#1Investor Presentation Investor Relations 2020 || stc#2Index I. Macro Environment II. KSA Telecom Market Overview III. stc Profile IV. Strategy Overview V. Business Overview VI. Financial Highlights 3 8 13 27 30 39 Investor Presentation 2020 | stc group stc#3I. Macro Environment stc#4Investor Presentation 2020 | stc group Domestic Macroeconomic Indicators GDP & Government Budget: Data on Q1 2020, real GDP showed that the economy decreased by 4.5% Q-o-Q. During Q1 2020, the oil sector declined by 17% Y-o-Y (26% share of GDP), whilst non-oil GDP rose by 3% Y-o-Y (non-oil private sector GDP was up 2.9% and government sector was up by 2.9% Y-o-Y). Saudi Unemployment Rate (15+): GaStat's latest labor market release for Q1 2020 shows that unemployment declined to 11.8%, down from 12.0% in Q4 2019. Male unemployment increased to 5.6%, up from 4.9% in Q4 2019, and female unemployment declined to 28.2%, down from 30.8% in the past two quarters. Bn (SAR) 13.2% 32.7% 32.5% 31.0% 30.9% 31.1% 30.9% 31.7% 31.1% 30.8% 30.8% 34% 28.2% 12.8% 12.9% 12.9% 12.8% 12.8% 12.8% 28% 12.7% 15% 12.4% 12.5% 22% 12.3% 12.0% 16% 12.0% 12.0% 5% 11.6% 7.4% 7.5% 7.6% 7.6% 7.5% 11.8% 6.6% 6.6% 10% 6.0% 5.8% 5.6% 4.9% 696 -5% 11.2% 4% Q3 Q4 Q1 Q2 Q3 Q4 2017 2017 2018 2018 2018 2018 Q1 Q2 Q3 Q4 Q1 2019 2019 2019 2019 2020 Total Unemployment Rate Male Female 3,500 2,949 2,974 25% 3,000 2,760 2,800 2,836 2,517 2,582 2,454 2,419 2,500 2,000 1,500 1,000 500 N 0 -15% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Nominal GDP (SAR) Nominal GDP % (Change) Real GDP (% Change) *Source: GASTAT According to the 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 Consumer Price Index: The general consumer price index (CPI) registered a Y-o-Y increase of 1.9% in Q2 2020 and a decline of 1.0% compared to the previous quarter of 2020 (with communication sector registering a Y-o-Y decrease of 0.8% in Q1 2020). 2.5% 2.2%.9% 1.3% 1.0% 2.8% 2.1%2.1%2.2% 0.7% 0.5% 0.8% 1.1% 1.5% 0.2% 0.5% -0.8% -1.4% -21% 30-Jun-18 30-Sep-18 31-Dec-18 31-Mar-19 30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20 30-Jun-20 31-Dec-17 31-Mar-18 30-Sep-17 30-Jun-17 SAR Budget 2020 Projections 2021 2022 Total Revenue 833 839 863 Total Expenditure 1,020 990 955 Budget Deficit (187) (151) (92) 754 848 924 Debt 26% 28% 29% % GDP Government Reserves 346 280 265 *Source: Bloomberg *Source: MoF 31-Mar-16 30-Jun-16 30-Sep-16 31-Dec-16 31-Dec-15 31-Mar-17 4 stc#5Domestic Macroeconomic Indicators Cont. $ 160 Nominal GDP of World's Major Economies: (KSA ranked #18 out of the top largest 20 economies in 2019) $ 5,082 3,846 li 2,875 2,827 2,716 III Investor Presentation 2020 | stc group 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 4% 2.65% 2.49% 2.41% 0.80% 0% 1% 100 1,642 10 1,394 1,393 19.84 20.70 20.77 20.08 20.41 20.77 793 5 -2% 2013 2014 2015 2016 2017 2018 Saudi Non-Saudi Growth Rate Japan Germany India United France Korea, Australia Spain Kingdom Rep. Saudi Arabia *Source: The World Bank Brent Oil Performance (Monthly): Brent oil prices averaged $28/ barrel in Q2 2020, but oil price witnessed a recovery during the last couple of months as OPEC+ agreed to reduce production along with number of countries opened back their economies. Looking ahead, it is expected to see a recovery in prices going forward specially with an increase in oil demand during H2 2020. Foreigners in Saudi Labor Force: Latest General Organization for Social Insurance (GOSI) figures shows an increase in the rate of the expat exodus in Q1 and Q2 2020. In addition, data shows that despite the rise in expat workers during Q1, it is still expected a total of 1.2 million expat departure by year end. 6% 909 40 0 120 80 30-Jan-09 30-Jan-10 30-Jan-11 5 *Source: Bloomberg 30-Jan-12 30-Jan-13 30-Jan-14 30-Jan-15 30-Jan-16 30-Jan-17 30-Jan-18 30-Jan-19 30-Jan-20 (Mn) 8.8 8.31 8.19 7.91 7.71 8.4 7.40 8.0 7.13 6.90 4% 3.6% 2% 7.6 6.71 6.58 -0.9% 