Kuwait Telecomunications Company K.S.C.PInvestors Presentation

Kuwait Telecommunications Company K.S.C.P.

FY- 2020

Page | 2

Table of content

stc’s History in Brief 3

Key Milestones 4

Vision, Mission & Values 5

Shareholder’s Structure 6

Population & Penetration 7

Competitive Strengths 8

Our 2020 Strategy 9

Market Share 10

Financial Results 11

Cash Dividends 15

Stock Performance 16

Appendix 18

Appendix 19

Page | 3Page | 3

Kuwait Telecommunications Company (stc) is a Kuwaiti shareholdingorganization fused as per Amiri Decree No. 187 on 22 July, 2008, to workand deal with the third GSM versatile system in Kuwait according toLaw No. 2 of 2007. Appropriately, stc propelled its tasks in December2008 and the shares of the company were listed on Boursa Kuwait on 14December 2014.

It is a world-class computerized pioneer giving imaginativeadministrations and stages to clients and empowering the advancedchange in Kuwait, and is an auxiliary of stc Group.

stc has quickly arrived at a pioneer position in the market through itsclient and representative driven system. Throughout a decade ofexcellence in service, transparency and proactivity, and as the fastest-growing and most advanced telecom operator with the largest 5Gnetwork in Kuwait.

Since 2008, stc’s accomplishments have transformed the Kuwaititelecom market, including changing wireless pricing models and fees.In 2016, stc entered the International Telecommunications Union (ITU).

In 2018, stc became the first network to offer its customers 5G serviceand to enable enterprises in mobility.

stc has invested in building the most advanced network, and proudlyowns the largest number of sites covered by the 5G service in Kuwait.

On 6 May 2019, stc has acquired 100% of the share capital of theleading Internet Service Provider in Kuwait – Solutions by stc, formerlyknown as “Qualitynet”.

stc’s History in Brief

Moving the World

wardfor

Page | 4

Key Milestones

Launches commercially

stc abolishes incoming calls fees and other operators follow

First Operator in the world to have all IP network

stc introduces high speed Mobile Broadband in Kuwait

stc launches innovative prepaid offerings and acquires 500K customers in one year

Expands retail network and launches joint promotions with retailers.

stc wins CommsMEA Best Telecom Finance Deal

First to introduce Apple iPhone

Strategic partnership with Manchester United

First to introduce newest HSPA+ (42.2 Mbps) Broadband network

stc launches Elite Program for loyal, VIP and high value customers

stc turns into profitability during the fourth year of operation.

stc starts deployment of 4G LTE network

Partnership with Real Madrid

Listing on KSE

Retained earnings turned to be positive

Ranked 2nd in terms of revenue and subscriber market share

Completes nationwide 4G LTE Coverage and awarded Best LTE deployment in the Middle East

Number portability and stc acquires majority of ported numbers between operators

The first in Kuwait to introduce the all-new (VoLTE) technology

stc branches network reached a total of 70 across Kuwait

First to introduce the LTE Advanced

Best Telecom Co. by Arabian Business

Member of (ITU )

Leading Corporate for IR

Business Innovation in Risk Management

Best Network Development Award at 5G MENA

stc Reap Three Accolades at ME Call Centre Awards

Leading for Investor Relations in Kuwait 2018 - third in the MEA

Wins "Advertising Creativity Award" at Arab Media Forum

VIP Customer Service Award

Won the "2017 Speedtest Award“ by Ooklacompany

Excellence in Governance Award

Won the “Best Operator Network” from telecom world Middle East

5G Innovator of the Year Awards

stc wins Sharjah Gulf Top 10 Business Award 2018

Acquisition of Qualitynet

Launched 5G services in June 2019

stc and Huawei sign MOU to develop 5G services

Launches the new brand stc

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

stc Group was ranked 1s in the MENA region, by Forbe’s "Global 2000" list

Ranked 1st as a Leader for Investor Relations in Kuwait

stc rebrands Qualitynet to Solutions by stc

stc signs an AoA for establishing Connect Arabia W.L.L. with Mobility Telecom Kuwait Limited (BVI)

Page | 5

Vision, Mission & Values

VisionA world-class digital leader providing innovative services and platforms to

our customers and enable the digital transformation in Kuwait.

stc is keen to present its customers with numerous telecommunications

opportunities with the goal of boosting existing relationships and providing

customers with the best experience around the clock which will, in turn,

earn us their trust.

