Score Motion: Moody’s affirms the scores of stc and SEC; withdraws BCAsGlobal Credit score Analysis – 17 Mar 2022Madrid, March 17, 2022 — Moody’s Buyers Service (“Moody’s”) has in the present day affirmed the A1 scores of Saudi Telecom Firm (“stc”) and the A1 scores of Saudi Electrical energy Firm (“SEC”). The outlook on stc’s and SEC’s scores stays secure. Concurrently, Moody’s has withdrawn stc’s a1 baseline credit score evaluation (BCA) and SEC’s baa1 BCA, as a result of it now not classifies stc and SEC as Authorities-Associated Issuers (GRIs). This follows Moody’s project of scores to stc’s and SEC’s mum or dad firm Public Funding Fund (PIF, A1 secure).Please click on on this hyperlink https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL464041 for the Listing of Affected Credit score Scores. This record is an integral a part of this Press Launch and identifies every affected issuer.RATINGS RATIONALEOn 7 February 2022, Moody’s assigned a first-time issuer score to PIF beneath the Authorities-Associated Issuers Methodology. PIF owns 64% of stc and 74.3% of SEC and is 100% owned by the Authorities of Saudi Arabia (A1 secure). Moody’s now not charges stc and SEC beneath the GRI Methodology as a result of Moody’s doesn’t usually designate subsidiaries of a GRI as additionally being GRIs. The elimination of the GRI standing has no score implications on stc and SEC and their scores have been affirmed accordingly. Moody’s will proceed to contemplate any advantages from oblique authorities possession in addition to help from PIF as a strategic shareholder on a qualitative foundation.stc’s score didn’t profit from any uplift beneath the GRI methodology, as the corporate has a standalone evaluation which has the traits of a powerful A profile. Nonetheless, stc’s issuer score displays the corporate’s strategic significance to PIF and subsequently the Authorities of Saudi Arabia. The affirmation of stc’s A1 scores displays stc’s (1) stable monetary profile, as illustrated by its persistently low debt/ EBITDA of beneath 1.0x; (2) main place within the home market, the place it holds a market share of round 70%; (3) sturdy EBITDA margin within the 35%-40% vary on a constant foundation; and (4) sturdy liquidity regardless of excessive dividend funds. It additionally considers (1) the focus to and rising aggressive nature of the telecom market within the Kingdom of Saudi Arabia (KSA); (2) the saturation in KSA’s cellular phase; and (3) the low combination income contribution of round 8% from worldwide operations in 2021.SEC’s A1 scores incorporate a standalone evaluation which has the traits of a powerful Baa profile. The issuer score displays SEC’s continued strategic significance to PIF, and subsequently the Authorities of Saudi Arabia. SEC’s standalone evaluation is supported by the low enterprise threat profile of its built-in electrical energy actions and its dominant market place in Saudi Arabia and continued ongoing help from the federal government together with gas and different types of subsidies. Since 1 January 2021, SEC operates beneath a brand new regulated asset base framework that’s clear and supportive. SEC’s A1 scores additionally displays a rising debt load as substantial investments are incurred to fulfill the rising demand for electrical energy in Saudi Arabia.OUTLOOKThe secure outlook on stc’ scores assumes that the metrics of stc will proceed to be commensurate with its A1 issuer score over the subsequent 18 months. The outlook additionally considers the corporate’s main place within the Saudi Arabian telecommunications companies market.The secure outlook on SEC’s scores displays the corporate’s low enterprise threat profile and considers the numerous credit score linkages between SEC and PIF and the federal government.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSstc’s score might come beneath optimistic stress if PIF’s or the Authorities of Saudi Arabia’s score is upgraded.With a standalone with traits of a powerful A profile, the corporate is now one of many highest rated telecom operators on a standalone foundation globally. The probability of the standalone evaluation enhancing to an Aa profile is low, because of the firm’s scale and focus in Saudi Arabia. Any improve in scale exterior of Saudi Arabia, in markets with decrease sovereign scores or the place the regulatory framework is much less supportive in comparison with Saudi Arabia, might end result within the firm diluting the advantage of its sturdy and main place in its home market.stc’s issuer score can be downgraded if PIF’s or the Authorities of Saudi Arabia’s score had been to be downgraded.Downward stress on stc’s score might end result from a fabric deterioration within the firm’s monetary profile on account of