Kuwait Telecomunications Company K.S.C.PInvestors Presentation

Kuwait Telecommunications Company K.S.C.P.

FY- 2019

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 14

Stock Performance 15

Appendix 16

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 was recorded on Boursa Kuwait in December 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.

stc’s customer base has proudly stood at 2.0 million.

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.

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 Company 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

Launch 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

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 Telecom Kuwaiti Government Public Shareholders

Page | 7

Kuwait Population (Million) & Penetration Rate (%)

Since 2010, Kuwait population has been growing at the same level of 2.8% yearly and the growth isforecasted by IMF at 2.8% over the next 5 years compared to almost 1% for the global population growth.This growth coupled with rising income levels will propel growth in consumer spending.

Population & Penetration

Kuwait boasts the highest telecom penetration levels in the MENA region, which stood at 199% by theend of 2018 and estimates by stc shows that the penetration rate in Kuwait increased to reach 202% atthe end of December 2019.

3.2 3.4 3.4 3.5 3.6 3.7 3.8 3.9 4.0 4.1 4.2 4.3 4.5 4.6

50%57% 57%

93%

133%

155% 150%

189%

218% 220%228%

207%199% 202%

0%

50%

100%

150%

200%

250%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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 customers reached 2.0 million by the end of December 2019, which represents a market share of 27%.

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

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

Uplift and Innovate

on Consumer

Capture Enterprise

Opportunities

TransformTechnology Capabilities

Revamp Enabling

Capabilities

EnhanceEmployee Potential

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 Share2019

34%

Revenue Market Share 2019

29%

EBITDA Market Share 2019

31%

Net Profit Market Share 2019

4.55.2

5.96.41

7.6 7.7 7.7 7.2 7.1 7.4

0.8 1.1 1.6 2.2 2.4 2.5 2.4 2.3 2.2 2.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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

627 684 690 717 753 788 799

841 860 859

61 94 137 182239 277 279 288 288 294

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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

Page | 11

stc’s revenue reached to KD 293.7 millionduring FY-2019 as compared to KD 287.9million recorded during FY-2018 .

On quarterly basis, stc’s revenues reached

KD 78.1 million in Q4-19 compared to KD 76.1

million in Q3-19 with growth of 2.6%, while

the net profit for increased to KD 12.0

million in Q4-19 compared to 11.7 million in

Q3-19.

EBITDA recorded a growth of 5.9% to reach

KD 82.4 million during FY-2019 compared to

KD 77.8 million for the same period in 2018.

EBITDA Margin reached 28% during FY-2019

compared to 27% during the FY-2018.

The net profit reached KD 43.6 million

(earning per share 87 fils) during FY-2019 as

compared to KD 50.4 million (earning per

share 101 fils) recorded during FY-2018.

Shareholders‘ equity reached KD 215.4million at the end of December 2019 with agrowth rate of 12% compared to KD 192million at the end of December 2018.

stc’s customers’ reached 2.0 million by end

of December 2019 .

Financial Results

Key Figures & Ratios FY-2018 FY-2019 Change

Subscribers (Mn) 2.15 2.0 -7.1%

Revenue (KD Mn) 287.9 293.7 2.0%

EBITDA 77.8 82.4 +5.9%

EBITDA Margin (%) 27% 28% +1.0 pt.

Net Profit (KD Mn) 50.4 43.6 -13.5%

Net Profit Margin (%) 17.5% 15% -2.7 pt.

EPS (Fils) 101 87 -13.5%

Equity (KD Mn) 192.0 215.4 +12%

BVPS (Fils) 384 431 +12%

2.152.0

Dec-18 Dec-19

Subscribers (Mn)

288 294

FY-18 FY-19

Revenue (KD Mn)

50.443.6

FY-18 FY-19

Net Profit (KD Mn)

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Financial Results - Highlights

Revenue (KD Million)

Net Profit (KD Million)CAPEX (KD Million)

EBITDA (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. .

239277 279 288 288 294

2014 2015 2016 2017 2018 2019

40.4 43.039.8

42.8

50.443.6

2014 2015 2016 2017 2018 2019

112.6

131.0 131.9

71.1 77.8 82.4

47% 47% 47%

25%27% 28%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2014 2015 2016 2017 2018 2019

EBITDA (KWD Million) EBITDA Margin (%)

17

39 38 33 31

59

7%

14% 14%12% 11%

20%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2014 2015 2016 2017 2018 2019

Capex (KWD Million) Capex to Sales Ratio

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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. .

