#1Investor Presentation Investor Relations 2020 || stc#2Index I. Macro Environment II. KSA Telecom Market Overview III. Saudi Telecom Company Profile IV. Strategy Overview V. Business Overview VI. Financial Highlights 3 8 14 28 31 40 Investor Presentation 2020 | stc group stc#3I. Macro Environment stc#4Domestic Macroeconomic Indicators Investor Presentation 2020 | stc group GDP & Government Budget: Data on 2019, real GDP showed that the economy expanded by 0.3% (Y-o-Y). During 2019, the oil sector declined by 6% (31% share of GDP), whilst non-oil GDP rose by 4% (non-oil private sector GDP was up 4.1% and government sector was up by 4.4%). Saudi Unemployment Rate (15+): GaStat's latest labor market release for Q3 2019 shows that unemployment declined to 12%, down from 12.3% in Q2 2019. Male unemployment declined to 5.8%, down from 6% in Q2 2019, and female unemployment was also down from 31.1 to 30.8%, the lowest in 3 years. Bn (SAR) 3,500 2,949 2,974 3,000 2,760 2,800 2,836 25% 2,517 2,582 2,454 2,419 2,500 1,981 2,000 1,500 1,000 500 13.2% 33.0% 33.1% 32.7% 31.0% 30.9% 31.1% 30.9% 32.5% 31.7% 31.1% 30.8% 34% 12.8% 12.9% 12.9% 12.8% 12.8% 12.8% 12.8% 28% 12.7% 12.7% 15% 12.4% 12.5% 22% 12.3% 12.0% 16% 12.0% 5% 11.6% 7.2% 7.4% 7.4% 7.5% 7.6% 7.6% 7.5% 6.6% 6.6% 10% 6.0% 5.8% 11.2% 4% -5% Q1 2017 Q2 Q3. Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 Q3 0 -15% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Nominal GDP (SAR) Nominal GDP % (Change) Real GDP (% Change) *Source: GASTAT According to the newly announced budget for the year of 2020, total expenditure is budgeted at SAR 1,020 trillion ($272 billion), a slight fall in spending that reversed three years of expenditure hikes aimed at spurring growth. Yet, the Kingdom continues to implement its Vision Realization Programs (VRPs) for the Saudi Vision 2030 aiming to achieve higher sustainable economic growth with a focus on growing non-oil GDP sector. *Source: GaStat Total Unemployment Rate Consumer Price Index: Male Female The general consumer price index (CPI) registered a Y-o-Y decline of 0.1% in Q4 2019 and an increase of 0.3% compared to the third quarter of 2019 (with communication sector registering a Y-o-Y decrease of 0.2%). 1.481.171.171.26 2.522.221.93 2.76 2.09 2.1 2.21 SAR Budget 2020 Projections 2021 2022 Total Revenue 833 839 863 Total Expenditure 1,020 990 955 Budget Deficit (187) (151) (92) Debt 754 848 924 % GDP 26% 28% 29% Government Reserves 346 280 265 *Source: MoF 4 30-Mar-15 30-Jun-15 *Source: Bloomberg 30-Sep-15 31-Dec-15 31-Mar-16 -0.09 -0.75 -1.4 2.1 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 0.96 0. 0.660.47-0.761.14 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 stc#50 40 1/30/2009 160 $ 80 120 Domestic Macroeconomic Indicators Cont. $ 4,971 Nominal GDP of World's Major Economy: (KSA ranked #19 out of the top largest 20 economies in 2018) 3,997 2,825 2,778 2,726 Japan Germany United France India Kingdom Korea, Australia Spain Rep. Saudi Arabia *Source: The World Bank Population: 33.41 (Mn) 35 32.55 10% 31.79 30.77 31.02 29.20 12.65 12.14 30 11.71 10.07 10.24 7% 9.36 25 25 5.39% 20 25 15 0% 1% 100 1,619 1,432 1,426 10 19.84 20.70 20.77 20.08 20.41 20.77 782 5 -2% 2013 2014 2015 2016 2017 2018 Saudi Non-Saudi Growth Rate 4% 2.49% 2.41% 2.65% 0.80% Brent Oil Performance (Monthly): Brent oil prices averaged $63/ barrel in Q4 2019 (higher 1.2% Q-o-Q) leading to a higher government revenue. Foreigners in Saudi Labor Force: Latest General Organization for Social Insurance (GOSI), figures show a decrease in the rate of the expat exodus in 2019. In addition, data shows that the expat departures, to date, have been concentrated amongst lower-paid workers (earning SR 1,500 or less a month). 1/30/2010 5 *Source: Bloomberg 1/30/2011 1/30/2012 1/30/2013 1/30/2014 1/30/2015 1/30/2016 1/30/2017 1/30/2018 1/30/2019 (Mn) 8.8 4% 8.42 8.31 8.49 8.19 7.91 7.71 8.4 7.40 2% 8.0 1.3% 7.6 7.13 6.90 6.71 -0.9% 0.1% -1% 7.2 6.58 6.8 0.8% 1.1% 1.3% 2.5% 1.5% -2.0% 6.90 -1.3% 6.71 6.58 -3% 6.52 3.6% 6.44 6.4 4.1% 2.7% 3.3% 3.4% 6.0 *Source: GOSI Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Male Female Growth -5% stc Investor Presentation 2020 | stc group#6Domestic Macroeconomic Indicators Cont. 6 Investor Presentation 2020 | stc group Historical Average Communication Consumer Spending (By Total Households): Throughout the years, percentage of consumer spending on communication services slightly witnessed a decrease. This is mainly due to the reduction of operational costs on the general telecom sector as a whole, along with the competitive packages offered by market operators. Average of Consumer Segmentation of Average Consumer Spending in 2018 (By Total Households): Food And Beverages 17.2% 20.0% ■Tobacco Average Household Year Salaries Spending on Fabric, Apparel and Footwear % Communication Services Housing, Water, Electricity, Gas, and other Fuels ■Furniture and Furnishings 5.1% 2018 12,818 659 5.14 Health 2013 11,522 726 6.30 ■Transport 2.6% 2.8% 2007 10,280 665 6.47 ■Communications ■Recreation and Culture 5.1% Education *Source: GaStat ■Restaurants and Hotels ■Miscellaneous Personal Goods and Services 11.9% 1.3% 6.2% 0.5% 3.8% 23.3% stc#7Aligning stc Strategy with Saudi Arabia's 2020 NTP 2020 & 2030 Vision 7 رؤية VISION 2*30 المملكة العربية السعودية KINGDOM OF SAUDI ARABIA National Transformation Program ► To raise our ranking on the E-Government Survey Index from our