Saudi Telecom Company (stc) announced its financial results for the third quarter of 2026, reporting a 3.74% increase in revenue to SAR 19,985 million, supported by 18.5% growth in revenue from subsidiaries. Gross profit rose 5.11% to SAR 9,724 million, while operating profit declined by SAR 116 million to SAR 3,511 million.

In terms of profitability, net profit reached SAR 3,599 million, down 12.37% year on year, affected by a SAR 124 million increase in financing costs and a SAR 156 million zakat and income tax expense, compared with a positive impact from the reversal of previous provisions. Net profit grew 3.6% quarter on quarter after excluding non-recurring items.

For the nine-month period, revenue increased 3.75% to SAR 60,096 million, and operating profit rose 4.14% to SAR 11,282 million. Net profit reached SAR 10,918 million, down 5.71% (or up 2.6% on an adjusted basis).

To analyze the implications of these results, including subsidiary growth relative to financing-cost pressures and the impact of zakat adjustments, Al Yamamah University students share their views on the company’s performance and structural transformation across the following themes:

Contract Sustainability and Cybersecurity’s Competitive Advantage

“Rahaf Al-Anazi” @Rahaf Alanazi explained the role of digital protection in stabilizing cash flows:

“In my view, cybersecurity is one of the most important areas for stc’s future. As digital transformation accelerates and companies rely more heavily on electronic systems, protecting data and information has become a necessity, not just an option. This gives sirar an opportunity to grow steadily by providing protection and monitoring services to businesses and securing long-term contracts.

I believe this field not only generates additional income for the group, but also strengthens customer trust and gives it a strong competitive advantage, especially as cyberattacks and digital threats become more prevalent.”

Turning Revenue Growth into Sustainable Net Profit

“Dina Alarjani” @Dina Alarjani emphasized the need to assess the quality of actual earnings, explaining:

“In my view, stc’s diversification is a fundamental step toward opening up revenue streams beyond telecom bills, particularly through enterprise solutions, cybersecurity, and cloud services. stc Bank’s strength lies in leveraging stc’s customer base and digital services.

But revenue growth alone is not enough to judge performance. We need to know whether these segments are generating recurring profits and understand the reasons behind the decline in net profit, especially if some items had a non-recurring impact.”

Reducing Traditional Telecom Risk and Improving Margins

“Rabiah Almugait” @Rabiah Almugait stressed the importance of digital expansion to income stability:

“Diversifying revenue sources is a strategic pillar for stc’s future. It reduces the company’s reliance on traditional telecom services and opens up new opportunities for growth and expansion, particularly as demand for technology solutions, software, and digital services increases. Its entry into sectors such as cybersecurity and cloud computing also allows it to benefit from the Kingdom’s accelerating digital transformation.

Over time, this diversity can positively affect revenue stability and improve profit margins, while strengthening the company’s ability to compete and continue growing.”

Transitioning to Systems Integration and Protecting Investment Valuation

“Fay Al-Dossari” @Fay Aldossari discussed how an integrated ecosystem affects profitability:

“Business Solutions and Distribution: Moving beyond selling telecom packages to offering software and systems integration increases profit margins and strengthens corporate loyalty and contract sustainability.

Digital Banking Services: Their competitive advantage lies in immediate access to millions of existing customers and extensive data, without the costs of traditional branches.

Cybersecurity: Protection services are a mandatory regulatory requirement for companies and government entities, and rely on automatically renewing subscriptions and long-term contracts.

Future Technologies and Cloud: These provide the infrastructure for smart cities (such as NEOM) and digital sovereignty, and are key drivers of data localization and Vision 2030 targets.

Impact of Diversification on Profits: It shields the company from declining returns in traditional telecom, while enabling faster growth and a higher investment valuation as a comprehensive technology company.”

Customer Acquisition Costs and Regulatory Compliance Requirements

“Albatool Bedairi” @Albatool Bedairi discussed the requirements for expanding banking services:

“For digital banking services (stc Bank), I believe the main advantage is its ability to leverage stc’s customer base, technology expertise, and digital channels. This could reduce customer acquisition costs and help deliver integrated financial services. However, the bank’s success also depends on risk management and compliance with regulatory requirements.”

