Moody’s raises STC Saudi Arabia’s base credit rating to A1

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Riyadh – Mubasher: Moody’s Investors Service raised today, Thursday, the basic credit rating of Saudi Telecom Company (STC) to the category A1 from category a2Long-term issuer rating confirmed A1The agency also confirmed the non-asset backed basic rating of Saudi Telecom Sukuk Limited at A1.

Moody’s said in its report, that the future outlook on all ratings for “STC” is still negative, indicating that after the upgrade to A1The company has now become one of the best telecom operators in the world, while the potential to upgrade the company’s base credit rating to aa3 low; Because of the company’s size and focus in the Kingdom.

The agency added that raising the basic credit rating of the Saudi Telecom Company (STC) to A1 The company’s conservative financial profile reflects the company’s ability to maintain strong metrics despite some challenging times, including the 2015-2016 oil price crash and most recently the coronavirus pandemic.

Moody’s noted, that STC’s debt to EBITDA systematically remained less than once, despite the fact that STC is a regular payer of profits and constantly invests in capital expenditures to maintain and modernize its infrastructure.

Moody’s pointed out that STC is in a good position to take advantage of growth opportunities in the ICT sector in the Kingdom, noting that this sector is one of the strategic sectors that the Kingdom’s government focuses on; In order to develop the non-oil economy and reduce its dependence on oil.

The agency noted that it classifies STC as a government-linked issuer; Because of its indirect government ownership of 76.2%, indicating that the company’s long-term credit rating of the issuer A1 Reflects independent creditworthiness.

Moody’s indicated that the strong liquidity of the Saudi Telecom Company through a strong cash balance of 7.7 billion riyals ($ 2.1 billion) as of June 30, 2021, and Moody’s expectations of generating strong funds from operations of 22.2 billion riyals ($ 5.9 billion) over the months. The next 12 too.

She said that STC has additional sources of liquidity available, which include short-term Murabahas totaling 2.9 billion riyals ($800 million) as of June 2021, in addition, the company has access to another 3.9 billion Saudi riyals ($1 billion). ) in the form of investments in sukuk issued by the government.

The agency added that any expansion of the company outside the Kingdom of Saudi Arabia in markets with a low sovereign rating or where the regulatory framework is less supportive compared to the Kingdom of Saudi Arabia could lead to the weakening of the company to its strong and leading position in its local market.

The Vice President of Moody’s, Senior Analyst and Local Market Analyst at STC, Julian Haddad, said that the upgrade of STC’s credit program reflects the company’s record in maintaining a conservative financial file over the years and its ability to maintain very strong financial metrics. This update STC’s leading position in the Saudi telecom sector, which has great growth opportunities.

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