Shares of Saudi Telecom (which trade on Saudi Arabia’s Tadawul exchange) got a 10% jump on Sunday after the company’s board of directors announced the proposal of a capital increase.The proposal would involve issuing 30 billion new shares, valued at $8 billion.
The announcement sent the company's shares soaring up 9.8% to 110.2 riyals in pre-market hours and fell to 107 riyals, up 6.6% at the start of trade on Sunday.
Last year, STC listed its subsidiary Arabian Internet and Communications Services Co, raising $966.35 million. Should Saudi Telecom go through with the proposal, current shareholders would have 1.5 new shares for each share they own. In addition, the capital increase proposal through retained earnings would allow the company to pursue its growth and expansion plans.
Saudi Arabia's government currently owns a 64% stake in the company, and has proposed the board trims its dividend policy from $0.26 per quarter to $0.10 for three years.