7.2 -1% 6.90 -2.0% -0.4% 6.8 1.1% 0.8% 2.5% 1.3% 1.5% 6.4 6.71 6.58 -1.3% 6.52 3.4% 3.6% 4.1% 2.7% 3.3% 6.44 6.67 6.65 -3% 6.0 *Source: GOSI 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 Q1-20 Q2-20 Male Female Growth -5% stc#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 (Q2 2020) 9 Macro Economy & Liquidity Regulatory Environment Saudi Aramco posts strong results in Q1 despite challenges, expects COVID-19 to weigh on revenue. Saudi Aramco completes acquisition of 70% stake in SABIC. Investor Presentation 2020 | stc group • Saudi Arabia: Hajj 2020 to be held with limited number of pilgrims. The decision was taken due to the ongoing threat from the coronavirus pandemic and to preserve "global public health," the Saudi Ministry of Hajj and Umrah said. Saudi Arabia VAT tax triples to 15 pct. The announcement came in mid-May following a wave of enormous cost-cutting programs to help counter the unprecedented economic fallout caused by the ongoing coronavirus pandemic. The unemployment rate among Saudis dropped to 11.8% in Q1 2020, compared to end of 2019, according to data from the Saudi General Authority for Statistics. CITC has announced it will lower the cap on termination rates for local mobile and fixed calls. Local mobile termination rates (MTR) will be reduced by 60% to SAR 0.022, from SAR 0.055 in 2017. Fixed termination rates (FTR) will be also cut by 48% to SAR 0.011, from SAR 0.021 in 2017. CITC plans to enhance the regulatory environment for cell-on-wheels (COW) or what is known as mobile cellular sites and towers. The step aims to cut operating expenses (OPEX) and capital expenditure (CAPEX), maximize efficiency, as well as cutting maintenance costs. CITC Open Access agreement came into effect during Q2 2020. Government Initiatives • • As part of its role in activating monetary policy tools and preserving financial stability, the Saudi Arabian Monetary Authority (SAMA) has decided to inject SAR 50 billion into the banking sector to enhance banking liquidity and enable banks to continue providing credit facilities for the private sector. Saudi Arabia has extended the validity of all tourist visas which had expired during the period of suspension of international flights. Saudi Arabia's Government launches measures to support industrial & mining sectors in response to COVID-19 pandemic. Saudi King Salman issued a royal decree on extending some government initiatives to mitigate the fallout of the coronavirus pandemic on economic activities and the private sector. These initiatives focus on supporting Saudi employees, suspending penalties, deferring collection of fees, exemptions and tax returns. 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% 180% 34.00% 53 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 Households Penetration (%) Post-paid Subcribers Pre-paid subscribers Mobile Panetration (%) 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 I ADSL Subscribers Leased lines+FTTH Houshold Paneteration stc#11KSA Internet Usage Internet Use Based on Device Perspective As of Jan 2020: # on Total Number of Active Internet Users: 32.23 mn Internet Users As a Percentage of Total Population: 93% Mobile Subscriptions By Type As of Jan 2020: * Source: Hootsuite 11 AA AA Total Number of Mobile Connections: 40.20 mn Mobile Connections As a Percentage of Total Population: 116% # on Investor Presentation 2020 | stc group Total Number of Active Mobile Internet Users: 30.46 Mobile Internet Users As a Percentage of Total Population: 93% mn BA BA Percentage of Mobile Connections That are Pre- paid: 72% Percentage of Mobile Connections That are Post- paid: 28% Percentage of Mobile Connections That are Broadband: 88%#12stc Internet Performance 12 4G Mobile Download Speed: (Mbps) 80 60 (Mbps) 60 60 40 40 40 72.8 52.7 45.4 51.4 20 35.4 37.2 20 37.9 33.0 0 Ookla ■Q3-Q4 2018 Q1-Q2 2019 ■Q3-Q4 2019 ■Q1-Q2 2020 4G Mobile Upload