Saudi Telecom Company (STC) has established a programme that could see it issue sukuk (Islamic bonds) worth up to SR5bn ($1.3bn).

The kingdom’s largest telecoms operator said in a statement that it may issue sukuk “from time to time” through local private placements.

STC’s profit rose 54 per cent year-on-year to SR2.4bn in the first quarter of 2014, after its decision to minimise losses from foreign units.

The company sold its Indonesian subsidiary Axis at the end of 2013, followed by a decision in January to exclude India-based Aircel’s losses from its financial results.

STC has plans to strengthen its presence in Saudi Arabia as it continues to face competition from rivals Mobily and Zain Saudi Arabia. It is enhancing the coverage of its 3G and 3.5G networks so it can provide services to more than 96 per cent of residential areas, and is also deploying a 4G network across the kingdom.