elevated competitors, debt-financed acquisitions or sustained intervals of unfavourable free money circulation consequently, for example, of upper capital spending or dividend payouts that trigger the corporate’s debt/EBITDA to materially exceed 1.5x on a sustained foundation and its retained money circulation/debt to lower beneath 40% on a sustained foundation. This steering incorporates Moody’s assumptions of parental help from PIF which might mitigate some weakening of stc’s standalone profile.SEC’s scores could possibly be upgraded if the PIF’s score or the Authorities of Saudi Arabia’s was upgraded. This may additionally require no materials deterioration within the firm’s working and monetary efficiency and an excellent observe report beneath the brand new regulatory regime.SEC’s scores could possibly be downgraded if PIF’s or the Authorities of Saudi Arabia’s scores had been to be downgraded. The score may be downgraded due to a discount in Moody’s assumption of parental help or if SEC’s credit score profile weakens such that (CFO pre-WC + curiosity)/curiosity is sustained beneath 3.0x and (CFO pre-WC – dividends)/debt, excluding the shareholder instrument from debt, is sustained beneath 15%.PRINCIPAL METHODOLOGYThe principal methodology utilized in score Saudi Telecom Firm and STC Sukuk Firm Restricted was Telecommunications Service Suppliers printed in January 2017 and accessible at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1055812. The principal methodology utilized in score Saudi Electrical energy Firm, Saudi Electrical energy International SUKUK Firm, Saudi Electrical energy International SUKUK Firm 2, Saudi Electrical energy International SUKUK Firm 3, Saudi Electrical energy International SUKUK Firm 4 and Saudi Electrical energy International SUKUK Firm 5 was Regulated Electrical and Fuel Utilities printed in June 2017 and accessible at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1072530. Alternatively, please see the Score Methodologies web page on www.moodys.com for a duplicate of those methodologiesThe native market analyst for Saudi Telecom Firm and STC Sukuk Firm Restricted scores is Julien Haddad, +971 (423) 795-39.The native market analyst for Saudi Electrical energy Firm, Saudi Electrical energy International SUKUK Firm, Saudi Electrical energy International SUKUK Firm 2, Saudi Electrical energy International SUKUK Firm 3, Saudi Electrical energy International SUKUK Firm 4 and Saudi Electrical energy International SUKUK Firm 5 is Thomas Le Guay, +971 (423) 795-45.COMPANY PROFILESstc is the main built-in telecommunications and ICT service supplier within the KSA. After the liberalization of the native telecommunications market, stc expanded throughout the Center East, and Southeast Asia. Internationally, the corporate primarily operates in Bahrain and Kuwait, and thru its affiliate in Malaysia. The corporate reported whole income of SAR63.4 billion ($16.9 billion) and a internet revenue of SAR11.6 billion ($3.1 billion) in 2021.SEC is the dominant vertically built-in electrical energy utility in Saudi Arabia, the place it served over 10.4 million clients as of 30 September 2021. The corporate owns 42 main crops with a technology capability of 54.5 Gigawatts (GW) and has curiosity in joint ventures with technology capability of an extra 15.6 GW, representing the overwhelming majority of Saudi Arabia’s technology capability. The Saudi authorities not directly owns 81.2% of SEC, together with 74.3% straight via PIF and 6.9% via Saudi Arabian Oil Firm (Saudi Aramco, A1 secure). The remaining 18.8% is listed on the Saudi Inventory Alternate. The corporate reported consolidated revenues of SAR74.5 billion ($19.9 billion) within the 12 months to 30 September 2021 and SAR477.8 billion in belongings ($127.4 billion) as of 30 September 2021.REGULATORY DISCLOSURESThe Listing of Affected Credit score Scores introduced listed below are all solicited credit score scores. For added info, please discuss with Moody’s Coverage for Designating and Assigning Unsolicited Credit score Scores accessible on its web site www.moodys.com. Moreover, the Listing of Affected Credit score Scores consists of further disclosures that adjust with regard to among the scores. Please click on on this hyperlink https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL464041 for the Listing of Affected Credit score Scores. This record is an integral a part of this Press Launch and supplies, for every of the credit score scores lined, Moody’s disclosures on the next objects: Score Solicitation Issuer Participation Participation: Entry to Administration Participation: Entry to Inner Paperwork Endorsement Lead Analyst Releasing Workplace For additional specification of Moody’s key score assumptions and