Dear Shareholders, 2021
was a year full of extraordinary operational and financial achievements for
stc, in spite of
the
stiff working environment imposed by the COVID-19 crisis on the Kuwaiti telecommunications
market, which in turn demonstrated its resilience and flexibility in addressing economic
risks.
stc has also updated its business model and strategy to meet the continuous and massive
growth
in the digital communications services. Accordingly, stc is committed to
provide integrated
technical solutions and corporate database solutions that would enable as well as support
the
economic and social recovery process of the COVID-19 crisis. This would, in turn, enhance
stc’s
operational and financial performance, with the aspiration to achieving an outstanding
performance in the coming periods.
The recent amplified trend and global shift towards digital transformation have increased the
reliance on digital products and services while maintaining open communication channels
across
various business sectors worldwide. These significant events have led to a strategic shift
in
stc’s operating model and highlighted the importance of sustaining a strong
telecom
infrastructure capable of delivering vast digital solutions that enable businesses to
maintain
their operations remotely and cater to their customers’ needs. Since then and with the
spread of
COVID-19 pandemic, telecom services and digital solutions have become a critical component
of
the gradual road to normalcy with the initiatives taken by the Kuwaiti government, local
society
and businesses to adopt the digital technology.
Driven by the enormous need for adopting a digital culture, stc found itself
at the brim of a
rapidly changing world and was quick to realize the necessity of implementing its business
continuity plan to continue providing pioneering digital solutions and telecom services to
its
customers. stc’s digital transformation strategy that has been developed
and implemented over
the past few years was a key success factor that aided the company in its numerous
contributions
to the local economy and government initiatives adopted throughout and post COVID-19 crisis.
Recovery Strategy
Throughout the COVID-19 pandemic, the strategic steps we took to preserve
stc’s competitive and
empowering working culture were essential in getting us to where we are today. One of the
main
functions executed by stc to maintain its communication and operation lines
was implementing
our
three-level business continuity plan. This was based on adhering to three scenarios that
would
facilitate controlling the tough operating environment, protect stc’s
customers and employees
through enforcing social distancing and maintain all Company’s operations during the
lockdown
period via remote working.
In response to the gradual return to normal life plan executed by the Kuwaiti government,
stc
was
keen to refresh its corporate strategy to cope with the sudden economic and societal changes
in
addition to expediting the recovery process. In this regard, stc have
embraced the necessary
developments within its own digital transformation journey to instill a performance driven
culture that is built on efficiency. Hence, we have Our unique and smart strategy was the
main
driver of stc’s outstanding operational and financial performance supported
by the continuous
progress and strategic growth in the ICT market and B2B segment automated all the internal
and
external processes, which have proven to be resilient during the most difficult times.
stc has found an opportunity to enhance its operations, reputation and
market position in the
recovery period of COVID-19; whereby, it paved the way towards implementing an internal and
external transformation aimed at supporting the local society, economy and environment.
Shaping
stc’s recovery process by utilizing the optimization resources consumption,
mobility in
operations and environmental impact reduction has helped the Company to build a resilient
financial and operational recovery. This, in turn, has helped stc to
exploit the arising
business and economic opportunities to best execute its digital transformation strategy,
enrich
the customer experience and achieve its short, medium and long-term strategic goals.
The Digital Future and beyond
The recovery period is witnessing an upward shift towards digitization aimed at immunizing
enterprises against future catastrophic events. As a result, digitizing businesses has now
become a critical aspect in this digital age, especially after the transition that most
companies are experiencing to keep pace with the latest technological innovations. This, in
turn, represents a promising future for telecom operators to capitalize on their advanced
infrastructure to provide the next generation with a range of sophisticated, finest and
latest
comprehensive digital services and products that will strengthen the customer experience.
In view of that, stc continuously strives
to accelerate vertical transformation by
constructing advanced Business Support
Systems tailored to fulfil a wide range of
industry transformations and business model
requirements. This reflects our commitment
to fulfill the needs of startups, SMEs, and
larger enterprises by offering flexible,
scalable, guaranteed, and reliable solutions
that showcase the strength of our 5G
network and ICT integrated solutions. In 2021,
stc was able to provide a wealth of solutions
and services to corporate and individual
customers through the use of its 5G network.
This was supported by the ease of access
and fast speeds the technology possesses,
which opens the doors for the company to a
wide range potential opportunities in terms
of accessibility, innovation, and expanded
network services. Hence, the 5G revolution
has redefined the way we connect to the
world and has contributed in enhancing the
level of services and solutions we can offer
our customers.
In line with the digital transformation that shall play a great role in the future of
stc, the
Company has been focused on investing in its digital marketing arena since the onset of
COVID-19
pandemic, being one of the most critical aspects of uplifting Company’s leadership and
distinguishing it from its competitors. Accordingly, stc has set up a huge
transformation
journey to cater customer needs and enrich their experience, which was highlighted in
company’s
Corporate Strategy ‘AHEAD’. By leveraging on our experience and expertise, we will continue
to
set our sights moving forward on meeting the needs of our individual customers in a way that
empowers and enriches their lifestyle, while assisting our corporate customers in achieving
the
diverse objectives under their unique digital transformation strategies.
Financial Performance of 2021
Despite the stiff competition in the Kuwaiti telecom market post the recovery period of
COVID-19
crisis, stc was able to achieve good financial results that meet the
aspirations of the
company’s shareholders during the current circumstances and intense competition. Whereby,
stc’s
total revenue grew by 4.6% to reach KD 296.3 mn in 2021, compared to KD 283.2 mn last year.
