Saudi Telecom Company - Q1 FY2026 Earnings Analysis

Performance Highlights

Saudi Telecom Company reported Q1 2026 revenue of SAR 19.94 billion, a 3.8% year-on-year increase, while EBITDA rose 7.1% to SAR 6.56 billion and operating profit surged 11.0% to SAR 3.98 billion, with net profit reaching SAR 3.70 billion, up 12.0% when excluding a non-recurring loss of SAR 219 million recorded in the comparable prior-year quarter. Gross profit margin expanded 350 basis points year-on-year to 49.0%, and EBITDA margin improved to 32.9%, reflecting the group's disciplined execution and cost efficiency initiatives.

The Commercial Unit was the primary growth engine, delivering 5.2% revenue growth driven by Mobility up 5.3% and Fixed up 4.5%, while the Carrier and Wholesale Unit added 6.2% and group subsidiaries collectively grew 5.8%. These gains more than offset a 3.6% decline in Business Unit revenue, and mobile subscribers expanded 5.3% year-on-year to 30.6 million, with 5G sites reaching 11,060 and fiber connections growing to 3.80 million households.

Management Outlook and Forward Catalysts

Management highlighted a capex intensity of just 8.5% for the quarter, signalling continued capital discipline even as stc pursues large-scale growth initiatives including the SAR 3 billion Silklink telecommunications infrastructure project in Syria and a completed USD 2 billion sukuk issuance, pointing to an accelerating international and infrastructure expansion phase. The quarterly dividend of SAR 0.55 per share and a 9.9% trailing dividend yield underscore management's commitment to shareholder returns alongside growth investment.

The central investor debate entering Q2 centres on whether stc can sustain margin expansion as finance income declined SAR 237 million year-on-year and zakat swung from a SAR 311 million credit to a SAR 152 million expense, pressures that could weigh on reported net profit; bulls will focus on subsidiary momentum, 5G monetisation, and the Silklink contract as structural revenue drivers, while bears will monitor Business Unit weakness, government receivables aged beyond two years totalling SAR 5.4 billion, and execution risk on international ventures.