current position of 36 to be among the top five nations; To increase the private sector's contribution from 40% to 65% of GDP; ► To increase women's participation in the workforce from 22% to 30%; ► To move from our current position as the 19th largest economy in the world into the top 15; ▸ To lower the rate of unemployment from 11.6% to 7%; ► To increase SME contribution to GDP from 20% to 35%; To increase our capacity to welcome Umrah visitors from 8 million to 30 million every year. ► Provide broadband services to all KSA regions by stimulating investment in infrastructure and regulatory frameworks; ► Support e-commerce; ► Bridge the digital gap in the skills of ICT users; Increase the IT industry's contribution in the non-oil GDP; ► Rehabilitation of specialized Saudi human capital and employment in CITC sector; ► Develop and activate smart government transactions based on a common infrastructure. Elements of stc Strategy: ► Lead market in digital services and creative solutions Drive efficiencies through digital transformation Digitalise processes, internal operations, delivery engine and commercial approach ► Instill culture change ► Grow B2G and B SME segments ▶ Lead technological advancement and provide best in class connectivity platform Investor Presentation 2020 | stc group stc#8II. KSA Telecom Market Overview 9:41 Instagram Fiber for half the price 50% For a limited time To learn mor stc 400 Fere the 50% limited time da Coulmate 3000 fr ejected it to be better stc#9KSA & Telecom Industry (Q4 2019) 9 Investor Presentation 2020 | stc group Macro Economy & Liquidity • • Saudi Aramco's world record-breaking IPO reaches $29.4 billion. Saudi Arabia became the first Arab nation to take over the G20 presidency. It will host world leaders for a global summit in its capital on November 21- 22. Base salaries will increase by 4.5 percent in Saudi Arabia by 2020, according to the annual Total Remuneration Survey (TRS) by global consultancy Mercer. Unemployment in Saudi Arabia currently stands at 12.3 percent, down from 12.9 percent last year, and Mohammed Al-Tuwaijri, the minister of economy and planning, expects it to fall further by the end of the year, according to reports. Saudi Arabia's energy minister said, the Khafji oil field which is jointly operated with Kuwait would produce 320,000 oil barrels per day (bpd) at the end of 2020, Saudi-owned al-Arabiya TV reported. Regulatory Environment Government Initiatives Saudi Arabia's Communication and Information Technology Commission (CITC) released a Request for Application (RFA) to issue licenses to foreign mobile virtual network operators (MVNO) and to enable them to invest in Saudi Arabia, CITC said in a statement. Custodian of the Two Holy Mosques King Salman ordered to extend the cost-of-living allowance for one additional year until the end of 2020. Saudi Arabia began offering tourist visas for the first time, offering e-visas and visas on arrival to citizens of 49 countries. Saudi Arabia has waived fees on expatriate workers employed in the industrial sector, one of the main economic segments eyed for development, for five years. Minister Al-Sawah stated that the Kingdom ranks first among the countries of the Middle East and North Africa in the size of the electronic games market and among the top 20 markets worldwide, with 4.6 million active players and revenues of about SR 2.8 billion in 2018, which calls for capturing the opportunities in the market through coordination between all stakeholders in the digital entertainment industry. stc#1010 KSA Telecom Market Overview Mobile & Fixed markets are saturated, however, this is expected to be offset by the increase in broadband subscribers Mobile Subscribers: Fixed Telephony Subscribers: (Mn) 4 (Mn) 171.40% 53 180% 34.00% 35.00% 32.30% 31.60% 149.40% 137.50% 126.90% 124.10% 3 43 126.70% 140% 3 33 1.09 45.92 26.28 100% 39.42 28.42 35.79 30.01 2 23 13 60% 2 Investor Presentation 2020 | stc group 41% 29.20% 35% 31.80% 29% 1.80 23% 1.75 1.74 1.40 1.60 17% 7.69 7.86 10.11 12.89 15.17 2.50 2.00 1.90 1.90 1.72 1.64 6.82 3 20% 1 2014 2015 2016 2017 2018 Q2 2019 2014 2015 2016 2017 2018 Q2 2019 Residential Subscribers Business Subscribtion Post-paid Subcribers Pre-paid subscribers Mobile Panetration (%) Households Penetration (%) Mobile Broadband Subscribers: (Mn) 35 100% 30 94.50% 25 GN NW 10 75.20% Fixed Broadband Subscribers: 11% (Mn) 60% 4 110% 93.60% 88.70% 50.70% 0.45 44.80% 50% 89.50% 3 43.20% 0.58 0.40 90% 33.60% 40% 33.70% 33.10% 2 0.70 30% 20 70% 1.57 31.52 29.10 29.72 29.15 29.63 2 1.40 1.62 15 23.88 *Source: CITC 2014 2015 2016 Mobile Broadband Subscribers 2017 2018 Mobile Panetration (%) 0.78 0.95 20% 50% 1 0.82 0.80 1.40 10% 1.20 1.54 1.09 0.40 0.30 0.23 30% 0 0% Q2 2019 2014 2015 2016 2017 2018 Q2 2019 Fixed-Wireless Subscribers ADSL Subscribers Leased lines+FTTH Houshold Paneteration stc#11KSA Internet Usage 11 Internet Usage: In 2019, the Kingdom was ranked in the 13th place in the world's mobile internet speed and in the 53rd place in fixed broadband speed**. Percentage Distribution of Internet Access in 2018: (Mn) 30 82.10% 83.40% 90% 74.90% 25 68.50% 27.16 26.10 63.80% 70% 23.80 20 21.60 19.6 50% 15 10 30% 5 10% 2014 2015 2016 2017 2018 I Number of Users Penetration *Source: CITC ** Source: Speedtest 9% 18% 33% 69% DSL ■Mobile phone packages Router Optical fiber (fiber) Investor Presentation 2020 | stc group stc#12KSA Internet Usage Internet