Speed: (Mbps) 30 20 0 (Mbps) 20 Meqyas ■■■ Q1 2019 Q2 2019 ■Q3 2019 ■ Q4 2019 10 17.4 17.1 10 20.0 21.5 14.3 14.3 16.3 17.0 0 Ookla ■Q3-Q4 2018 Q1-Q2 2019 Q3-Q4 2019 ■Q1-Q2 2020 0 Investor Presentation 2020 | stc group Meqyas ■■Q1 2019 Q2 2019 ■Q3 2019 ■ Q4 2019 stc#13We are looking forward III. stc Company Profile * stc is ranked as the 2nd most valuable brand in Saudi Arabia with a total value of SAR 30.09 bn (USD 8.024 bn) as of April 2020 stc#14stc at Glance (Q2 2020) 14 Balance Sheet SAR GCC Ranking** Total Assets 119.51 bn #2 Total Equity 62.92 bn #1 Total Liabilities 55.37 bn #3 Debt/Equity 14.41% Debt/ Assets 7.59% Dividends Paid (Q2 2020) Dividend Yield Q2 2020* SAR 1/ share 4.04% Income Statement SAR GCC Ranking** Revenue 14.92 bn #1 Operating Profit 3.06 bn #2 Net Income 2.72 bn #1 EPS 1.36 #1 *Based on 30/6/2020 closing price **Among GCC biggest Telecom Operators (Zain Group, Etisalat UAE and Ooredoo Qatar) based on 3M 2020 numbers ***As of April 2020, Brand Finance A- Standard & Poor's A1 Moody's SAR30.09 bn 2nd Most valuable Brand (AA+)*** Investor Presentation 2020 | stc group #1 in KSA in Mobile & Fixed Broadband subscribers Total stc group employees 19K & Total stc KSA employees 13.6K Length of deployed fiber optic cables 217K KM #1 in KSA in Post-paid & Pre-paid subscribers #1 in KSA in Fixed Telephony subscribers stc#15Board of Directors 15 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#16Major 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 SAR 15 billion to SAR 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 2016 SAR 5 billion Sukuk program offering (1st series was SAR 2 billion). Share increase in VIVA Kuwait up to 51.8% and Sale Co. to 100%. 16 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 3rd 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. 2015 2016-2017 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#17Wining Awards 17 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#18Expanding Footprints Across Four Countries Has Unlocked Growth Opportunities 18 2007 Kuwait 2009 Bahrain Kingdom of Saudi Arabia 2008 Malaysia Investor Presentation 2020 | stc group stc#19stc 5G Technology 19 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. 3,000 5G Towers Total number of 5G towers as end of 2019 reached 2,300. stc KSA currently has more than 3,000 towers out of 7,000 towers in the Kingdom. It is expected that the number of towers deployed will increase as demand grow for devices and applications supporting 5G technology. stc deals with various international suppliers for providing 5G equipment. IOT Technology The company will benefit from Internet of Things (IoT) enabled by 5G technology. It will not only enhance operational efficiencies and user experiences but provide new revenue opportunities. 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 group won 3 international awards at the 5G MENA Summit. stc#20Y-o-Y Revenue Breakdown Q2 2019 stc KSA SAR 13.60 bn Revenue SAR 10.34 bn Q2 2020 stc KSA Channels by stc SAR 4.23 bn SAR 14.92 bn Revenue Other Operating Segments* SAR 3.05 bn Eliminations/Adjustments SAR (4.01) bn *Other operating segments include: stc Kuwait, stc Bahrain, Solutions by stc, Intigral, Specialized by stc, Aqalat, Tawal and stcpay. 20 Channels by stc SAR 10.28 bn -------------- Investor Presentation 2020 | stc group SAR 4.97 bn Other Operating Segments* SAR 3.78 bn Eliminations/ Adjustments SAR (4.11) bn stc#21Key Credit Strengths 1 FTTH: Fiber-to-the-home technology. 