STC drives Saudi stock market on first day

Saudi Telecommunications Company (STC) made its debut on the Saudi stock exchange, January 25, opening at SR225 and climbing to SR237.

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By  Massoud Derhally Published  January 26, 2003

Saudi Telecommunications Company (STC) made its debut on the Saudi stock exchange, January 25, opening at SR225 and climbing to SR237.

With close to 6.5 million (worth SR1.54 billion) shares of STC trading hands, the company was the market leader driving the index up 6% for the day.

The IPO of STC, which is the only telecoms company in the kingdom, is part of the government’s privatisation initiative. The government is a shareholder in STC and sold off 30% of STC to Saudi investors, a pension fund and general association for social insurance fund at SR170 a share.

The offering, worth a total of 15.3 billion riyals, was three times oversubscribed among private investors, the finance ministry said.

Bisher Bakheet, of Bakheet Financial Advisors (BFA) explained the 39.4% increase in the share price of STC, as a result of the company being “undervalued when you make the comparison vis-a-vis the rest of the Gulf and companies like Batelco, Qtel, Kuwaiti Telecom, you find that it was under priced,” Bakheet told Arabian Business. “The government wanted to make sure the stock goes up and the start of its privatisation is successful,” he added.

The debut on the Saudi market makes STC the largest capitalised company in Saudi Arabia and the Middle East, according to Bakheet, who estimated the price would increase in the next few years to reach SR350.

The stock traded as high 249 on the first day of trading.

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