Use Based on Device Perspective As of Jan 2019: # on Total Number of Active Internet Users: 30.26 mn Internet Users As a Percentage of Total Population: 89% Mobile Subscriptions By Type As of Jan 2019: * Source: Hootsuite 12 AA AA # Total Number of Active Mobile Internet Users: 27.14 mn Total Number of Mobile Connections: 43.80 mn Mobile Connections As a Percentage of Total Population: 129% Percentage of Mobile Connections That are Pre- paid: 76% on Investor Presentation 2020 | stc group Mobile Internet Users As a Percentage of Total Population: 80% Percentage of Mobile Connections That are Post- paid: 24% BA Percentage of Mobile Connections That are Broadband: 79%#13stc Internet Performance 13 4G Mobile Download Speed: (Mbps) 60 40 (Mbps) 60 60 40 51.4 52.7 45.4 20 37.9 20 33.0 35.4 37.2 11.4 0 0 Ookla ■Q2-Q3 2017 Q3-Q4 2018 ■Q1-Q2 2019 ■Q3-Q4 2019 4G Mobile Upload Speed: (Mbps) 30 20 (Mbps) 20 Meqyas ■■■ Q1 2019 Q2 2019 ■Q3 2019 ■ Q4 2019 10 17.4 17.1 10 20.0 14.3 14.3 16.3 17.0 10.1 0 0 Ookla ■Q2-Q3 2017 ■Q3-Q4 2018 ■Q1-Q2 2019 ■Q3-Q4 2019 Investor Presentation 2020 | stc group Meqyas ■■Q1 2019 Q2 2019 ■Q3 2019 ■ Q4 2019 stc#14We are looking forward III. stc Company Profile * stc is ranked as the most valuable brand in Saudi Arabia with a total value of SAR 30.09 bn (USD 8.024 bn) as of January 2020 stc#15stc at Glance (12M 2019) 15 Balance Sheet SAR GCC Ranking** Total Assets 118.33 bn #2 Total Equity 61.76 bn #1 Total Liabilities 55.27 bn #3 Debt/Equity 15.08% Debt/ Assets 7.87% Dividends Paid (12-M) Dividend Yield 2019* SAR 4/ share 3.93% Investor Presentation 2020 | stc group A- Standard & Poor's A1 Moody's #1 in KSA in Mobile & Fixed Broadband subscribers Total stc group employees 19K & Total stc KSA employees 13.5K SAR30.09 bn Most valuable Brand (AA+)*** #1 in KSA in FTTx with 741,503 customers Length of deployed fiber optic cables 217K KM Income Statement SAR GCC Ranking** Revenue 54.37 bn #1 Operating Profit 12.48 bn #1 Net Income 10.66 bn #1 EPS 5.33 #1 *Based on 31/12/2019 closing price ** Among GCC biggest Telecom Operators (Zain Group, Etisalat UAE and Ooredoo Qatar) based on 12M 2019 numbers ***As of January 2020, Brand Finance #1 in KSA in Post-paid & Pre-paid subscribers #1 in KSA in Fixed Telephony subscribers stc#16Board of Directors 16 HRH. Prince Mohammed Khalid ALFaisal Chairman of the Board Mr. Rashid Ibrahim Sharif Board Member H.E. Dr. Khaled Hussain Biyari Board Vice Chairman Mr. Osama Yassin Al-Khiary Board Member H.E. Mohammed Talal Al-Nahhas Board Member Mr. Roy Chestnutt Board Member Mr. Ahmed Mohammed Al-Omran Board Member Mr. Sanjay Kapoor Board Member Dr. Ibrahim bin Abdulrahman Kadi Board Member Eng. Nasser Bin Sulaiman Al Nasser Chief Executive Officer (CEO) Investor Presentation 2020 | stc group stc#17Major Milestones Since Establishment, stc has Capitalized on Major Growth Opportunities السعودية SAUDIT STC LECOM CO 1998 Company Incorporation. الاتصالات السعودية SAUDI TELECOM 2003 Introduction of DSL services. G 2006 Increased capital from SR 15 billion to SR 20 billion. 2008 Stake acquisition in Oger; Launched Indonesian operation under the name AXIS. 2010 Launched Bundled services. STC الاتصالات السعودية 2012 Fiber Optic in Saudi; reached more than 500 residents. 2014 SR 5 billion Sukuk program offering (1ST series was SAR 2 billion). 2016 Share increase in VIVA Kuwait up to 51.8% and Sale Co. to 100%. 17 1998-2002 2002 stc IPO (December) 2003-2005 ■ 2005 10 million mobile subscriber mark; Launch of 3G and 3.5G mobile technology. 2006-2007 2007 2008-2009 Stack acquisition in MAXIS Communications and its operations in Indonesia & India; Won third mobile license in Viva Kuwait. 2009 2010-2011 Third mobile license in Viva Bahrain. " Investor Presentation 2020 | stc group 2018 stc " Comprehensive settlement agreement with the Government; Announcement of new Dividend Policy; Launch of stc PAY. 2011 2012-2013 Acquired 60% stake in Sale Communication; Share Increase in AXIS Indonesia and Integral; Launched IPTV services in Saudi Arabia. 2013 2014-2015 Acquisition of push-to-talk (PTT) mobile operator Public Telecom Company (Bravo); Establishment of Aqalat Company. 2016-2017 2015 stc became an ICT integrated player in the Region. 2017 2018-2019 stc ranked as most valuable brand in Saudi Arabia; Establishment of STV with $500 million capital. ☐ 2019 $ 5 billion international Sukuk program offering (1st series was $ 1.250 bn); Establishment of Tawal Company; Launching 5G services Launching the new branding of stc Uber acquisition of Careem (in which stc owns a direct stake of 8.8% and an indirect stake of 9.3%) sic#18Wining Awards 18 Investor Presentation 2020 | stc group 2010: ☐ Advertiser Excellence in the Middle East and North Africa by Dubai Linux; Operational Excellence Award at the Global Forum for Communications TM Forum Management World; ■ Transparency Award for Saudi Stock Companies by BMG Financial Consultations Firm. 2011: " Customer Care Excellence Award by Middle East Excellence Awards Institute; Cisco Most innovation Data Center Project awards by Cisco International; Leadership Award for pioneer Role in Telecom Industry at TMT Conference Middle East; Best operator of mobile phone services at TMT Conference; International Award for Development, Experience Transfer, and Innovation at TMT Conference Middle East. 2012: Distinctive award for Employment Nationalization; Mobile Operator of the Year by TMT Finance; Best iPhone app; " Best Mobile Service Provider in the fourth annual poll by Mobile Trend; Mid East Media Reach-Out Award by Datamatix International; The Best Provider of Telecom Services to Airports in Emerging Markets by Arabian Reach; Distinction Award for Information Security Control and Operating Project for the entire region by Symantec. 