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Saudi Arabia Approves Financial Technology Strategy

Saudi Arabia continues its digital transformation in the financial sector. (Asharq Al-Awsat)
Saudi Arabia continues its digital transformation in the financial sector. (Asharq Al-Awsat)
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Saudi Arabia Approves Financial Technology Strategy

Saudi Arabia continues its digital transformation in the financial sector. (Asharq Al-Awsat)
Saudi Arabia continues its digital transformation in the financial sector. (Asharq Al-Awsat)

The Saudi Cabinet approved on Tuesday the Kingdom’s financial technology strategy, a move that experts say would enable and activate modern means in the financial sector and attract local and foreign companies to work in an equipped infrastructure in the Kingdom.

Specialists explained that the strategy will organize the sector and put it on the right track for active participation in financial technology.

They also considered the strategy a great leap to prepare the infrastructure in the Kingdom to be ready to receive foreign investments working in this field and to reach the country's goals during the next stage.

Saudi Arabia's Minister of Communications and Information Technology Abdullah Alswaha said that with the support of the Kingdom's government, the new strategy will be a fundamental pillar to accelerate the growth of the digital economy in the country.

Saudi Central Bank (SAMA) Governor Fahad Almubarak emphasized that the financial sector is going through rapid changes, especially in the FinTech industry, which necessitates swift and collaborative action to keep pace with such changes, noting that the implementation of this strategy requires cooperation and joint efforts from all relevant stakeholders.

Capital Market Authority (CMA) Chairman Mohammed Elkuwaiz clarified that the strategy supports all financial technology activities through transformation engines combined with initiatives that support service providers and develop the sector’s infrastructure.

Mohammed Al Suwayed, CEO of Razeen Capital, highlighted the specialized role played by government agencies, especially the Ministry of Communications and Information Technology, the Capital Market Authority and the Central Bank of Saudi Arabia, in developing the financial technology sector.

Al Suwayed told Asharq Al-Awsat that government agencies are ensuring that FinTech activity in the Kingdom is based on international standards and a safe institutional ecosystem.

Saudi Arabia's adoption of an independent strategy in financial technology explicitly indicates that the Kingdom is organizing this sector and placing it on the path of active participation in the financial sector in its broadest sense, he added.

The new strategy is in line with the supreme directive for Saudi Arabia to be among the leading countries in the field of FinTech, with Riyadh becoming a global tech hub.

It is included as a new pillar within the Saudi Vision 2030's Financial Sector Development Program (FSDP), which is aimed at developing the national economy, diversifying sources of income and enabling financial institutions to support private sector growth by giving new companies the opportunity to provide financial services.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.