MissionOur Strategy outlines the key pillars to expand stc’s topline, create value

with greater efficiencies, while preparing the company for the future:

End to end digital experience

Enhance core performance

Reinvent customer experience at world class standards

Leveraging on group synergies

Values

Page | 6

Shareholders' Structure

Public Share holders consistsof companies, portfolios,funds and individuals.

The public shareholders aremix between local, regionaland international investors.

Independent Board memberelected during the AGM on16th of May 2016.

stc KSA, the leading regionaltelecom operator, won the bid forthird mobile license in November2007, and paid USD 980 million forthe license.

stc has a management agreementwith stc Group.

stc increased its ownershippercentage from 26% to 51.8%through a VTO at the beginning of2016.

Currently, 4 out of 7 boardmembers are representative of stcgroup.

The Kuwaiti government holds24% of stc’ capital throughdifferent governmentalentities.

Currently 2 out of 7 boardmembers are representing theKuwaiti government bodies.

52% 24% 24%

Saudi TelecomKuwaiti Governmental

EntitiesPublic Shareholders

Page | 7

Kuwait Population (Million) & Penetration Rate (%)

Population & Penetration

Source: Population as per PACI Kuwait, Penetration Rate as per ITU till 2018, while 2019 till December 2020 are calculated by stc IR

Current Population 4.7 Million

Current Penetration 166%

3.4 3.5 3.6 3.7 3.8 3.9 4.1 4.2 4.4 4.5 4.6 4.8 4.757%93%

133%

155% 152%

182%

205% 200% 194%176% 172% 171% 166%

0%

50%

100%

150%

200%

250%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Page | 8

Competitive Strengths

Relation-ship with

stc group

stc (the largest telecom company in the region) will continue to be a major shareholder and will continue tobenefit from being a member of stc group. Through this relationship, stc has access to technical support,industry best practice for provision of telecom services, as well as stronger purchasing power benefiting fromjoint procurement and coordination of regional initiatives.

Extensive distribution

channels

stc has an extensive, well-developed and increasingly sophisticated direct and indirect distribution networkcovering all parts of Kuwait. stc Inaugurates New Branches to its network amounting to a total of 93 branchesacross Kuwait

Modern & Scalable Network

stc benefits from having a modern and efficient network that is adaptable to emerging technologies. stc hasthe widest 5G service coverage in Kuwait reaching 100% of populated areas as it was also the first company inthe Middle East to launch the testing process of 5G service.

Strong Branding

Since its launch in 2008, stc has built a valuable brand associated with excellence. By the end of 2019, stc hasrebranded with the intention to unify its brand with stc Group’s companies to reflect its plan in creating newopportunities in addition to enabling the digital transformation through implementing stc Group’s 2020 newdigital transformation strategy. Changing the brand name to “stc” positions the company among the mostvaluable brands in the Middle East.

Strong Growth & Results

stc has a proven track record of successfully providing high-quality product and services to its customers.stc’s revenue market share reached 35%.

Customer-Centric Strategy

stc follows a customer-centric strategy, which entails focusing on the communication needs of customers andproviding differentiated service. This strategy positions stc as the only telecom provider in Kuwait that targetsenhancing customer experience.

Page | 9Page | 9

Our 2020 Strategy “AHEAD”

…..aims to position stc at the center of Kuwait’s digital ambitions and is built upon 5 strategic pillars

Anticipate Consumer

Needs

HarnessEnterprise

Opportunities

Excel Digital

Experience

Accelerate Enabling

Capabilities

Devote performance

Culture

I II III IV V

Value growth strategy in the core Innovative service offering venturing in new

services beyond the core End to end digital experience

Technology as the enabler of digital transformation Corporate functions to enable the development of a

sustainable business model Leveraging stc Group capabilities

Page | 10

Market Share

Total Subscriber Base in Kuwait (Mn) Telecom Sector Revenues in Kuwait (KWD Mn)

27%

Subscriber Market ShareDecember - 2020

35%

Revenue Market Share FY - 2020

31%

EBITDA Market Share FY - 2020

32%

Net Profit Market Share FY - 2020

5.25.9

6.41

7.6 7.7 7.7 7.2 7.1 7.4

7.0

1.1 1.6 2.2 2.4 2.5 2.4 2.3 2.2 2.0 1.9

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Subscribers in kuwait (Mn) stc Subcribers (Mn)

684 690 717 753 788 799 841 860 859

814

94 137 182 239 277 279 288 288 294 283

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total Telecom Revenue in Kuwait (KWD Mn) stc's Revenue (KWD Mn)

Page | 11

Full Year ended 31 December 2020

stc’s revenue declined by 3.6% during the year

ended 31 December 2020 to reach KD 283.2 mn

as compared to KD 293.7 mn recorded in 2019.

