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stc
Annual Report
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A brief overview of stc
Group

 

,The performance, activities

and investments of stc Group

and its subsidiaries during

the year 2022

 

Risks management

and transactions with

related parties

 

Board of Directors and
Committees

 

Dividends Policy and Distribution

and Board Recommendations and

Compensation

 

Conclusion

 

Financial Consolidated

Statements

A brief overview of stc Group The performance, activities, and
nvestments of stc Group and
its subsidiaries during the year 2022 Risks management and transactions
with related parties Board of Directors and Committees Dividends Policy and
Distribution and Board
Recommendations and Compensation Conclusion Financial Consolidated
Statements
Sustainability

  • ﻣﻦ ﺳﻜﺎن اﻟﻤﻤﻠﻜﺔ ﺑﺸﺒﻜﺔ اﻟﺠﻴﻞ اﻟﺨﺎﻣﺲ ﻣﻦ stc وﺗﻘﺪﻳﻢ ﺧﺪﻣﺎت ﻣﺘﻤﻴﺰة ﻣﻦ ﺳﺮﻋﺎت اﻻﻧﺘﺮﻧﺖ وﺳﺮﻋﺔ اﻻﺳﺘﺠﺎﺑﺔ.

    %40

  • ﻣﻦ ﺳﻜﺎن اﻟﻤﻤﻠﻜﺔ ﺑﺸﺒﻜﺔ اﻟﺠﻴﻞ اﻟﺨﺎﻣﺲ ﻣﻦ stc وﺗﻘﺪﻳﻢ ﺧﺪﻣﺎت ﻣﺘﻤﻴﺰة ﻣﻦ ﺳﺮﻋﺎت اﻻﻧﺘﺮﻧﺖ وﺳﺮﻋﺔ اﻻﺳﺘﺠﺎﺑﺔ.

    %40

  • ﻣﻦ ﺳﻜﺎن اﻟﻤﻤﻠﻜﺔ ﺑﺸﺒﻜﺔ اﻟﺠﻴﻞ اﻟﺨﺎﻣﺲ ﻣﻦ stc وﺗﻘﺪﻳﻢ ﺧﺪﻣﺎت ﻣﺘﻤﻴﺰة ﻣﻦ ﺳﺮﻋﺎت اﻻﻧﺘﺮﻧﺖ وﺳﺮﻋﺔ اﻻﺳﺘﺠﺎﺑﺔ.

    %40

stc Strategy

Directions

During 2022, within global context of record levels of inflation, supply chain disruptions, increasing interest rates, and rising energy costs, the Kingdom of Saudi Arabia (KSA) economy has performed well as indicated by majority of the economic indicators. This performance has been primarily driven by continuous Government drive to invest in mega projects, underlying infrastructure, digitization of the economic value chain, subsidized energy costs, and high oil prices. Saudi Arabia has reported its first budget surplus in nearly ten years.

In the Information and Communications Technology (ICT) industry, there has been acceleration in digital services trend (e-Health, digital media, gaming and digital entertainment, digital banking, e-Education etc.), underlying infrastructure (connectivity and data centers) and enabling technologies (5G, AI, AR/VR, Blockchain, IoT… etc). In KSA, ICT market has grown in 2022 due to increased demand from consumer and enterprise segments.

circle

At the same time, on the overall market level, there has been more pressure on short-term profitability due to rising costs and substantial capital investments in infrastructure projects. Competitive and regulatory dynamics have also been evolving in the market with more presence of global players and increasing maturity of the regulatory body.

Aspirational goals of the Vision 2030 continue to drive the national agenda and strategies of the government, private sector, investors and individuals. During 2022, stc reviewed its strategy by incorporating the evolving global and local social-economic, national aspirations, competitive, regulatory, market dynamics, and industry trends.

The fundamental pillars of stc’s strategy remain the same in the refreshed strategy

(DARE 2.0)

and it can be summarized as follows:

D

Digitization

A

Accelerate performance

R

Reinvent experience

E

Expand scale and scope

During 2022, within global context of record levels of inflation, supply chain disruptions, increasing interest rates, and rising energy costs, the Kingdom of Saudi Arabia (KSA) economy has performed well as indicated by majority of the economic indicators. This performance has been primarily driven by continuous Government drive to invest in mega projects, underlying infrastructure, digitization of the economic value chain, subsidized energy costs, and high oil prices. Saudi Arabia has reported its first budget surplus in nearly ten years.

In the Information and Communications Technology (ICT) industry, there has been acceleration in digital services trend (e-Health, digital media, gaming and digital entertainment, digital banking, e-Education etc.), underlying infrastructure (connectivity and data centers) and enabling technologies (5G, AI, AR/VR, Blockchain, IoT… etc). In KSA, ICT market has grown in 2022 due to increased demand from consumer and enterprise segments.

circle

At the same time, on the overall market level, there has been more pressure on short-term profitability due to rising costs and substantial capital investments in infrastructure projects. Competitive and regulatory dynamics have also been evolving in the market with more presence of global players and increasing maturity of the regulatory body.

