There is a peculiar irony embedded in the way GCC telecom stocks are discussed in most investor notes. The conversation almost always begins with network technology, with 5G tower counts and fiber home-passes treated as the primary analytical variables, as though the sector were a technology story that happened to list on a stock exchange. It is not. It is a story about regulated infrastructure returns, oligopolistic pricing power, and the extraordinary capacity of concentrated market structures to generate durable cash flows for patient capital. Nowhere is this more legible than in Saudi Arabia, where the telecom sector price target debate on Tadawul has quietly become one of the more interesting capital allocation questions in the GCC.

Start with the dividend, because the dividend is where the argument lives.

STC announced a three-year dividend policy in August 2024, committing to a payout of SAR 0.55 per share each quarter from Q4 2024 through to Q3 2027.

That commitment has not wavered even as reported earnings have moved around.

STC continued to pay its dividend for the fourth quarter of 2025 despite reporting a 40 percent drop in annual net profit, distributing SAR 2.7 billion, or 5.5 percent of capital, for that quarter alone.

The profit decline, it is worth noting, was almost entirely a base-effect distortion:

net earnings fell to SAR 15 billion in 2025, down from SAR 25 billion in 2024, due to the impact of a one-off gain of SAR 14 billion from discontinued operations resulting from stake sales in two subsidiaries to the Public Investment Fund.

Strip out that gain and the underlying business held its shape with reasonable composure.

The cumulative picture of the STC dividend payout history is striking in its own right.

Over the past five years, STC has paid total dividends of approximately SAR 60.1 billion through the end of the second quarter of 2026.

The company's cash dividend yield stood at 9.7 percent and its payout ratio at 142.9 percent at the end of the second quarter, based on dividends paid over the past 12 months, including the additional 2024 dividend of SAR 2 per share paid in June 2025.

A payout ratio above 100 percent sustained over multiple quarters is not, in isolation, a sign of financial health. What it signals instead is a deliberate policy choice by a company whose majority shareholder, the Public Investment Fund, has its own structural appetite for dividend income. The economics of sovereign ownership shape the capital return policy in ways that a conventional free-cash-flow analysis alone will not capture.

Operationally, the revenue trajectory has been modest but consistent.

Revenue rose 3 percent year on year in the second quarter of 2026, with a half-year topline of more than SAR 40 billion, while mobile subscribers in Saudi Arabia rose 5 percent annually to more than 30 million.

The number of 5G towers rose to 12,120, while households connected to the fiber optic network increased 5 percent year on year.

These are not explosive growth numbers. They are the numbers of a mature market growing steadily inside a structural upgrade cycle, which is precisely what the Saudi telecom sector price target on Tadawul should reflect: not a growth premium, but a quality infrastructure premium.

The infrastructure upgrade cycle itself is a Vision 2030 story, though not in the promotional sense in which that phrase is usually deployed.

Vision 2030 is focused on digital infrastructure, broadband, and smart cities, with a goal of achieving 90 percent fiber coverage in densely populated zones.

💡 Insight

The November 2024 spectrum auction alone is expected to contribute over SAR 25 billion to GDP by 2030 through enhanced digital infrastructure and induced investment..

The November 2024 spectrum auction alone is expected to contribute over SAR 25 billion to GDP by 2030 through enhanced digital infrastructure and induced investment.

For operators, the policy environment functions as a demand guarantee. Connectivity is not optional infrastructure in an economy restructuring itself around tourism, entertainment, logistics, and financial services. It is the precondition for all of it.

The tower divestiture completed in 2024 deserves more analytical attention than it typically receives.

The TAWAL transaction saw PIF acquire a 51 percent stake from STC, with the resulting entity merging with Golden Lattice Investment Company to create a combined tower company operating approximately 30,000 mobile tower sites with annual revenue of approximately USD 1.3 billion, among the largest tower companies globally.

STC converted a capital-intensive asset into a long-term tenancy obligation, freeing balance sheet capacity while retaining network access. It is a structurally intelligent move that mirrors what European operators spent a decade executing, and it reshapes how one reads STC's capital expenditure profile going forward.

Against this backdrop, the contrast with e& (formerly Etisalat) in the UAE is instructive for investors thinking across GCC telecom dividend stocks as an asset class.

e& delivered record financial performance in 2025, reporting consolidated revenues of AED 72.9 billion, an increase of 23.1 percent year on year, with consolidated net profit reaching AED 14.4 billion.

The Etisalat earnings report for the first half of 2026 sustained that momentum:

e& recorded consolidated revenue of AED 38.1 billion in the first six months of 2026, representing an increase of 11.6 percent year on year, with EBITDA reaching AED 17.7 billion and a margin of 46.5 percent.

e&'s AGM approved a dividend per share of 90 fils for fiscal year 2025, with the company announcing its intention to distribute 95 fils per share in fiscal year 2026 as part of its approved dividend policy.

The subscriber base tells a different story from STC's domestic-focused model:

e&'s consolidated subscriber base reached 248 million, reflecting 30.8 percent year on year growth.

International scale is e&'s distinguishing structural feature, and it introduces a different risk and return profile from the more domestically anchored Saudi operators.

What emerges from examining both markets together is a picture of GCC telecom dividend stocks as a genuinely differentiated infrastructure asset class, one where the analytical work lies not in the technology layer but in understanding how regulatory frameworks, sovereign ownership structures, and national connectivity mandates interact to determine the durability of cash flows. The Saudi telecom sector price target on Tadawul is ultimately a question about how the market prices that durability. At current yields, the answer appears to be: with a degree of skepticism that the underlying policy commitment may not entirely warrant.

This article is for informational and research purposes only and is not a solicitation. Readers are encouraged to consult a licensed financial advisor before making any investment decision.