2013: Customer Services Excellence Award by Global Telecom Business; MENA performance excellence and telecom service delivery Award by COMMSMEA magazine; World-renowned ISO Certification for effectively handling customer complaints in call centers by Lloyd's Register Quality Assurance (LRQA); Procurement wins EIPM Award. 2014: 4 Mena Cristal awards for its print and outdoor Roaming campaigns by Mena Cristal event. 2015: Obtains OKAZ and EFFIE awards; Best wholesale operator for data and voice services in the MENA region by Telecoms World Middle East. 2016: " Multiple creativity awards on outstanding work on the Rayi7 Rayi7, Dawri Plus, and Laywagif campaigns by Dubai Lynx; Mega contact centers and "social media services" awards; Middle East Grand Prix at the Lorez Award Ceremony; Gold medal for "contact center" award and the silver medal for "Best use of Social Media in the Contact Center" award during Contact Center World Summit; Two awards for being the leader in the telecommunication industry by Effie Worldwide. 2017: " 7 awards (1 Grand Prix, 2 silver, 4 bronze) on creativity portrayed in advertising campaigns by Dubai Lynx International Festival of Creativity; Makkah excellence award for its strategic partnership; Excellence Award in Corporate Governance at the 2nd Annual Corporate Governance Conference by Alfaisal University. 2018: " SPEEDTEST award for the fastest mobile internet in the Kingdom; Golden Award for Mystc Campaign for the Effective Integration of the Channels Partnerships by the WARC Media Awards; Silver Award for the "Unveil Saudi" campaign for the Effective Use of Partnerships by the WARC Media Awards; Pioneer Marketing Award as Best Advertising Campaign for Digital Day. 2019: 6 Awards at Dubai Lynx 2019 Festival; King Salman honored stc for supporting the Founder's Equestrian Cup Festival; stc Academy won the Silver award in Technology by the Global Council of Corporate Universities (GCCU); 4 Awards by Effie Worldwide as a leader in the telecommunication industry; Won Makkah excellence award for its strategic partnership; Golden Award for "Mystc campaign" and with the Silver Award for "Unveil Saudi"; Won the Excellence Award in Corporate Governance by Al Faisal University. stc#19Expanding Footprints Across Four Countries Has Unlocked Growth Opportunities 19 2007 Kuwait 2009 Bahrain Kingdom of Saudi Arabia 2008 Malaysia Investor Presentation 2020 | stc group stc#20stc 5G Technology Investor Presentation 2020 | stc group 1st Launched Commercial Network stc is the first telecom company launching the fifth generation technology in the region commercially (KSA, Kuwait and Bahrain). ■ The fifth generation in the Kingdom was launched through broadband applications. Å 2,300 5G Towers The total number of 5G towers as end of 2019 is 2,300, and it is expected that the number of towers deployed will increase by the end of 2020 as demand grow for devices and applications supporting 5G technology. stc deals with three main international partners. IOT Technology The company also has the Internet of Things (IoT) through its cellular network applications. 5G technology in industrial applications is a future plan, as the company operates in several areas, including oil and gas, service agencies and various industries. Award Wining ■ stc won 3 international awards at the 5G MENA Summit. 20 20 stc#2112M Revenue Breakdown stc KSA SAR 54.37 bn Revenue* Channels by stc Other Operating Segments** Eliminations/ Adjustments SAR 40.26 bn SAR (15.93) bn SAR 17.41 bn SAR 12.63 bn Investor Presentation 2020 | stc group *As of 31 Dec. 2019 ** Other operating segments include: stc Kuwait, stc Bahrain, Solutions by stc, Intigral, Specialized by stc, Sapphire, Aqalat, Tawal and STC Pay. stc 21#22Key Credit Strengths 1 FTTH: Fiber-to-the-home technology. 22 Largest telecom operator in the MENA region ▷ Market cap of SAR 203.6 bn (USD 54 bn), and presence in 4 countries (as of 31-Dec-19) Experienced best-in-class management team ▸ Management team has significant experience across telecom products & markets and has a proven track record of delivery Extensive & developed telecommunications infrastructure Largest fixed line network in Saudi Arabia. Comprehensive cross-border network serving all operators in MENA. ▸ Regional pioneer in 5G & FTTH deployment¹ Sound business and growth strategy Given its strong financial position, stc is able to swiftly capitalize on growth opportunities via organic and inorganic growth 8 1 2 7|| stc || 3 6 LO Strong financial performance Consistent growth in EBITDA Margin (14% since 2016) Strong Government links and strategic importance 70% government ownership; national flagship company; significant contributor to non-oil GDP and employment. 5 4 Strong balance sheet and Healthy Cash Flow Well placed to gain access to efficient, substantial levels of debt to fund future investments if needed. Market leadership in Saudi Arabia (the largest market in the region) ▷ 71% market share by revenue, as of 31-Dec-19 Investor Presentation 2020 | stc group stc#23Share Information 23 23 Ownership Structure As of 31st Dec. 2019: Foreign Ownership 26% 4.3% 70% Public Investment Fund (PIF) Free Float Shares Share Information Close Price (SAR) Issued Shares (mn.) Free Float P/E Ratio EPS (12M) SAR Bn Market Capitalization as of 31st Dec. 2019 Among Major Saudi Listed Companies: 281.7 Investor Presentation 2020 | stc group 203.6 163.5 147.8 Ii…....... 