sensitivity evaluation, see the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure kind. Moody’s Score Symbols and Definitions will be discovered at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For scores issued on a program, sequence, class/class of debt or safety this announcement supplies sure regulatory disclosures in relation to every score of a subsequently issued bond or notice of the identical sequence, class/class of debt, safety or pursuant to a program for which the scores are derived completely from current scores in accordance with Moody’s score practices. For scores issued on a help supplier, this announcement supplies sure regulatory disclosures in relation to the credit standing motion on the help supplier and in relation to every explicit credit standing motion for securities that derive their credit score scores from the help supplier’s credit standing. For provisional scores, this announcement supplies sure regulatory disclosures in relation to the provisional score assigned, and in relation to a definitive score that could be assigned subsequent to the ultimate issuance of the debt, in every case the place the transaction construction and phrases haven’t modified previous to the project of the definitive score in a way that might have affected the score. For additional info please see the scores tab on the issuer/entity web page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit score help from the first entity(ies) of this credit standing motion, and whose scores could change on account of this credit standing motion, the related regulatory disclosures might be these of the guarantor entity. Exceptions to this method exist for the next disclosures, if relevant to jurisdiction: Ancillary Providers, Disclosure to rated entity, Disclosure from rated entity.The scores have been disclosed to the rated entity or its designated agent(s) and issued with no modification ensuing from that disclosure.Regulatory disclosures contained on this press launch apply to the credit standing and, if relevant, the associated score outlook or score evaluate.Moody’s normal ideas for assessing environmental, social and governance (ESG) dangers in our credit score evaluation will be discovered at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The beneath contact info is offered for info functions solely. Please see the scores tab of the issuer web page at www.moodys.com, for every of the scores lined, Moody’s disclosures on the lead score analyst and the Moody’s authorized entity that has issued the scores.The related workplace for every credit standing is recognized in “Debt/deal field” on the Scores tab within the Debt/Deal Listing part of every issuer/entity web page of the web site.Please see www.moodys.com for any updates on modifications to the lead score analyst and to the Moody’s authorized entity that has issued the score.Please see the scores tab on the issuer/entity web page on www.moodys.com for added regulatory disclosures for every credit standing. Carlos Winzer Senior Vice President Company Finance Group Moody’s Buyers Service Espana, S.A. Calle Principe de Vergara, 131, 6 Planta Madrid, 28002 Spain JOURNALISTS: 44 20 7772 5456 Shopper Service: 44 20 7772 5454 Rehan Akbar, CFA Senior Vice President Company Finance Group JOURNALISTS: 44 20 7772 5456 Shopper Service: 44 20 7772 5454 Releasing Workplace: Moody’s Buyers Service Espana, S.A. Calle Principe de Vergara, 131, 6 Planta Madrid, 28002 Spain JOURNALISTS: 44 20 7772 5456 Shopper Service: 44 20 7772 5454 © 2022 Moody’s Company, Moody’s Buyers Service, Inc., Moody’s Analytics, Inc. and/or their licensors and associates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All info contained herein is obtained by MOODY’S from sources believed by it to be correct and dependable. Due to the opportunity of human or mechanical error in addition to different elements, nonetheless, all info contained herein is offered “AS IS” with out guarantee of any variety. MOODY’S adopts all mandatory measures in order that the data it makes use of in assigning a credit standing is of enough high quality and from sources MOODY’S considers to be dependable together with, when applicable, impartial third-party sources. Nevertheless, MOODY’S just isn’t an auditor and can’t in each occasion independently confirm or validate info acquired within the score course of or in getting ready its Publications.To the extent permitted by legislation, MOODY’S and its administrators, officers, staff, brokers, representatives, licensors and suppliers disclaim legal responsibility to any particular person or entity for any oblique, particular, consequential, or incidental losses or damages in any respect arising from or in reference to the data contained herein or the