EBITDA recorded a decline of 12.4% to reach

KD 73.4 mn during the year ended 31 December

2020 compared to KD 83.8 mn in 2019.

EBITDA Margin reached 26% during the year

ended 31 December 2020 compared to 29% in

2019.

Net profit reached KD 32.1 mn (earning per

share 64 fils) during the year ended 31

December 2020 as compared to KD 43.6 mn

(earning per share 87 fils) recorded in 2019.

Shareholders' equity reached KD 222.2 mn at

the end of December 2020 with a growth of

3.2% compared to KD 215.4 mn at the end of

December 2019. stc’s customer base reached

1.9 mn by the end of December 2020.

The Board of Directors has recommended

distributing cash dividends of 60 fils among

the shareholders representing 60% of the

share’s nominal value for the year ended 2020,

subject to the approval of the Ordinary

General Assembly of the company.

Financial Results

Key Figures & Ratios FY-2019 FY-2020 Change

Subscribers (Mn) 2.0 1.9 -6.2%

Revenue (KD Mn) 293.7 283.2 -3.6%

EBITDA 83.8 73.4 -12.4%

EBITDA Margin (%) 29% 26% -2.6pt.

Net Profit (KD Mn) 43.6 32.1 -26.4%

Net Profit Margin (%) 15% 11% -3.5pt.

EPS (Fils) 87 64 26.4%

Equity (KD Mn) 215.4 222.2 3.2%

BVPS (Fils) 431 445 3.2%

2.0 1.9

Dec-2019 Dec-2020

Subscribers (Mn)

293.7

283.2

FY-2019 FY-2020

Revenue (KD Mn)

43.6

32.1

FY-2019 FY-2020

Net Profit (KD Mn)

Page | 12

Financial Results - Highlights

*FY 2017 and 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach. .

Annual 2020

Revenue (KD Million)

Net Profit (KD Million)CAPEX (KD Million)

EBITDA (KD Million)

277279

288 288

293.7

283.2

2015 2016 2017 2018 2019 2020

131 131.9

71.1 77.8 83.8 73.4

47% 47%

25% 27% 29%26%

0%

10%

20%

30%

40%

50%

2015 2016 2017 2018 2019 2020

0

20

40

60

80

100

120

140

EBITDA (KD Million) EBITDA Margin (%)

39 38 33 31

59

26

14% 14%12% 11%

20%

9%

0%

5%

10%

15%

20%

25%

2015 2016 2017 2018 2019 2020

0

10

20

30

40

50

60

70

Capex (KD Million) Capex to Sales Ratio

43.039.8

42.8

50.4

43.6

32.1

2015 2016 2017 2018 2019 2020

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Financial Results - Highlights Quarterly

Revenue (KD Million)

Net Profit (KD Million)

EBITDA (KD Million)

66.672.9 76.1 78.1

72.264.2

72.6 74.2

Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20

18.8 19.8 21.5 23.7

17.0 18.922.0

15.5

28% 27% 28%30%

24%

29% 30%

21%

0%

5%

10%

15%

20%

25%

30%

35%

Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20

0

5

10

15

20

25

EBITDA (KD Million) EBITDA Margin (%)

9.610.3

11.7 12

6.5

9.3

11.6

4.6

Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20

Page | 14

Financial Results - Highlights

Total Assets (KD Million) Total Debt / Equity (KD Million)

Book Value Per Share (KD)Shareholders Equity (KD Million)

*FY 2017 and 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach. .

263 267 273305

391 374

2015 2016 2017 2018 2019 2020

0.186

0.2660.314

0.3840.431 0.445

2015 2016 2017 2018 2019 2020

72

47

90 20 10

0.80

0.40

0.100.00

0.10 0.05

-0.50

-0.30

-0.10

0.10

0.30

0.50

0.70

0.90

2015 2016 2017 2018 2019 2020

0

10

20

30

40

50

60

70

80

Total Debt (KD Million) Debt to Equity Ratio (x)

93

133157

192215 222

2015 2016 2017 2018 2019 2020

Page | 15

Cash Dividends

10

3040

5060

2016 2017 2018 2019 2020

Cash Dividends Per Share (Fils) Dividends Payout Ratio (%)

13%

35% 40%

57%

93%

2016 2017 2018 2019 2020

0.799 0.800 0.7880.852

0.920

1.3%3.8%

5.1%

7.0% 6.5%

0.5

0.55

0.6

0.65

0.7

0.75

0.8

0.85

0.9

0.95

2017 2018 2019 2020 Feb-21

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Stock Price (KD) Div. Yield (%)

stc has been distributing a growing

dividends since 2016 reaching 60 fils in

2020.

stc’s dividend payout ratio increased from

40% in 2018 to reach 93% in 2020.