84.2 72.0 71.3 64.9 51.9 49.5 SABIC stc Alrajhi NCB Bank Saudi Electric Riyad SABB SAMBA Maaden AIMarai Bank 31st December 2019 Float Adj Mkt Cap MSCI* (USD bn) Index Wt. (%) 101.8 RAJHI BANKING & INV 21.36 13.23% 2,000 SAUDI BASIC IND CORP AL 18.77 11.63% 30% NATIONAL COMM BANK 15.75 9.76% 19.10 SAUDI TELECOM CO 10.85 6.73% 5.33 Saudi Aramco 9.40 5.82% * As of 31st Dec 2019 stc#2424 24 Share Information stc won a (2300) MHz spectrum Q4, 2018 Fin. Results 1/1/2019 2/1/2019 3/1/2019 4/1/2019 Share Performance Vs. Telecom Index and TASI: Year End 2018 Fin. Results stc established an international Sukuk Program Q1, 2019 Fin. Results Q2, 2019 Fin. Results 5/1/2019 6/1/2019 7/1/2019 8/1/2019 stc ⚫TASI Telecom 9/1/2019 10/1/2019 11/1/2019 12/1/2019 Q3, 2019 Fin. Results 20.1% YTD 11.3% YTD 7.6% YTD Investor Presentation 2020 | stc group Market Capitalization of Telecom Sector As of 31st Dec. 2019: 88.64% 2.98% 8.38% ■Mobily STC Zain stc#25Submarine Cable Investment & Optimized Connectivity 25 25 Submarine Cables Investor Presentation 2020 | stc group # Cable System Name of Cable 99% stc has given a strategic importance to establish its international network, as about 99% of the total communication and data transmission is carried out through Submarine Cables. 1 SMW 5 South Asia Middle East #5 Western Europe 25 Years stc serves the Middle East and North Africa (MENA) region through its international network, which for more than 25 years is considered one of the leading networks in the region. 2 SMW4 South Asia Middle East #4 Western Europe 3 IMEWE EIG India Middle East Western Europe Europe India Getaway 400 Operators stc has signed with more than 400 operators all over the world in more than 100 countries. 90% 5 SMW3 South Asia Middle East #3 Western Europe 6 1-SAS 7 2-SAS 1- Saudi Arabia Sudan 2- Saudi Arabia Sudan Initiator Founder 8 EASSY Eastern Africa Submarine System 9 MENA Middle East North Africa Partnerships 10 FLAG Fiber link around Global International alliances 11 GBI Gulf Bridge International 12 JADI Jeddah Amman Damascus Istanbul New projects stc runs more than 90% of the volume of the internet traffic and data in the Kingdom and increases the data traffic to more than 3,500 TB per day. The company passes the data flows through the largest internet gateway in the region with capacity of 4,000 GB per second. stc is one of the initiators and founders of the fourth continental submarine cable, which extends for a distance of 20 thousand Km and connects 14 countries between Singapore and France. The company is also a founding member of IMEWE marine cable project linking India, Middle East and Western Europe. The Company is a founding member of EIG Europe India Getaway project that extend from the UK through Alexandria with landing station in Tark mountain, Libya and Morocco, and from Egypt to India with landing station in Saudi Arabia, Oman, Djibouti and UAE. The company has strategic partnership in new projects such as (EASSY) which extend along the East Coast as well as South Africa to reach Sudan linked to two cable systems SAS-1 and SAS-2. The latest achievements was the completion of a project of an international alliance of more than 14 international communication companies. The project of establishing the SMW "South Asia Middle East West Europe" (Capacity of 24 TB per second, 20,000 km long and connects 17 countries). stc is currently preparing to engage in a new project (Africa1 cable), which connects a number of African countries, with capacity of 36 TB per second and connect more than 12 countries in Africa and Europe through the Kingdom. stc#2626 Submarine Cable Investment & Optimized Connectivity Investor Presentation 2020 | stc group Europe India Gatewa FLAG Euroce UNITED KINGDOM PORTUGAL SPAIN MOROCCO HATLANTIC DCEAN BELGIUM GERMANY FRANCE ALGERIA Source: stc Wholesale Unit ITALY SeaMeWe-4 TUNISIA G Black Swe TURKEY CYPRUS SeaMeWe-3 MENA/GB FLAG Europe-Asia LIBYA EGYPT IRAQ IRAN JORDAN PAKISTAN <-SAUDI ARABIA SAS-2 SAS- SUDAN KENYA TANZANIA Dar Es Salaam MOZAMBIQUE O SOUTH AFRICA Tulary GBUMEN OMAN DG YEMEN SeaMeWe-4 IMEWE SeaMeWe-S 120163 SOMALIA CASSY Aralian Se SOUTH KOREA CHINA BANGLADESH INDIA MYANMAR VIETNAM Bay of THAILAND SeaMeWe-4 SeaMeWe-S 12016 FLAG Europe-Asia SeaMeWe-3 INDIAN OCEAN FLAG Europe-Asia PHILIPPINES Celvbes SINGAPORE MALAYSIA INDONESIA FEA AUSTRALIA Great Australian Bighe stc#27Healthy Organization - stc's OHI Success Story Continues with Hitting Target Again Investor Presentation 2020 | stc group 27 +8 stc OHI 2019 Entered Top Quartile +8 5-64-70-78 3339 47 55 2013 2014 2015 ☐ stc Unique Success Story continues in it's 7th year; Ranked in the first-quartile in KSA and the Region; First-Quartile compared to Telecom Industry. 