Riyadh – Mubasher: Moody's Investors Service has upgraded the Saudi Telecom Company's (stc) baseline credit assessment (BCA) to ‘a1’ from ‘a2’, according to a press release.
It also affirmed the telecom company’s ‘A1’ long-term issuer rating, with the outlook remaining ‘negative’.
Moody's further affirmed STC Sukuk Company Limited's ‘A1’ senior unsecured rating.
Upgrading the BCA reflects the entity's ability to maintain a conservative financial profile over the years besides strong financial metrics, Moody's Vice President, Senior Analyst, and local market analyst on stc, Julien Haddad.
Haddad added, "The upgrade also reflects stc's leading position in the Saudi telecom sector, which has considerable growth opportunities".
The upgrade which was based on the company’s solid profile took place despite challenging times like the oil price crash in 2015 until 2016 and the COVID-19 pandemic.
Moody’s said the negative outlook was partially based on the fact that stc generates over 90% of its cash flow in Saudi Arabia.
At the end of June this year, stc had SAR 7.7 billion ($2.1 billion) in unrestricted cash and cash equivalents. This was in addition to SAR 2.9 billion ($0.8 billion) of short term Murabaha and SAR3.9 billion ($1.0 billion) in sukuk investments issued by the Saudi government.
The telecom operator’s solid liquidity was underpinned by its strong cash balance until last June as well as Moody's forecast of strong generation of funds from operations of SAR 22.2 billion ($5.9 billion) over the coming 12 months, in addition to short term committed working capital facilities of SAR 5 billion.
During the first half (H1) of 2021, stc registered net profits of SAR 5.77 billion as well as SAR 31.59 billion in revenues.