usage of or incapability to make use of any such info, even when MOODY’S or any of its administrators, officers, staff, brokers, representatives, licensors or suppliers is suggested upfront of the opportunity of such losses or damages, together with however not restricted to: (a) any lack of current or potential income or (b) any loss or injury arising the place the related monetary instrument just isn’t the topic of a selected credit standing assigned by MOODY’S.To the extent permitted by legislation, MOODY’S and its administrators, officers, staff, brokers, representatives, licensors and suppliers disclaim legal responsibility for any direct or compensatory losses or damages brought about to any particular person or entity, together with however not restricted to by any negligence (however excluding fraud, willful misconduct or another sort of legal responsibility that, for the avoidance of doubt, by legislation can’t be excluded) on the a part of, or any contingency inside or past the management of, MOODY’S or any of its administrators, officers, staff, brokers, representatives, licensors or suppliers, arising from or in reference to the data contained herein or the usage of or incapability to make use of any such info.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Buyers Service, Inc., a wholly-owned credit standing company subsidiary of Moody’s Company (“MCO”), hereby discloses that the majority issuers of debt securities (together with company and municipal bonds, debentures, notes and business paper) and most popular inventory rated by Moody’s Buyers Service, Inc. have, previous to project of any credit standing, agreed to pay to Moody’s Buyers Service, Inc. for credit score scores opinions and companies rendered by it charges starting from $1,000 to roughly $5,000,000. MCO and Moody’s Buyers Service additionally keep insurance policies and procedures to handle the independence of Moody’s Buyers Service credit score scores and credit standing processes. Info concerning sure affiliations which will exist between administrators of MCO and rated entities, and between entities who maintain credit score scores from Moody’s Buyers Service and have additionally publicly reported to the SEC an possession curiosity in MCO of greater than 5%, is posted yearly at www.moodys.com beneath the heading “Investor Relations — Company Governance — Director and Shareholder Affiliation Coverage.”Extra phrases for Australia solely: Any publication into Australia of this doc is pursuant to the Australian Monetary Providers License of MOODY’S affiliate, Moody’s Buyers Service Pty Restricted ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as relevant). This doc is meant to be offered solely to “wholesale purchasers” inside the that means of part 761G of the Companies Act 2001. By persevering with to entry this doc from inside Australia, you characterize to MOODY’S that you’re, or are accessing the doc as a consultant of, a “wholesale shopper” and that neither you nor the entity you characterize will straight or not directly disseminate this doc or its contents to “retail purchasers” inside the that means of part 761G of the Companies Act 2001. MOODY’S credit standing is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the fairness securities of the issuer or any type of safety that’s accessible to retail traders.Extra phrases for Japan solely: Moody’s Japan Ok.Ok. (“MJKK”) is a wholly-owned credit standing company subsidiary of Moody’s Group Japan G.Ok., which is wholly-owned by Moody’s Abroad Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan Ok.Ok. (“MSFJ”) is a wholly-owned credit standing company subsidiary of MJKK. MSFJ just isn’t a Nationally Acknowledged Statistical Score Group (“NRSRO”). Due to this fact, credit score scores assigned by MSFJ are Non-NRSRO Credit score Scores. Non-NRSRO Credit score Scores are assigned by an entity that isn’t a NRSRO and, consequently, the rated obligation is not going to qualify for sure kinds of therapy beneath U.S. legal guidelines. MJKK and MSFJ are credit standing businesses registered with the Japan Monetary Providers Company and their registration numbers are FSA Commissioner (Scores) No. 2 and three respectively.MJKK or MSFJ (as relevant) hereby disclose that the majority issuers of debt securities (together with company and municipal bonds, debentures, notes and business paper) and most popular inventory rated by MJKK or MSFJ (as relevant) have, previous to project of any credit standing, agreed to pay to MJKK or MSFJ (as relevant) for credit score scores opinions and companies rendered by it charges starting from JPY100,000 to roughly JPY550,000,000.MJKK and MSFJ additionally keep insurance policies and procedures to handle Japanese regulatory necessities.