2016 2017 2018 2019 stc#28IV. Strategy Overview stc#29stc Vision & Values 29 29 Vision: 66 We are a world-class digital leader providing innovative services and platforms to our customers in the MENA region. Values: } > F devotion drive dynamic " Investor Presentation 2020 | stc group stc#30stc DARE Strategy 30 digitize stc Digitally transform stc's operational capabilities accelerate Core Asset Performance Extract more value from our core assets and traditional segments dare reinvent Customer Experience At World-class Standards Redefine customer experience through personalization of every interaction expand Aggressively Scale And Scope Pursue concrete opportunities for growth Investor Presentation 2020 | stc group stc#31V. Business Overview stc#32stc Subsidiaries, Associates & Joint Ventures 32 Local Subsidiaries International Subsidiaries Associate Companies Arab Satellite Communications Channels by stc 100% stc Bahrain 100% 36.6% Organization Specialized by stc 100% stc Kuwait 51.8% Tawal (Tower Company) 100% stc Asia 100% Solutions by stc 100% stc Gulf Investment 100% Aqalat stc pay 100% 100% Telecom Commercial 100% Investment Co Ltd (TCIC) Virgin Mobile KSA 10% Joint Ventures Arab Submarine 50% Contact Center (CCC) 49% Binariang GSM Holding (BGSM) 25% Investor Presentation 2020 | stc group stc#3333 33 Tawal TAWAL Date of Incorporation: The subsidiary was founded in Q1 2018. Invested Capital: A total of SAR 2.5 billion. Subsidiary Objective: To be responsible for owning, constructing, operating, leasing and investing in the towers. stc Ownership: Since establishment, stc fully owns the subsidiary (100%). Subsidiary Operation: During Q1 2019, stc Towers Co. obtained the necessary operational licenses from the Communications and Information Technology Commission. Investor Presentation 2020 | stc group stc#34Specialized by stc 34 ☐ specialized by stc Investor Presentation 2020 | stc group Date of Incorporation: The subsidiary was founded in 2002. Invested Capital: A total of SAR 252 million. Subsidiary Objective: stc Specialized, is the only national licensed operator providing the business sector, and the governmental, industrial and commercial sectors with services and solutions addressing instant collective wireless communications. stc Ownership: stc fully owns the subsidiary (100%). Provided Services: TETRA Services Messaging Services Mobile Telephony Location-Based Services Alert Service Inmarsat Control Room Solutions stc#35Channels by stc (Formerly Sale Advanced - SALECO) 35 channels by stc Investor Presentation 2020 | stc group Date of Incorporation: The subsidiary was founded back in 2008 Invested Capital: A total of SAR 100 million Subsidiary Objective: Considered as the sales and distribution arm of stc Group, stc Channels is the leading and one of the largest telecom distribution companies in the Middle East with operations in Saudi Arabia, Bahrain and Oman; The company is a wholesaler and retailer of smart card services, communication equipment and computer services, the selling and reselling of all fixed and mobile telecommunications services and the maintenance and operation of commercial complexes. The company's head office is located in Saudi Arabia. stc Ownership: In December 2011, stc acquired a 60% stake of the subsidiary. In January 2017, the company acquired the remaining shares thereby owning 100% in the subsidiary. Digitization: • Reduced number of branches and distribution centers by 36%; • Increasing number of Self-services machines which increased the number of transactions by 380% in two years only; Digitized inventory management by using a digital order management system; . Launched digital platforms to boost online sales: MyStore, Mystc, electronic recharging...etc. 266 Stores 46,000 + Merchants 122+ Distribution Hubs 57,000 + POS transaction 3,200 + Agents stc#36Solutions by stc 36 Date of Incorporation: The subsidiary was founded in 2002. Invested Capital: solutions by stc Investor Presentation 2020 | stc group A total of SR 100 million. Subsidiary Objective: ■ To enable digital transformation to support government and private sector goals; spreading the benefits of Cloud computing to bring down the cost of progress and speed up the journey into the future; Through an extensive partner ecosystem, the subsidiary aim to deliver the most advanced end-to-end solutions, and managed services, for compute, storage and network, software and hardware. stc Ownership: stc fully owns the subsidiary (100%). Provided Services: Big Data Analytics and Smart Data Insights Cyber Security The Internet of Things CLOUD Managed Services System Integration stc#37AQALAT JUIMI: AQALAT Date of Incorporation: The subsidiary was founded in 2013. Invested Capital: A total of SAR 70 million. Subsidiary Objective: To develop and manage the company's properties in all parts of the Kingdom by benefiting from the capabilities of the Saudi Telecommunications Group and its applications by adopting the concept of smart development that is based on integrating technology in all projects and investments. stc Ownership: Since establishment, stc fully owns the subsidiary (100%). Projects Under Management: 1- Riyadh Project (Smart Square)* The project is located in the heart of Riyadh City in Al-Mursalat district, sitting on a 140,000 m2 land. In this project, AQALAT aspires to achieve its vision of future projects by enabling Smart Cities concepts. It is a mixed- use project that include residential, offices and commercial units. 2- Dammam Project (Smart Boulevard) The project is located in the southern part of the communications complex in Al-Rayan district, in the heart of Dammam City situated on a land of 380,000 m2. The project is a mixed-use project with the commercial part being the project's main concept. AQALAT aim this project to achieve its vision by enabling Smart Cities applications. * During Q4 2019, stc issued a separate SPV for the project allocating SAR 107mn of invested capital. 