214

263 267 273 305

391

2014 2015 2016 2017 2018 2019

50

93

133 157

192 215

2014 2015 2016 2017 2018 2019

0.100

0.186

0.266 0.314

0.384 0.431

2014 2015 2016 2017 2018 2019

66

86

72

47

9 0

20

6.9

1.70.8

0.4 0.1

0.0

0.1 -

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

0

20

40

60

80

100

2013 2014 2015 2016 2017 2018 2019

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

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Cash Dividends

10

30

40

50

2016 2017 2018 2019

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

13%

35%40%

57%

2016 2017 2018 2019

0.799 0.800 0.788 0.783

1.3%3.8%

5.1%6.4%

0.5

0.55

0.6

0.65

0.7

0.75

0.8

0.85

2017 2018 2019 Jan 2020

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

Stock Price (KD) Div. Yield (%)

stc has been distributing a growing

dividends since 2016 reaching 50 fils

in 2019.

stc’s dividend payout ratio

increased from 40% in 2018 to reach

57% in 2019.

Based on the latest cash dividend

payout the stock price will be

yielding at 6.4%.

Stock Price vs. Dividends Yield

Page | 15Page | 15

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

Data as of 31 December 2019

Stock Performance

PE (X) 9.03

PB (X) 1.83

Dividend Yield (%) 6.4%

Closing Price (KD) 0.788

Paid up Capital (KD Million) 49.9

Market Cap (KD Million) 393.5

60

80

100

120

140

160

180

Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19

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

Rebased

100Index

Page | 16

Balance Sheet (2014 – 2019) Income Statement (2014 – 2019)

Appendix

Page | 17

Balance Sheet 2014 2015 2016 *2017 *2018 2019KD Mn KD Mn KD Mn KD Mn KD Mn KD Mn

ASSETSProperty and equipment 113.1 125.4 137.7 145.0 150.5 193.4

Intangible assets 36.3 50.6 47.5 - - 20.8 Goodwill - - - - - 5.4Non-current assets 150.1 175.9 185.2 145.0 150.5 219.7

Inventories 5.8 7.1 4.4 12.8 6.9 9.1 Prepayments and other current assets 4.7 5.4 5.0 0.46 4.0 5.4 Trade and other receivables 21.2 22.9 25.7 31.2 35.8 35.8Contracts assets - - - 47.2 42.5 44.4 Cash and cash equivalents 32.3 51.8 47.2 32.2 65.7 76.7Current assets 63.9 87.2 82.2 128.2 154.8 171.3Total assets 214.0 263.1 267.4 273.2 305.4 391.0

EQUITY AND LIABILITIESShare capital 49.9 49.9 49.9 49.9 49.9 49.9 Statutory reserve 0.0 4.5 8.7 12.9 18.2 22.8 Voluntary reserve - 4.5 8.7 12.9 18.2 22.8 Other Reserves - - - - (0.31) (0.5)Retained earnings/(accumulated losses) 0.0 33.9 65.4 81.0 105.9 120.3

Total equity 49.9 92.9 132.7 156.8 192.0 215.3

Employees' end of service benefits 2.6 2.8 3.2 3.6 5.3 8.3

Islamic Financing Facilities 51.6 31.4 11.6 - - 11.2 Trade and other payables NC - - - - - 5.4

Non-current liabilities 54.1 34.2 14.8 3.6 5.3 24.9.

Islamic financing facilities 34.0 41.0 35.5 0.9 - 8.8 Trade and other payables 75.9 95.0 84.4 103.6 108.1 142.0Current liabilities 109.9 136.0 119.9 112.7 108.1 150.8

Total liabilities 164.0 170.2 134.7 116.3 113.4 175.7

Total equity and liabilities 214.0 263.1 267.4 273.2 305.4 391.0

Balance Sheet (2014–2019)

*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.

Page | 18

Income Statement2014 2015 2016 *2017 *2018 2019

KD Mn KD Mn KD Mn KD Mn KD Mn KD Mn

Revenue 239.0 276.9 279.1 287.7 287.8 293.7

Operating expenses (65.5) (78.7) (80.9) (145.5) (139.3) (148.5)

Staff costs (15.9) (15.8) (18.0) (20.4) (21.7) (24.7)

Expected credit losses on trade & other receivables and contract assets

(4.1) (7.1) (9.0) (14.1) (18.2) (12.7)

Depreciation and amortization (67.6) (82.2) (88.4) (25.9) (25.6) (37.8)

General and administrative expenses (40.8) (44.2) (39.2) (36.3) (30.6) (25.3)

Finance cost (Net) (2.3) (2.8) (2.1) (1.2) (0.1) (1.0)

Other income/(expenses) (1.8) (0.9) 0.4 0.9 0.7 2.2

Profit before BoD remuneration, contribution to KFAS and Zakat

41.0 45.2 41.9 45.0 53.0 45.9

KFAS (0.0) (0.4) (0.4) (0.4) (0.5) (0.4)

NLST (0.1) (1.2) (1.1) (1.2) (1.4) (1.3)

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

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

Net Profit 40.4 43.0 39.8 42.7 50.4 43.6

Basic earnings per share (in fils) 81 86 80 86 101 87

Income Statement (2014–2019)

*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.

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