There is a peculiar kind of analytical satisfaction in watching a sector do the opposite of what the broader market is doing, and doing it quietly, without fanfare, as if it had simply decided the drama was not its concern. That is roughly what happened to the Saudi telecommunications sector across 2025, a year in which the Tadawul All Share Index delivered what can only be described as a humbling.

TASI recorded losses of around 1,546 points, or 12.8%, closing at 10,491 points, compared with 12,037 points at the end of 2024.

The annual loss represented the largest percentage decline since 2015, when the index fell by 17%, and the highest point drop since 2008.

Against that backdrop, the telecommunications and information technology sector did something almost impolite.

All sectors declined in 2025 except for telecommunications and information technology, which saw an increase of over 11% year-on-year.

The index continued its losing streak into the current year, extending its decline into a sixth consecutive session, a sequence that concentrates the mind and invites the question that always matters most in these situations: what is the market actually telling us, and is it telling us something true?

To understand what the sixth consecutive session of losses means, it helps to understand what kind of market TASI is, and what kind of pressures have been accumulating beneath its surface. The Saudi equity market is not a market driven primarily by earnings discovery in the way that, say, a mid-cap technology exchange might be. It is a market shaped by oil price expectations, sovereign fiscal posture, liquidity conditions, and the capital allocation decisions of a relatively concentrated investor base.

Several events affected market performance in 2025, most notably the trade war following the United States' decision to impose tariffs on several countries, led by China and Europe, after Donald Trump was inaugurated for a second term as President.

Oil price softness, which flows directly into Saudi fiscal revenues and investor risk appetite, compounded the pressure.

The fourth quarter of 2025 recorded the steepest drop, with the index dropping by more than 1,000 points, or 8.8%, followed by the second quarter, which declined by about 861 points, or 7.2%.

What makes the current streak of six consecutive sessions of decline analytically interesting is not the decline itself, which in isolation is unremarkable, but the context in which it is occurring. The market has already absorbed a severe year.

TASI has decreased to its lowest level since October 2023, having lost nearly 14% over the last twelve months.

The question is whether the current selling represents a continuation of the structural derating that began in 2025, or whether it is the kind of sentiment-driven exhaustion that tends to precede stabilization. The distinction matters enormously for how one reads the sector-level divergences that have opened up within the index.

The telecom sector's outperformance in this environment is not an accident of timing. It reflects something more durable about the economics of infrastructure ownership in concentrated markets. Saudi Arabia's listed telecommunications sector comprises four operators, with stc, Mobily, and Zain KSA accounting for the overwhelming majority of revenues and profits.

Companies listed on the Saudi Exchange posted a 3.8% increase in total revenue, exceeding SAR 108.4 billion in 2025, compared with SAR 104.46 billion in 2024.

Revenue growth of that consistency, delivered through a year in which most of the rest of the market was contracting in earnings terms, speaks to the defensive characteristics that make regulated infrastructure businesses behave differently from cyclical equities during periods of broad market stress.

The profit picture requires more careful reading.

Despite strong top-line growth, aggregate net profits for the sector fell by 33.4%, with the three largest operators reporting combined earnings of SAR 18.9 billion, down from SAR 28.39 billion the previous year.

That is a number that demands explanation rather than alarm, because the explanation is largely structural rather than operational.

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That is a number that demands explanation rather than alarm, because the explanation is largely structural rather than operational..

The decline in profitability was largely driven by stc, which accounts for 78% of the sector's earnings, and the year was characterized by profit normalization following an exceptional 2024, when non-recurring gains significantly lifted stc's net income.

Fourth-quarter earnings were further weighed down by a strong comparison base and higher seasonal, marketing, and financing costs tied to capital investments in networks and infrastructure.

This is the kind of profit decline that looks alarming in the headline and considerably less alarming once you have traced it to its source. The underlying demand environment remained constructive throughout.

The mid-year picture was, in fact, genuinely strong.