This
increase is mainly attributed to the services and smart packages that are created to meet
most
of the individual sector’s needs, in addition to the growth in the enterprise sector through
the
implementation of the digital transformation strategy and providing integrated technical
solutions to the private and government sectors. stc also ensured pushing
its business into new
areas of sustainable growth through a series of innovative initiatives aimed at upgrading
the
operational efficiency and delivering the best in-class services and products that cater to
customers’ needs and meet their anticipations in light with COVID-19 crisis and its
consequences. This was accompanied with stc’s support to business
operations through its
advanced infrastructure with the best and widest coverage of the 5G network.
These outcomes resulted in the growth of EBITDA by 8.5% in 2021 compared to 2020. Whereby,
EBITDA
margin reached 27% during the year ended in 2021. As a result, the company’s net profit
during
the FY2021 recorded a growth of 40% to reach KD 44.9 million (earnings per share 90 fils)
with a
net profit margin of 15%. stc’s customer base reached approx. 2.0 million
customers at the end
of December 2021.
At stc, we are working on implementing a balanced cost-efficiency policy to
achieve the best
results and enhance profitability through adopting effective financial plans to direct our
operational and capital expenditures. Whereby, stc was able to structure
its capital
expenditures, especially after the negative impact of the current economic crisis, to ensure
liquidity of its cash flows under the current circumstances. stc’s
financial results throughout
FY2021 also reflected its competitiveness and strengthened its position as the second
largest
telecommunications company in terms of its market share of revenue in the Kuwait
telecommunications sector with a market share of approx. 36%.
Capturing Business opportunities
In addition to having several successful milestones that reflected our position as a
pioneering
telecom and digital solutions provider, this year, stc achieved a great
achievement embodied in
receiving the approval from the Communication and Information Technology Regulatory
Authority’s
(CITRA) to launch the first-of-itskind mobile virtual network operator (MNVO) license to
launch
Virgin Mobile Kuwait in partnership with Virgin Mobile Middle East & Africa. The license
will
permit Virgin Mobile Kuwait to operate using stc’s network, with
stc acting as
a Host Facilities
Based Provider “FBP” with Virgin Mobile Kuwait, offering prepaid plans to users, and making
it
the first virtual telecom service in the country.
ICT Expansion
In alignment with its corporate strategy of expanding its activities to shift from providing
traditional telecommunication services to a variety of digital services as well as advanced
integrated communications information solutions and advanced technical solutions,
stc announced
signing a binding offer to acquire 100% of the share capital of e-portal Holding Company and
its
subsidiaries. The acquisition of e-portal – one of the most prominent companies in the ICT
field, is aimed at strengthening stc’s internal ICT capabilities in line
with the recent rapid
global developments.
Driven by the key pillars of stc’s corporate strategy which focuses on
harnessing the Company’s
expertise to provide the most advanced digital solutions, merging the ICT division of
stc with
e-portal is considered an integral opportunity for both companies to expand their scope of
work
and share expertise between their teams. This would allow stc to exploit
the potential growth
opportunities arising in the enterprise sector, develop its scope and share the required
expertise necessary to support the digital transformation process in the State of Kuwait.
Accordingly, this acquisition will be the corner stone that would support
stc to provide the
necessary infrastructure in order to develop its ICT portfolio backed by our current
capabilities. Whereby, stc will continue to provide the best services,
products and solutions
to
exceed the expectations and requirements of our enterprise and corporate customers.
Human Capital Development
At stc, we continue to invest in our people, the cornerstone of our
operational excellence and
solid financial performance. stc ensures taking the necessary steps to
develop the capabilities
of its employees, empower them and support their determination to do their best at diverse
working environments and under different circumstances. Throughout 2021, and in line with
Company’s corporate strategy, stc was committed to offer its employees with
a flexible working
environment throughout 36 CEO Statement CEO Statement 37 the recovery period of COVID-19, to
maintain their wellbeing, safety and dedication. This was manifested in implementing the
structured rotation between employees within each department across all Company’s sectors
while
providing them with the latest training courses for a better progress. Devoting the
performance
culture across employees reflect stc’s keenness to take a proactive
position in leading the way
to build a robust and effective workforce that would contribute to the future generation. As
part of stc’s commitment to support the Kuwaiti employment program
«Kuwaitization» aimed at
increasing the indigenous participation rate in the private sector, we have placed the
Kuwaiti
employment replacement program as one of the main pillars of our human resources strategy.
Whereby, the Kuwaiti employees at stc reached 63% of company’s total
employees by the end of
2021.
Appreciation and Gratitude
In conclusion, I am pleased to express my gratitude and thank our valued customers for their
loyalty and confidence in stc, which has enabled us to achieve these
results despite the
difficult times we faced due to the COVID-19 crisis. Furthermore, I would like to thank the
Board of Directors, Executive Management, stc family members and partners
for their
contributions in achieving this remarkable operational performance through their outstanding
teamwork. I would also like to shed the light on their contributions to company’s success
during
these difficult and unprecedented times through their cooperation, enthusiasm, dedication
and
continued support. This, in turn, has paid off with the fact that stc is
now at the forefront
of
the most innovative digital communications services providers. Through your support and our
productivity in implementing company’s new strategy, transformation plan and investment
activities, we are confident that stc will be able to move forward in
achieving its future
goals.