Recurring Cash Flows and Profit Margins from Subsidiaries

“Fahad Alruwaished” @Fahad Alruwaished detailed the operational expansion figures:

“solutions’ revenue of SAR 9,637 million and channels’ revenue of SAR 10,426 million demonstrate stc’s successful transformation from a traditional telecom operator into a technology giant. Providing software and digital transformation solutions to businesses generates long-term contracts with higher margins and recurring cash flows, supporting the group’s total revenue of SAR 60.1 billion and net profit of SAR 10.9 billion for the nine months.

stc Bank, meanwhile, generated revenue of SAR 1,310 million. It benefits from the exceptional advantage of stc’s vast customer base and ready-to-use digital infrastructure, reducing customer acquisition costs and allowing it to provide digital financial services more flexibly and quickly than traditional banks.”

Long-Term Government Partnerships and Vision Targets

“Raneem Asiri” @Raneem Asiri highlighted the dimensions of sustainable growth:

“In my view, diversifying stc Group’s revenue sources helps it achieve sustainable growth rather than relying solely on traditional connectivity services. Business solutions, cloud services, and cybersecurity create opportunities for long-term contracts with companies and government entities. stc Bank can also draw on the company’s customer base and digital expertise to provide convenient, fast financial services. I believe expansion in these areas strengthens revenue stability and the group’s competitiveness, while supporting digital transformation and the goals of Saudi Vision 2030.”

Digital Protection as a Source of Sustainable Revenue

“Noof Al-Anazi” @Noof Alanazi explained the importance of cybersecurity to the group’s growth:

“Cybersecurity is an important area for stc Group’s growth, especially as companies increasingly rely on digital solutions. The ongoing need to protect data creates growth opportunities and sustainable revenue streams through long-term contracts, while also strengthening customer confidence in digital services.”

The Profitability Test: Controlling Costs as Revenue Expands

“Jumanah Al-Shehri” @Jumana Alshehri explained that diversification should be measured by actual profitability:

“stc’s results show that it has successfully diversified its revenue sources rather than relying solely on telecom. Companies such as solutions and channels boost income by providing technology services and business solutions to companies, while stc Bank benefits from the company’s large customer base and the ease of delivering digital services.

Growth at sirar also reflects increasing demand for cybersecurity and data protection, while expansion into the Internet of Things and cloud computing supports smart-city projects and Vision 2030. Overall, diversification gives stc greater growth opportunities and reduces its reliance on a single business. But the most important thing is generating actual profits from these investments, particularly as nine-month revenue rose to SAR 60,096 million despite the decline in third-quarter net profit. This shows that revenue growth alone is not enough to assess performance; costs and profitability must also be considered.”

The Integrated Ecosystem and the Digital Bank’s Advantage over Traditional Banks

“Ahmed Al-Jadaan” @AHMED ALJADAAN discussed the digital bank’s marketing advantage:

“Having a digital bank (stc Bank) under the umbrella of a telecom company gives it a major competitive advantage over traditional banks. The bank can reach stc’s extensive customer base of more than 25 million subscribers and use their data to market financial services efficiently and at lower cost. This is clearly reflected in the bank’s revenue, which jumped 26.8% to SAR 1,310 million over the nine months. This integration of telecom and financial services creates a powerful ecosystem that is difficult to compete with.”

Turning Technology-Sector Growth into Sustainable Profits

“Omar Al-Sheikh” @عمر الشيخ discussed how revenue diversification affects the group’s stability:

“stc Group’s results show that diversifying revenue sources has become an important factor in boosting growth and reducing reliance on traditional telecom services. Revenue of SAR 9,637 million at solutions and SAR 10,426 million at channels highlights the importance of providing integrated technology solutions to businesses, such as software and digital systems, opening up additional revenue streams and strengthening customer relationships.

stc Bank’s connection to a large telecom group also gives it the advantage of a broad customer base and advanced digital infrastructure, which may make it easier to reach customers and provide more integrated digital financial services. Meanwhile, sirar’s cybersecurity services create opportunities for long-term contracts, given institutions’ continuing need to protect their data and systems as digital transformation expands.

Expansion into the Internet of Things and cloud computing supports the development of smart cities and digital infrastructure, in line with Saudi Vision 2030 targets. In my view, diversifying revenue toward software, data, and digital services will make the group more stable in the future. It will no longer depend solely on subscriber numbers and telecom bills, but will build multiple revenue streams that can add value and deliver better profit margins. The success of this strategy will ultimately depend on the company’s ability to turn growth in these sectors into sustainable profits.”