37 Riyadh Project Dammam Project Investor Presentation 2020 | stc group stc#38stc pay stc pay Investor Presentation 2020 | stc group Date of Incorporation: The subsidiary was founded in 2018. Invested Capital: A total of SAR 400 million. Subsidiary Objective: stc Pay is a digital secure wallet that empowers individuals to take full control of their finances at their fingertips- anytime, anywhere. Enabling them to send, receive, spend, and manage money simply through their phone. stc Ownership: Since establishment, stc fully owns the subsidiary (100%). Application Main Features: Purchases Allows you to pay for your purchase needs from shops and restaurants anytime, anywhere International Remittance With stc pay you can transfer funds. instantly to more than 525,000 Western Union agent locations worldwide Transfer money to mobile number You can send and receive money with family & friends from your contacts list! Bank Bills ATM 38 Transfer money to a local banks stc pay app allows you to transfer money to any local bank account in the Kingdom of Saudi Arabia stc Services You can now pay your bills or recharge your Sawa Directly, easily and safely through stc pay Cash withdrawal You can withdraw cash from your mobile account through any ANB Bank ATM stc#39Saudi Technology Ventures (VC Fund) 39 STV STV is an independent VC fund with a total capital of USD 500 is anchored by stc with access to its assets (e.g., network, channels, analytics, customer base, etc.) Careem unifonic Your Communication Code Vezeeta.com Co-leading a SAR 750 million (USD $200 million) investment in Careem 120+ Cities, 15+ million Riders, 1+ million Captains Leading a SAR 78.75 million (USD $21 million) investment round in unifonic 150+ Countries, 720+ Operators Vezeeta has managed 3 million bookings in the region Served 2.5 million consumers/patients Connected more than 10,000 doctors in Egypt, Saudi Arabia and Jordan تلفاز 11 Telfaz11 88 MRSOOL نون noon Academy أكادمي TRUKER ANY TRUCK ANY TIME ANYWHERE FIREFLY Leading an investment round of 33.75M SAR to accelerate the company's growth and scale-up plans A multimillion-dollar investment in Mrsool The leading Saudi on-demand delivery service $ 270 million in transactions in 2018 4 million registered users A CO-leading SAR 32.2 Million investment in noon Academy noon Academy is the leading EdTech platform in the Mena Region Brings innovation to trucking with On-Demand aggregation in Real-Time. 100% automated booking, real-time tracking of trucks, smart asset utilization, & cost efficiency. Delivers full screen, engaging media and measurement on rideshare vehicles and taxis. Creating a significant new ad format at scale. the scale of rideshare networks has created a large opportunity to provide digital out of home advertising with granular city-block and time targeting. Investor Presentation 2020 | stc group stc#40VI. Financial Highlights stc#41Financial Highlight Numbers are in SAR Billions 41 0.4% Revenue -6.0% 4.6% 14.11 54.37 13.60 51.96 13.39 13.21 13.27 -7.2% EBITDA -4.5% 7.2% 21.27 0.76 5.66 20.51 19.84 0.19 5.24 5.47 5.39 5.39 39.1% 0.18 5.00 38.2% 5.06 0.21 41.6% 40.8% 40.2% 37.1% 4.79 37.7% 12M-18 12M-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 12M-18 12M-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 IFRS Impact EBITDA Margin Operating Profit Net Profit -30.9% 1.9% 12.48 -27.8% 12.25 -22.4% -1.1% -12.2% 10.78 10.66 348 26.3% 3.48 3.28 3.33 25.6% 23.6% 24.5% 2.40 23.6% 18.1% 3.11 23.5% 2.85 2.75 2.75 23.0% 20.7% 20.9% 20.5% 2.41 19.5% 18.2% H H 19.6% Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Operating Margin Investor Presentation 2020 | stc group 12M-18 12M-19 12M-18 12M-19 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Net Profit Margin stc#42Financial Highlight cont. 42 50.65 52.67 Revenue +1.4% 50.66 51.96 54.37 19.29 EBITDA +2.0% 18.43 18.03 19.84 21.26 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Operating Profit +1.0% Net Profit +2.9% 12.25 12.48 10.78 10.66 11.86 10.02 10.99 9.26 9.95 8.90 Investor Presentation 2020 | stc group 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 stc#43Financial Highlight cont. 43 Performance: 17.27% 16.45% 15.93% 14.85% 9.86% 9.23% 8.74% 9.01% 2016 2017 Leverage: ROA ROE Investor Presentation 2020 | stc group 19 61 95% 54.37 52.67 51.96 50.66 38.17% 39.11% 36.38% 41 65% 34.23% 21 23.57% 21.69% 22.96% 35% 18.89% 19.77% 20.74% 19.62% 16.89% 1 5% 2018 2019 2016 2017 2018 2019 Revenue Net Margin Operating Margin EBITDA Margin 9.31 120% 9 ■ During the 12 months period of 2019, total debt increased by 117% due to the new established international sukuk program that was approved at the General Assembly meeting on 24th April 2019; 100% 5.88 80% 6 4.65 4.29 43.79% 60% ▪ This new sukuk program is denominated in US Dollars not exceeding the amount of USD 5,000 million; During the second quarter 2019, stc Sukuk Company Ltd. (SPV established for the purpose of issuing sukuk), completed the first sukuk issuance under the Sukuk Program for USD 1,250 million (equivalent to SR 4,688), at USD 200 thousand par value, annual yield of 3.89% and a maturity of ten years. 