Riyadh-Mubasher: Saudi Arabia's telecom sector is likely to be defensive in the market, driven by oil volatility and potential spending cuts, NCB Capital (NCBC) said in a report.

The research firm added that earnings will be supported by strong growth in data segment and the potential increase in Hajj/Umra visas.

"However, STC is our only pick in the sector on its strong balance sheet, attractive dividend outlook and other issues," NCBC said.

The think tank remained 'Neutral' on Zain KSA despite the profitability improvement, setting the price target at SAR 10.8.

Meanwhile, NCBC maintained its 'Under Review' rating on Mobily due to the unclear outlook as it believes significant cost optimisation is required to return to profitability.

The research firm reiterated its 'Overweight' rating on Saudi Telecom Co. (STC), with a price target of SAR 78.8, supported by strong fundamentals, attractive dividend yield of 6.6% and potential dividends growth.