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HomeNewsSaudi Telecom shares rise due to proposed $ 8 billion capital increase...

Saudi Telecom shares rise due to proposed $ 8 billion capital increase by Reuters

Saudi Telecom shares rise due to proposed $ 8 billion capital increase
© Reuters. FILE PHOTO: A man passes the Saudi Telecom STC office in Riyadh, Saudi Arabia February 6, 2018. REUTERS / Faisal Al Nasser

By Alexander Cornwell

DUBAI (Reuters) – Saudi Telecom (TADAWUL 🙂 said on Sunday that its board of directors had proposed increasing the company’s share capital by 30 billion riyals ($ 8 billion), or 150%, driving the share price nearly 10% higher.

The Riyadh-listed company had previously announced that the proposed capital increase would involve the issuance of 30 billion new shares, with shareholders offering 1.5 new shares for every share they own.

It sent stocks up as much as 9.8% to 110.2 riyals in early trading before retreating slightly to 107 riyals, up 6.6% from the start of trading on Sunday, according to Refinitiv data.

“This increase will undoubtedly lead to an increase in the liquidity of the company’s shares and make them more accessible to a wider group of investors,” said Chairman of the Board Prince Mohammad bin Khalid Al-Abdullah Al-Faisal.

In a statement, he said the company’s so-called “daring” strategy is based on four main pillars: expansion in scale and scope, enriching the customer experience, enabling digital transformation and accelerating revenue generation of its assets.

Last year, STC listed its unit Arabian Internet and Communications Services Co. and raised $ 966.35 million.

Saudi Telecom said in a statement that the capital increase through retained earnings would support growth and expansion plans.

The company, in which the Saudi government owns 64% of the shares through the public investment fund, also said the board had proposed trimming the dividend policy.

Under the proposal, the three-year dividend policy in place since the fourth quarter of 2021 will be cut from a payment of 1 riyal ($ 0.26) per share. share pr. quarter to 0.40 riyal ($ 0.10).

That recommendation was in response to the proposed share capital increase, though the board will continue to consider additional dividend payments, the company said.

($ 1 = 3.7513 riyal)