Aspirational goals of the Vision 2030 continue to drive the national agenda and strategies of the government, private sector, investors and individuals. During 2022, stc reviewed its strategy by incorporating the evolving global and local social-economic, national aspirations, competitive, regulatory, market dynamics, and industry trends.

The fundamental pillars of stc’s strategy remain the same in the refreshed strategy

(DARE 2.0)

and it can be summarized as follows:

D

Digitization

A

Accelerate performance

R

Reinvent experience

E

Expand scale and scope

As the strategic direction of diversification into new opportunities while extracting more value from existing assets, stc continues to emphasize focus on execution of the priorities within the existing businesses, coupled with an increased focus on key growth areas. Specifically, these growth areas include:

  • Wider IT services market

    stc is building a strong and integrated services portfolio of Cloud services (IaaS, PaaS, SaaS), IT professional services (consulting, system integration) and Cybersecurity services. These will further support the needs of its public and private customers, as they execute digitization journeys.

  • Internet of Things (IoT) enabled digital solutions

    The second growth priority is in vertical and horizontal solutions and use cases enabled by Internet of Things. Building on existing capabilities, stc will further develop use cases for smart city applications, industrial automation, smart logistics, public services, and smart home applications.

  • Digital Financial Services

    Building on the success of stc Bank (previously stc Pay), stc will aim to take its capabilities to the next level, within the digital financial services space. stc will do so by providing services beyond payments, money transfers and international remittances.

  • MENA Data Center and Connectivity Hub

    The fourth growth focus is on a strong regional hub for international connectivity and related co-location space in data centers for global and local enterprises, government entities, Hyperscalers, OTT players, and content providers. stc’s asset base in this domain, geographical location, and regional presence will be key success drivers.

  • Digital media, gaming and entertainment

    Considering a young digital and tech-savvy population of KSA, digital media, gaming and entertainment are key growth focus areas for stc. Building on the success of stc TV, stc will continue developing its capabilities and scale in the media space, with a clear aggregator strategy that will allow consumers across the MENA region. Similarly, stc will continue to build on gaming and eSports platform where stc Play will engage the wider gaming ecosystem.

  • Mega Projects

    One of the emerging opportunities for stc is being the partner of choice for ongoing and planned Mega Projects in the Kingdom for infrastructure deployment and digital platforms and services. stc will leverage its existing capabilities, brand, customer and partner relationships to enable the aspirational goals of the Mega Projects.

In addition to these specific growth areas, stc will also be active, should value accretive geographical expansion in the telecommunications space appear, as the company affirms its further expansion in regional ambitions to serve the objectives of stc strategy (dare 2.0).

Driven by an aspirational strategy and strong management commitment, 2022 has been yet another successful year for stc. Despite ongoing market and regulatory challenges and associated risks, stc has been successfully executing its dare 2.0 strategy driving market-leading revenue growth while achieving best-in-class profitability, and establishing building blocks of strategic Big Bets as growth pillars.

stc maintained its market leadership in the consumer and enterprise broadband segments, while significantly increasing the customer base of its digital media platform (stc TV), gaming and eSports platform (stc Play) and digital financial services (stc Pay).

Internal digitization efforts have been increased resulting in extensive shift of customers to digital channels for sales and support. Digitization efforts have resulted in improved customer experience, time to market, and operational efficiency.

stc’s continuous investment in infrastructure (5G, Fiber, Data Centers, and International sub-sea cables) has ensured technology leadership for it, which resulted in reaching

40%

of the KSA population is covered by stc’s 5G network delivering excellent speed and low latency broadband connectivity.

stc has already started creating value for the Mega Projects (e.g., NEOM) as part of the infrastructure and ICT services deals.

Following up on stc’s successful incubation of multiple emerging startups in the Kingdom, we are further broadening the scope of our InspireU program as an incubator and accelerator. Further, our corporate venture fund (STV) also continued its efforts by investing in the right opportunities related to emerging technologies.

Understanding the value of its people as the key bearers of its strategy, stc continued its efforts to attract, develop and retain a diversified and inclusive workforce. The stc Academy further expanded its leadership development programs by collaborating with some of the leading global academics and experts. Notably, women empowerment and diversity remained high on our agenda with the induction of a high number of women employees in our Talent Incubation and other development programs and many women progressing upwards in stc Group management hierarchy.

Lastly, stc’s dare 2.0 strategy encompasses a holistic focus on technology infrastructure leadership, digital growth services, value extraction from core assets and capability build up. stc is proud to have the right leadership, progressive workforce and support from the stakeholders that will collectively ensure achievement of stc’s vision: ‘Digital and telco leader, enabling the society and economy to thrive, in KSA and beyond’. Driven by our values of Devotion, Dynamism, and Drive, stc will deliver a digitally transformed thriving society as envisioned by the KSA Vision 2030.