Revenue – SAR12,012mn, -9% Y-o-Y, -11% Q-o-Q, -10% vs. EFGe EBITDA margin – 35.8%, +2.2pp Y-o-Y, +3.6pp Q-o-Q, +3.0pp vs. EFGe Net income – SAR2,150mn, +10% Y-o-Y, +0% Q-o-Q, +3% vs. EFGe   STC reported its 4Q16 results, with earnings coming at SAR2,150mn, in line with our estimate. The company announced it would distribute SAR1.00/share for the quarter, in line with our estimate, and in line with its three-year dividend policy announced in November 2015. This puts the total dividends for FY16 at SAR4.00/share, implying a dividend yield of 6.0%, in line with our estimate. We expect STC to maintain the same dividend yield in 2017; while we see this as an attractive yield, we believe the stock is fairly valued at current level, particularly in light of the challenging operating environment in KSA. We reiterate our Neutral rating on the stock. The main negative surprise was revenue, which missed our estimate by 10%, coming in at SAR12,012mn (-9% Y-o-Y, -11% Q-o-Q); STC did not provide any explanation for the revenue softness, but we note that 3Q16 may have been seasonally strong due to the pilgrimage season. At the same time, STC’s EBITDA margin for the quarter was better than expected, standing at 35.8% vs. our estimate of 32.8%. We suspect that the weakening revenue in conjunction with improving margins could be due to STC abandoning or temporarily decelerating aggressive offers and promotions that are meant to effectively buy top-line growth through lower-margin revenues.   STC said that it continued to deploy both the 4G network and the fibre optic network across the country. Its bundled services subscribers grew 19% Y-o-Y and 11% Q-o-Q, while revenue from the Enterprise business unit increased c19% Y-o-Y, owing to a 16% increase in data revenue from the Business sector, as well as the 2016 launch of cloud computing and managed data services. (Company disclosure, Omar Maher, Karim Riad)   Saudi Telecom Company: SAR66.31 as of 19 January 2017, Rating: Neutral, TP: SAR68.29 per share, MCap: USD35,365mn, STC AB / 7010.SE