21 Largest telecom operator in the MENA region ▸ Market cap of SAR 198.0 bn (USD 52.60 bn), and presence in 4 countries (as of 30-Jun-2020) 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) ▷ 73% market share by revenue, as of 30-Jun-20 Investor Presentation 2020 | stc group stc#22Share Information 22 22 Ownership Structure As of 30th Jun. 2020: Foreign Ownership 24.57% 5.43% 70.00% Public Investment Fund (PIF) Free Float Shares Share Information Close Price (SAR) Issued Shares (mn.) Free Float P/E Ratio EPS (Q2) SAR Bn Market Capitalization As of 30th Jun. 2020 Among Major Saudi Listed Companies : 264.3 198.0 141.5 111.8 Investor Presentation 2020 | stc group 65.1 53.7 51.8 50.6 46.8 40.7 SABIC stc Al Rajhi NCB Saudi Samba Electric Al Marai Riyad Bank SABB Maaden 30th June 2020 MSCI* Float Adj Mkt Cap (USD bn) Index Wt. (%) 99.00 SAUDI BASIC IND CORP AL 21.14 14.02% 2,000 AL RAJHI BANKING & INV 18.84 12.26% 30% Saudi Telecom Co 15.84 10.51% 18.20 NATIONAL COMM BANK 14.60 9.69% 1.36 Saudi Aramco 10.40 6.90% * As of 30th Jun. 2020 stc#2323 23 Share Information Investor Presentation 2020 | stc group Share Performance Vs. Telecom and TASI Index: Market Capitalization of Telecom Sector As of 30th Jun. 2020: Vodafone Egypt Acquisition MOU Announcement on Results of the Extraordinary General Assembly meeting 18% 14% 10% 6% 2% -2% 4/1/2020 4/7/2020 4/13/2020 4/19/2020 3M 2020 Financial Results Announcement 4/25/2020 5/1/2020 5/7/2020 -TASI 5/13/2020 5/19/2020 Telecom 5/25/2020 Announcement of Q1 2020 interim dividends Covid-19 Response 5/31/2020 stc 6/6/2020 6/12/2020 6/18/2020 6/24/2020 6/30/2020 10.0% YTD 11.3% YTD 10.0% YTD 9.10% 2.94% 87.96% ■stc Mobily Zain stc#24Submarine Cable Investment & Optimized Connectivity 24 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#2525 25 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 GBUMEN OMAN DG YEMEN SeaMeWe-4 IMEWE SeaMeWe-S 120163 SOMALIA CASSY Tulary 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#26Healthy Organization - stc's OHI Success Story Continues with Hitting Target Again Investor Presentation 2020 | stc group 26 +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#27IV. Strategy Overview stc#28stc Vision & Values 28 Vision: 66 We are a world-class digital leader providing innovative services and platforms to our customers in the MENA region. Values: } devotion F drive dynamic " Investor Presentation 2020 | stc group stc#29stc DARE Strategy 29 29 digitize stc Digitally transform stc's operational capabilities accelerate Core Asset Performance Extract more value from our core assets and traditional segments dare einvent 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#30V. Business Overview stc#31stc Subsidiaries, Associates & Joint Ventures 31 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% Virgin Mobile KSA 10% stc Asia 100% Oger Telecom Limited 35% Solutions by stc 100% stc Gulf Investment 100% Aqalat stc pay 100% 100% Telecom Commercial 100% Investment Co Ltd (TCIC) Joint Ventures Arab Submarine 50% Contact Center (CCC) 49% Binariang GSM Holding (BGSM) 25% Investor Presentation 2020 | stc group stc#32Tawal TAWAL Investor Presentation 2020 | stc group 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. 32 32 stc#3333 33 Specialized by stc ☐ 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#34Channels by stc (Formerly Sale Advanced - SALECO) 34 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#35Solutions by stc 35 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#36AQALAT 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. 36 Riyadh Project Dammam Project Investor Presentation 2020 | stc group stc#37stc 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 37 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#38Saudi Technology Ventures (VC Fund) 38 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.) unifonic Your Communication Code Vezeeta.com 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 أكادمى 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#39VI. Financial Highlights stc#40Financial Highlight Numbers are in SAR Billions 40 13.60 14.11 Revenue 9.7% 7.1% 14.92 13.93 13.26 6.9% 28.86 26.99 5.66 5.24 -5.5% 41.6% 4.99 40.2% EBITDA -3.3% 0.2% 11.04 10.67 5.33 5.34 40.9% 37.0% 38.2% 37.6% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 