The Dividend That Tells the Whole Story: STC, e&, and the Structural Logic of GCC Telecom in 2025

STC Group recorded its highest revenues in history for fiscal year 2025, reaching SAR 77.8 billion, a 2.5 percent increase on the prior year, while net profit rose 12.5 percent after excluding non-recurring items.

Gross profit reached SAR 37.7 billion, operating profit came in at SAR 14.4 billion, and EBITDA amounted to approximately SAR 24.5 billion, a 6.1 percent increase after stripping out non-recurring items.

The headline reported profit figure looked weaker, and the Saudi telecom sector analysis community spent considerable energy explaining why.

Analysts attributed the apparent drop to a high comparison base in 2024, when exceptional and non-recurring items had boosted profits to unusually elevated levels.

The underlying operating machine, in other words, was not deteriorating. It was normalising, which is a very different thing.

The quarterly trajectory reinforces that reading.

In Q2 2025, STC posted a 16 percent year-on-year net profit increase to SAR 3.8 billion, with revenue climbing 2.6 percent to SAR 19.45 billion.

EBITDA grew 7 percent to SAR 6.17 billion, lifting the EBITDA margin to 31.7 percent.

That margin expansion in a quarter of heavy capital expenditure is the kind of operational leverage that makes a multi-year dividend commitment credible rather than aspirational.

The STC Vision 2030 digital growth narrative is real, but it is worth being precise about what it actually means for the capital structure.

STC is no longer attempting to be only a traditional telecom carrier. Public disclosures increasingly frame the company as a digital enabler for the Kingdom's economy, aligned with Vision 2030, with the strategic shift directed toward enterprise solutions, cybersecurity, data centres, subsea connectivity, fintech, and platform services.

The infrastructure commitments are substantial.

STC's fibre footprint now passes 3.75 million homes, with peak speeds of 1 Gbps for residential customers and dedicated symmetric high-capacity connections for enterprise clients.

The Kingdom now ranks third globally in 5G download speed at 243.7 Mbps average per Ookla and ninth overall in mobile internet performance as of December 2025.

The STC valuation price target debate among analysts tends to circle around one central tension: how much of the digital services growth is genuinely incremental margin, and how much is revenue reclassification from the core connectivity business?

As of Q1 2025, STC holds approximately 44 percent of the Saudi mobile market and over 70 percent of fixed-line broadband.

That structural dominance in the core franchise is the foundation on which every adjacency play rests.

In 2024, STC secured a SAR 32.64 billion contract to develop and operate telecommunications infrastructure for a government entity over 15 years, projected to contribute approximately SAR 2.0 billion annually to revenue starting from the second half of 2026.

That single contract, largely unremarked in most Saudi telecom sector analysis, represents a meaningful long-duration revenue stream that changes the free cash flow calculus in ways that quarterly earnings releases do not fully capture.

Across the Gulf, the Etisalat e& earnings results tell a complementary but structurally distinct story.

e& delivered record financial performance in 2025, reporting consolidated revenues of AED 72.9 billion, an increase of 23.1 percent year-over-year, with a full year dividend per share of 90 fils that will increase to 95 fils in 2026.

The board approved a final dividend of 47 fils per share for the second half of 2025, bringing the full year 2025 dividend to 90 fils per share, compared with 83 fils in 2024.

The revenue growth rate at e& is substantially faster than at STC, but the composition of that growth matters enormously for how one reads the earnings quality.

The aggregate subscriber base reached 248 million, increasing 30.8 percent year-over-year, with revenue rising 15.1 percent to AED 19.4 billion in the most recent quarter, while EBITDA increased 16.5 percent with a healthy margin of 44.1 percent.

That 44 percent EBITDA margin is the number that separates e& from almost every comparable emerging market operator and explains why the Abu Dhabi-listed group trades at a premium to its regional peers.

The structural contrast between the two companies is, in many ways, the most interesting analytical observation in the GCC telecom sector right now. STC is a deeply embedded national infrastructure operator whose growth is tied to the pace and ambition of Vision 2030 capital deployment, a government programme that is simultaneously its largest customer and its most important regulatory counterparty.

Industry research estimates the Saudi mobile communications market at approximately $27 billion in 2025, with expectations to reach $37 billion by 2030, a compound annual growth rate of 6.64 percent.

e&, by contrast, is executing a more aggressive internationalisation strategy, with its subscriber base and revenue growth driven significantly by the consolidation of PPF Telecom and organic expansion across Africa and South Asia. The risk profiles are different. The dividend philosophies are similar. Both companies have made multi-year public commitments to progressive distributions, and both have the free cash flow generation to honour them.

The Saudi telecom sector is no longer a passive utility. It is the load-bearing layer beneath the smart city programmes, the Aramco Industry 4.0 build-out, the data centre and AI infrastructure surge, and the digital government services that have pushed the Kingdom to the top of the World Bank's GovTech Maturity Index in 2025.

That observation applies with equal force to the UAE, where e& occupies an analogous structural position. The GCC telecom story in 2025 is ultimately a story about what happens when governments decide that connectivity infrastructure is a strategic national asset and then price their regulatory frameworks accordingly. The dividend is not a distribution of surplus. It is the visible return on a regulated infrastructure monopoly that was always going to generate this kind of cash. The analysts who found that interesting found it early.

For informational and research purposes only. Not a solicitation or offer. Consult a licensed financial advisor before making any investment decision.

The Quiet Compounders: What Vodafone Qatar's Profit Surge and Zain Bahrain's AI Milestone Reveal About GCC Telecom's Structural Resilience