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Saudi Telecom Launches Debut International Sukuk

Saudi Telecom Company (STC), the largest telecom operator in the Gulf Cooperation Council (GCC) states in terms of assets and with a 73 per cent share of the aggregate revenue of telecommunications providers in Saudi Arabia in 2018, launched its debut benchmark Sukuk in the international market on 26 April 2019, becoming the latest Saudi corporate debutante in the burgeoning Islamic debt issuance market in the region.

This follows the establishment of an US$5 billion Trust Certificates (Sukuk) Issuance Programme in March 2019.

The Sukuk are issued through STC Sukuk Company Limited, a wholly-owned special purpose vehicle of STC incorporated in the Cayman Islands.  The final value of the first issuance, added the company at the time of writing, “will be subject to market conditions and the company’s requirements.”

STC had earlier mandated HSBC Bank plc, J.P Morgan Securities plc, Standard Chartered Bank, Samba Capital & Investment Management Company, First Abu Dhabi Bank, and KFH Capital Investment Company to arrange investor meetings in key locations in London, Europe, the GCC and Asia.

Previously STC has issued domestic Saudi Riyal denominated Sukuk, of which the first one was in 2014 – a SR2 billion issuance under its then SR5 billion Trust Certificates Issuance Programme.

The aim of the Sukuk programme, said STC in a statement, “is to support the execution of the company’s strategy and future plans. Further, it will help the company to diversify the sources of funding and benefit from the features of international debt capital market in terms of liquidity, competitive pricing and diversification of investors base. In addition, having an international presence in debt capital market through this programme will enhance STC’s financial standing.”

Looking ahead, Eng. Nasser Bin Sulaiman Al Nasser, STC Group CEO, is keen “to invest in new and diverse domains that can enable the digital transformation and enrich the customers’ experience. STC will continue to play its role as an incubator for creative projects and ideas that capture the rapid changes in the telecom industry, customer needs and requirements as both innovation and investment are key factors to accelerate and achieve the digital transformation.

“In order to establish our pivotal role in enabling digital transformation within the guidelines of vision 2030, STC has signed three strategic agreements with international companies as part of the ” 5G Aspiration Project ” to deploy the 5G network and develop innovative services and solutions related to latest generation of networks and communication technologies, which comes across our commitment to launch one of the fastest network in the world.”

In this respect, Saudi banking sources stress that STC is almost certainly emerging as a potentially major player in sourcing alternative financing through Sukuk issuances – both in the domestic and international markets.

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