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© Reuters. FILE PHOTO: A man passes the Saudi Telecom STC office in Riyadh, Saudi Arabia February 6, 2018. REUTERS/Faisal Al Nasser
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By Alexander Cornwell
DUBAI (Reuters) - Saudi Telecom said on Sunday its board had proposed increasing the company's share capital by 30 billion riyals ($8 billion), or 150%, driving the share price nearly 10% higher.
The Riyadh-listed company had earlier announced the proposed capital increase would involve issuing 30 billion new shares, with shareholders offered 1.5 new shares for each share owned.
That sent shares up as much as 9.8% to 110.2 riyals in early trade before retreating slightly to 107 riyals, up 6.6% from the start of trade on Sunday, according to Refinitiv data.
"This increase will undoubtedly lead to enhancing the liquidity in the company's shares and make them more accessible to wider group of investors," chairman of the board of directors Prince Mohammad bin Khalid Al-Abdullah Al-Faisal said.
In a statement, he said the company's so-called "dare" strategy is based on four main pillars: expanding in scale and scope, enriching the customer experience, enabling digital transformation, and accelerating monetisation of its assets.
Last year STC listed its unit Arabian Internet and Communications Services Co, raising $966.35 million.
Saudi Telecom said in statement the capital increase through retained earnings would support growth and expansion plans.
The company, in which Saudi Arabia's government holds a 64% stake through sovereign wealth fund the Public Investment Fund, also said the board had proposed trimming the dividend policy.
Under the proposal, the three-year dividend policy in place since the fourth quarter of 2021 would be cut from a 1 riyal ($0.26) payment per share per quarter to 0.40 riyal ($0.10).
That recommendation was in response to the proposed share capital increase, though the board would continue to consider additional dividend payments, the company said.
($1 = 3.7513 riyals)
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