Based on the latest cash dividend payout

and the stock price at the end of

December 2020, the stock will be yielding

at 7%.

Stock Price vs. Dividends Yield

Page | 16Page | 16

Rebased Index Since stc’s Listing Date 14 Dec 2014 – Stock Performance vs. KSE and Telecom weighted Indices

Data as of 31 December 2020

Stock Performance

PE (X) 13.31

PB (X) 1.91

Dividend Yield (%) 7.0%

Closing Price (KD) 0.852

Paid up Capital (KD Million) 49.9

Market Cap (KD Million) 425.5

60

80

100

120

140

160

180

Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20

STC's Stock Price (KWD) KSE Weighted Index Telecom Weighted Index

Rebased

100Index

Page | 17

Balance Sheet (2017 – December 2020) Income Statement (2017 – FY 2020)

Appendix

Page | 18

Balance Sheet (2017–2020)

*FY 2017 and 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach.

Balance Sheet 2017 2018 2019 2020

KD Mn KD Mn KD Mn KD MnASSETS

Property and equipment 145.0 150.5 193.5 190.4

Goodwill and Intangible assets - - 26.2 25.0

Total non-current assets 145.0 150.5 219.7 215.4

Inventories 12.9 6.9 9.1 9.3

Prepayments and other current assets 4.7 4.0 5.4 7.0

Trade and other receivables 31.2 35.8 35.8 29.7

Contracts Assets 47.2 42.5 44.4 37.9

Cash and cash equivalents 32.2 65.7 76.7 75.0

Total Current assets 128.2 154.8 171.4 158.8

Total assets 273.2 305.4 391.1 374.2

Equity And Liabilities

Share capital 49.9 49.9 49.9 49.9

Statutory reserve 12.9 18.2 22.8 26.2

Voluntary reserve 12.9 18.2 22.8 26.2

Other reserves - (0.3) (0.6) (0.9)

Retained earnings 81.0 105.9 120.3 120.6

Total equity 156.9 192.0 215.4 222.2

Employees' end of service benefits 3.6 5.3 8.3 10.1

Islamic Financing Facilities - - 11.3 6.9

Trade and other payables - - 5.4 6.1

Total non-current liabilities 3.6 5.3 25.0 23.1

Islamic Financing Facilities 9.0 - 8.8 3.1

Trade and other payables 103.7 108.1 142.0 125.9

Total current liabilities 112.7 108.1 150.7 129.0

Total liabilities 116.3 113.4 175.7 152.1

Total equity and liabilities 273.2 305.4 391.1 374.2

Page | 19

Income Statement (2017–2020)

*FY 2017 and 2018 numbers are based on the IFRS 15 ‘Revenue from Contracts with Customers “and IFRS 9 “Financial Instruments” which are effective from 1st January 2018 and opted for full retrospective approach.

Income Statement 2017 2018 2019 2020

KD Mn KD Mn KD Mn KD Mn

Revenue 287.7 287.9 293.7 283.2

Operating expenses (145.5) (139.3) (148.5) (147.4)

Staff costs (20.4) (21.7) (24.6) (24.2)

Expected credit losses on trade & other receivables

and contract assets (14.2) (18.2) (12.7) (15.0)

Depreciation and amortization (25.9) (25.6) (37.7) (39.3)

General and administrative expenses (38.7) (34.8) (25.3) (23.4)

Finance costs (0.7) (0.1) (1.0) (0.7)

Other income 2.7 4.9 2.2 0.9

Profit before Contributions to KFAS, NLST, Zakat and BOD Remuneration 45.0 53.0 46.0 34.0

KFAS (0.4) (0.5) (0.4) (0.3)

NLST (1.2) (1.4) (1.3) (1.0)

Zakat (0.5) (0.6) (0.5) (0.4)

BOD remuneration (0.2) (0.2) (0.2) (0.2)

Net Profit for the year 42.8 50.4 43.6 32.1

Basic and Diluted Earnings per share (Fils) 86 101 87 64

Control 0 0 0 0

Thank you

Investor Relations Department:

: Investor.relations@stc.com.kw: +965 5000 1911: www.stc.com.kw

stc Kuwait

Kuwait Telecommunication Company (stc)

stc_Kuwait

@stc_Kuwait