Diversification, Contract Renewals, and Converting Revenue into Cash Flow

“Thanaa Al-Shayeb” @ثناء الشايب discussed the ecosystem’s ability to retain customers:

“The strength of stc’s diversification model lies in the way its services complement one another. A company that needs connectivity may also need technology and cloud solutions, as well as data protection. This gives the group an opportunity to generate more revenue from the same customer and build a longer-term relationship.

But increased revenue alone is not enough to judge the success of expansion. The key measures are how much of that revenue turns into profits and cash flow, and whether customers continue renewing their contracts. This is where diversification’s impact on the group’s strength and income stability becomes clear.

In my opinion, providing these services together makes it easier for customers to deal with a single provider and may increase their willingness to stay. However, each field has its own competitors and costs, so successful expansion ultimately depends on service quality and efficient management.”

Earnings Quality and Avoiding Saturation in the Traditional Market

“Zaid Darweesh” @Zaid Darweesh discussed diversification’s impact on revenue stability and margins:

“stc Group’s results show that diversifying revenue sources has become an important factor in boosting growth and reducing reliance on traditional telecom services. Revenue of SAR 9,637 million at solutions and SAR 10,426 million at channels highlights the importance of providing integrated technology solutions to businesses, such as software and digital systems, opening up additional revenue streams and strengthening customer relationships.

stc Bank’s connection to a large telecom group also gives it the advantage of a broad customer base and advanced digital infrastructure, which may make it easier to reach customers and provide more integrated digital financial services. Meanwhile, sirar’s cybersecurity services create opportunities for long-term contracts, given institutions’ continuing need to protect their data and systems as digital transformation expands.

Expansion into the Internet of Things and cloud computing supports the development of smart cities and digital infrastructure, in line with Saudi Vision 2030 targets. In my view, diversifying revenue toward software, data, and digital services will make the group more stable in the future. It will no longer depend solely on subscriber numbers and telecom bills, but will build multiple revenue streams that can add value and deliver better profit margins. The success of this strategy will ultimately depend on the company’s ability to turn growth in these sectors into sustainable profits.”.

Stabilizing the Revenue Mix through High-Margin Sectors

“Dana Al-Sadoun” @Dana Alsadoun discussed the structural transformation toward becoming a technology company:

“My reading of stc’s results suggests that the real driver of sustainable profits is its smart transformation from a telecom company into an integrated technology giant.

The financial indicators support this trajectory. Business solutions and distribution channels (solutions and channels) generated more than SAR 20 billion in revenue, reflecting a strong presence in the corporate software and systems market. stc Bank’s revenue of SAR 1.31 billion also demonstrates effective use of its broad subscriber base.

In cybersecurity, sirar is performing strongly, generating SAR 756 million in revenue through long-term managed-services contracts. Meanwhile, rapid expansion in cloud computing and the Internet of Things (iot² and SCCC) generated SAR 553 million in revenue, supporting Vision 2030. Overall, the group’s SAR 60.1 billion in revenue is now more stable because it is supported by modern, high-margin technology sectors, rather than relying solely on telecom bills.”

The Measure of Success Is Shifting from Subscriber Growth to Return on Invested Capital

In an analytical assessment, financial and economic analyst “Hamad Alsaeed” @Hamad Alsaeed adds: Reading stc’s results goes beyond the nine-month period. The group is reshaping its sources of value alongside an information technology market that reached SAR 115 billion in 2025—around 40% larger than the telecommunications market, according to the Ministry of Communications and Information Technology’s annual report.

From this perspective, reported profit is not the most accurate indicator. Its decline was linked to a higher zakat base, while the more important shift occurred in the earnings mix: subsidiaries led growth, and the core network accounted for a smaller share of the equation.

It is worth noting that stc is financing this transition through borrowing, with leverage at 0.61 times EBITDA, while maintaining stable dividends that exceed its free cash flow. Accordingly, the benchmark for assessing its performance is gradually shifting from subscriber growth to the return on capital invested in expansion—such as 5G networks and investment in other sectors. This is the measure that will determine how the market views its future results.

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