6M 2019 6M 2020 Q2-19 Q3-19 37.1% Q4-19 Q1-20 Q2-20 EBITDA Margin 6M 2019 6M 2020 Operating Profit Net Profit -11.9% 1.9% 3.48 3.33 6.75 3.00 3.06 25.0% 2.40 25.6% 24.5% 23.6% 18.1% 21.6% -10.2% -4.3% -6.5% 2.91 2.85 2.75 2.72 6.07 20.9% 20.9% 19.5% 2.32 18.3% 21.0% 17.5% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Operating Margin 6M 2019 6M 2020 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Net Profit Margin 0.7% 5.60 5.64 20.7% H 19.5% 6M 2019 6M 2020 Investor Presentation 2020 | stc group stc#41Financial Highlight cont. 41 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#42Financial Highlight cont. 42 Performance: Investor Presentation 2020 | stc group 61 95% 17.92% 54.37 17.27% 51.96 16.45% 50.66 15.93% 38.17% 39.11% 36.38% 36.98% 41 65% 9.86% 9.23% 9.01% 9.43% 28.86 2017 2018 21 23.57% 21.69% 22.96% 35% 21.02% 19.77% 20.74% 19.62% 19.54% 1 5% 2019 6M 2020 2017 2018 2019 6M 2020 Revenue ROA ROE Net Margin Operating Margin EBITDA Margin Leverage: ■ Total borrowings paid during the six months period ended 30 June 2020 amounted SAR 202 million (the six months period ended 30 June 2019 amounted SAR 281 million). Total borrowings received during the six months period ended 30 June 2020 amounted SAR 20 million (the six months period ended 30 June 2019 amounted SAR 5,300 million). 9.31 9.07 80% 9 70% 43.79% 60% 42.47% 6 50% 4.65 4.29 40% 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; 25.25% 15.08% 14.41% 30% 3 7.40% 21.61% 6.54% 20% 10% 7.87% 7.59% ▪ This new sukuk program is denominated in US Dollars not exceeding the amount of USD 5,000 million; 4.29% 3.92% 0 0% 2017 2018 2019 6M 2020 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. I Long-Term Debt Short-Term Debt Debt/Assets Debt/Equity Debt/ EBITDA stc#43Financial Highlight cont. 43 Total Capital Expenditure (Capex): 12 CFO/ Capex Ratio: 25% Investor Presentation 2020 | stc group 10 20% 20.91% 8 18.78% 16 15.67% 25 2.01 1.96 20 2.40 4 2 7.94 9.76 11.37 15% 15 13.28% 10% 10 5% 3.83 1.52 1.80 1.20 0.87 5.84 0.60 5 0 0% 15.92 19.13 9.92 2017 2018 2019 6M 2020 0 0.00 2017 Capex Capex/ Revenue 2018 CFO 2019 CFO/Capex Ratio 6M 2020 Free Cash-Flow (EBITDA-Capex): III 10.49 10.08 9.90 2017 Capex/ Depreciation & Amortization Ratio: 6.84 1.07 1.29 1.29 0.83 2018 2019 6M 2020 2017 2018 2019 6M 2020 stc#4444 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: 110 102 94 86 78 70 1-Apr-20 10-Apr-20 19-Apr-20 28-Apr-20 7-May-20 16-May-20 25-May-20 Price Div yeild 3-Jun-20 12-Jun-20 21-Jun-20 30-Jun-20 Investor Presentation 2020 | stc group 12 10.78 10.66 10.02 90% 10 79.84% 74.21% 75.05% 8 73.53% 60% 5.64 4 6 30% 2 5.83% 6.54% 3.93% 4.04% 0 0% 2017 2018 2019 6M 2020 I Net Income Dividend Yeild Payout Ratio *Payout ratio taking into account the special dividend paid in 2018: 111.32% P/E Multiple for Q2: 6.00% 5.20% P/E At 100.0 (Max)* 18.38 4.40% P/E At 88.2 (Min)** 16.21 3.60% P/E at closing price of Q2 (99.0) 18.20 2.80% *As of 01/06/2020 2.00% ** As of 06/05/2020 stc#45Financial Highlight cont. 45 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#46Sukuk Programs Issued by stc 46 Investor Presentation 2020 | stc group Item Issuing Type Currency Program Amount Issuing Objective Minimum Settlement Price at Maturity Price As of 30th Jun. 2020 Trading Market Issuing Date 1st Tranche Amount Number of Sukuk Issued Subscription Coverage Tenor Coupon Rate Payment Frequency Arrangers Rating International Sukuk Program International Sukuk (senior, unsecured sukuk) USD denominated USD 5 Bn 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 110.5 (YTD 2.6%) 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-) Domestic Sukuk Program Domestic Sukuk SAR denominated SAR 5 Bn ■ 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#47Disclaimer 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#48Let's create the future together Thank you stc