32.64% 3 40% 25.25% 21.61% 15.08% 9.82% 7.40% 6.54% 20% 7.87% 5.78% -4.29% 3.92% 0 0% 2016 2017 2018 2019 I Long-Term Debt Short-Term Debt Debt/ Assets Debt/Equity Debt/ EBITDA stc#44Financial Highlight cont. 44 Total Capital Expenditure (Capex): 12 30% 26% 10 20.91% 22% 8 19.03% 18.78% 6 15.67% CFO/ Capex Ratio: 20 Investor Presentation 2020 | stc group 2.40 2.01 1.96 1.83 14 1.80 18% 8 1.20 0.87 14% 4 2 18.38 15.92 19.13 9.92 0.60 10.02 7.94 9.76 11.37 2 10% 2016 2017 2018 2016 2017 2018 2019 -4 2019 0.00 Capex Capex/ Revenue CFO CFO/Capex Ratio Free Cash-Flow (EBITDA-Capex): Capex/ Depreciation & Amortization Ratio: 8.01 10.49 10.08 9.90 1.24 1.07 1.29 1.29 2016 2017 2018 2019 2016 2017 2018 2019 stc#4545 Financial Highlight cont. Dividends Distribution: ■ Recently announced, the company has approved its dividend policy for the next three years starting from the 4th quarter 2018 (as approved by the board of directors); ■ The objective of the dividend policy is to maintain a minimum level of dividend per share on quarterly basis. stc commits to pay a fixed minimum dividend of a SR 1 per share per quarter; ■ The company may consider paying additional dividends subject to the Board approval after assessment and determination of the Company's financial situation, outlook and capital expenditure requirements; ■ Additional dividends are likely to vary on quarterly basis depending on the company's performance. Price Vs. Yield Fluctuation: 124 115 106 97 88 79 70 1/1/2019 2/1/2019 3/1/2019 4/1/2019 5/1/2019 6/1/2019 7/1/2019 8/1/2019 9/1/2019 10/1/2019 Price Div Yield 11/1/2019 12/1/2019 Investor Presentation 2020 | stc group 89.89% 14 79.84% 74.21% 75.05% 90% 10.02 10 8.90 10.78 10.66 60% 9 30% 5.51% 5.83% 6.54% 3.93% 2 0% 2016 2017 2018 2019 Net Income Dividend Yeild Payout Ratio *Payout ratio taking into account the special dividend paid in 2018: 111.32% P/E Multiple for Q4: 4.90% P/E At 108.4 (Max)* 20.34 4.10% P/E At 91.4 (Min)** 17.15 3.30% P/E at closing price of Q4 (101.8) 19.10 *As of 01/10/2019 **As of 02/12/2019 2.50% stc#46Financial Highlight cont. 46 Stability of Dividend Distributions: Over the last five years, stc distributed a total of SAR 44 billion to investors through a stable dividend distribution in each quarter (SAR 1/share) which indicates a healthy cash flow supported by a strong and stable performance. 22 4 18 6 18 12 4 12 8 4 8 4 4 2015 2016 2017 2018 2019 ■Incremental ■Dividends/ share *Assuming 1000 shares were invested at the beginning Annualized Capital Gains: 10.16% 1 year 21.60% 2 years 11.54% 3 years 10.58% 4 years 8.75% 5 years Annualized Total Return* (Re-invested Dividends): 16.33%, Div: SAR 6/ share 17.62% Div: SAR 14/ share 15.15% Investor Presentation 2020 | stc group Div: SAR 22/ share 1 year (1/1/2019 - 1/1/2020) 3 years (1/1/2017 - 1/1/2020) 5 years (1/1/2015 - 1/1/2020) stc#47Sukuk Programs Issued by stc 47 Item Issuing Type Currency Program Amount International Sukuk Program International Sukuk (senior, unsecured sukuk) USD denominated USD 5 Bn Domestic Sukuk Program Domestic Sukuk SAR denominated SAR 5 Bn Investor Presentation 2020 | stc group Issuing Objective " Minimum Settlement Price at Maturity Price As of 31st Dec. 2019 Trading Market Issuing Date 1st Tranche Amount Number of Sukuk Issued Subscription Coverage Tenor Coupon Rate Payment Frequency Arrangers Rating ■ To support the execution of the company's strategy, future plans and diversify the sources of funding; To benefit from the features of international debt capital market in terms of liquidity, competitive pricing and diversification of investors' base. USD 200,000 At Par USD 106.82 (YTD 3.05%) Irish Stock Exchange plc trading as "Euronext Dublin" 13th May 2019 USD 1.250 bn 6,250 sak 3.5x 10 years (13th May 2029) 3.89% (Valued at Mid Swap of 2.54%+135 bps) Simi annual (first payment on 13th Nov 2019) HSBC, JPMorgan, Standard Chartered, Samba Capital, First Abu Dhabi Bank, and KFH Capital Moody's (A1), S&P (A-) To support the execution of the company's strategy, future plans and diversify the sources of funding. SAR 1,000,000 At Par N/A private placement 9th June 2014 SAR 2 bn 2,000 sak 2x 10 years (9th June 2024) 3M SAIBOR + 70 bps Quarterly J.P. Morgan Saudi Arabia Limited, NCB Capital Company and Standard Chartered Capital Saudi Arabia N/A stc#48Disclaimer Investor Presentation 2020 | stc group This presentation has been prepared as an informative guide that might assist interested parties in gaining an insight into the history and background of telecommunications within Saudi Arabia, as they relate to the Saudi Telecom Company (stc). Furthermore, it does not constitute an invitation or inducement to purchase or dispose of any securities, either in stc, or any companies in which stc has a financial interest. In addition, there may also be 'forward looking' statements included within the meaning of current securities laws and regulations. In this context, any opinions expressed within this document, regarding the company's potential future performance, should be viewed as being accurate at the time of preparation. However, cognizance should be taken of the fact that uncertainty may dictate that actual performance differs substantially from any views articulated herein. stc Head Office: Almursalat District, Imama Saud Road Toll Free (from inside KSA): 8001161100 Postal Address: P.O.Box 87912, Riyadh 11652 Saudi Arabia Investor Relations E-mail: [email protected] Website: https://www.stc.com.sa/wps/wcm/connect/e nglish/investor/overview stc#49Let's create the future together Thank you stc