Saudi Arabia's listed telecommunications companies posted robust results in the second quarter of 2025, with sector-wide net profits rising 17.4% year-on-year to SAR 4.78 billion, while revenues grew 3.7% to SAR 27 billion.

The jump in net profits was driven by higher revenues and operating income, coupled with lower revenue costs, financing expenses, and other outlays.

Mobily was the standout performer within the sector,

recording the highest profit growth rate in the sector with net income up 25.6% to SAR 830 million, as revenues rose 8.2% to SAR 4.83 billion.

These are not the numbers of a sector under structural pressure. They are the numbers of a sector executing well inside a market that happens to be in distress for reasons largely unrelated to telecom fundamentals.

The infrastructure economics underlying this resilience deserve attention because they explain why the sector behaves as it does.

Infrastructure consolidation has been intensifying, with the Public Investment Fund's tower-company merger with stc forming the region's largest passive-infrastructure platform, lowering duplication and freeing operator capital, while Zain's tower sale to PIF signals a broader shift toward service-level competition rather than infrastructure spending.

This is a structurally important development. When operators monetize their tower assets and redeploy capital toward network software, digital services, and enterprise connectivity, the capital intensity of the business changes character. The fixed-cost base becomes more variable, the return on invested capital improves at the margin, and the dividend sustainability calculus becomes more favorable.

Saudi Telecom Company's dividend yield stood at 5.12% in 2025, with a payout ratio of 73.75%.

For a market experiencing the kind of broad derating that TASI has undergone, that yield profile is not a trivial consideration.

The longer-term demand architecture is also worth examining as a structural support for the sector's valuation case.

Industry research estimates the Saudi mobile communications market at approximately $27 billion in 2025, with expectations to reach $37.19 billion by 2030, a compound annual growth rate of 6.64%.

That growth trajectory is not speculative. It is anchored in the Kingdom's national connectivity ambitions, its fiber rollout programs, its 5G densification commitments, and the enterprise demand that Vision 2030's industrial diversification agenda is generating.

Fixed-wireless-access adoption is strongest in peri-urban districts where fiber rollouts lag, representing 20% of residential broadband connections in 2025,

which means there is still meaningful penetration upside in the residential segment even before accounting for the enterprise and government verticals that are growing faster.

Aramco Digital's substantial AI fund and newly obtained connectivity license introduce a formidable challenger in the enterprise slice, pushing incumbent operators to refine their industrial solutions.

Competition from well-capitalized industrial entrants is a genuine risk to incumbent pricing power in the enterprise segment, and it would be analytically careless to dismiss it. But it is also worth noting that the incumbents, particularly stc, have been investing heavily in exactly the capabilities that enterprise connectivity demands.

The six-session losing streak in TASI is, at one level, simply the market working through the accumulated weight of oil price uncertainty, global trade friction, and the liquidity dynamics of a market where

liquidity has been shifting toward long-term debt instruments such as sukuk and bonds, reflecting economic maturity and the financing needs of major Vision 2030 projects.

At another level, it is an invitation to think carefully about which parts of the market are being sold for structural reasons and which are being sold simply because everything is being sold. The telecommunications sector's 11% outperformance in 2025 against a market that fell 12.8% is not a coincidence. It is the market's own acknowledgment that regulated infrastructure businesses with predictable cash flows, growing dividend yields, and exposure to a national connectivity agenda that is both well-funded and structurally necessary occupy a different risk category from the cyclical and commodity-linked sectors that drove the index lower.

The consecutive session losses are worth watching precisely because they test that thesis. If the telecom sector's relative strength persists through a sixth and seventh session of broad market weakness, the structural case is reinforced. If it capitulates alongside the broader index, the question becomes whether the selling is price discovery or simply contagion. In markets under sustained pressure, the distinction between the two is not always obvious in real time. It tends to become clear only in retrospect, which is, of course, when it is least useful.

For informational purposes only. Not investment advice, a solicitation, or a recommendation. Consult a licensed financial advisor before making any investment decision.