Zain Group announces its consolidated financial results for the third-quarter (Q3) and nine-month periods (9M) ended 30 September, 2020. The company ended the period with a stable customer base of 48.9 million customers.
Group Key Performance Indicators (KD and USD) for the first nine months (9M) 2020
| Consolidated Revenue | KD 1.2 billion | USD 3.9 billion |
| EBITDA | KD 502 million | USD 1.6 billion |
| EBITDA Margin | 42% | |
| Net Income | KD 132 million | USD 429 million |
| EPS | 30 fils | USD 0.10 |
For 9M 2020, Zain Group generated consolidated revenue of KD 1.2 billion (USD 3.9 billion), down 2% Y-o-Y, while consolidated EBITDA for the period reached KD 502 million (USD 1.6 billion), down 7% Y-o-Y, reflecting a healthy EBITDA margin of 42%. Consolidated net income amounted to KD 132 million (USD 429 million), reflecting a 14% Y-o-Y decrease. Earnings per share amounted to 30 fils (USD 0.10) for the nine-month period.
For 9M 2020, foreign currency translation impact, predominantly due to the 14% currency devaluation in Sudan from an average of 46 at 9M 2019 to 53.7 at 9M 2020 (SDG / USD), cost the Group USD 78 million in revenue, USD 36 million in EBITDA and USD 9 million in net income.
Group Key Performance Indicators (KD and USD) for third-quarter (Q3) 2020
| Consolidated Revenue | KD 408 million | USD 1.3 billion |
| EBITDA | KD 166 million | USD 542 million |
| EBITDA Margin | 41% | |
| Net Income | KD 48 million | USD 157 million |
| EPS | 11 fils | USD 0.04 |
In Q3’20, Zain Group generated consolidated revenue of KD 408 million (USD 1.3 billion), down 1% Y-o-Y. EBITDA for the quarter reached KD 166 million (USD 542 million), a decrease of 9% Y-o-Y, reflecting a 41% EBITDA margin. Net income for the three months amounted to KD 48 million (USD 157 million), a 14% decrease Y-o-Y. Earnings Per Share for Q3’20 reached 11 fils (USD 0.04).
Key Operational Notes for 9M 2020
Expansion of 4G networks across markets, including 5G networks in Kuwait and Saudi Arabia and launch of 5G commercial services in Bahrain, saw Zain Group consolidated data revenue grow 9% Y-o-Y to reach USD 1.61 billion, representing 41% of the Group’s revenue for 9M 2020.
2. The 9M 2020 period was highlighted by the notable 68% Y-o-Y increase in net income at Zain Iraq and healthy 28% revenue growth in USD terms at Zain Sudan.
3. Zain Saudi Arabia successfully raises at preferential terms a Murabaha facility of SAR 6 billion (USD1.6 billion) loan to refinance existing debt of SAR 3.85 billion (USD1.03 billion) with access to additional liquidity of SAR 1 billion (USD267 million) with a consortium of eight banks.
4. Zain crowned ‘Best Brand’ at 2020 Telecom World Middle East Awards for 7th consecutive year
5. Supporting innovation and youth creativity, Zain Group partners Mentor Arabia to launch “Youth Awareness Film Competition” as well as partnering the 14th edition of MIT Enterprise Forum Pan Arab Startup competition
Commenting on the performance to date, the Chairman of the Board of Directors of Zain Group, Ahmed Al Tahous said, “The Board is working closely with management in overcoming the impact of COVID19 across our footprint with a particular focus on expanding 4G and 5G networks and at the same time seeking new lucrative opportunities in the ICT sector to drive revenue growth. I would like to thank the government ministries and regulatory authorities across our markets for their collaboration with the telecom sector during these unique times.”
Mr. Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO commented, “The telecom sector is not immune to the current pandemic facing the global community that will continue to play havoc across all aspects of socio-economic life for the foreseeable future. Nevertheless, we continue our resolve and commitment to ensuring meaningful connectivity and implementing more digitalization initiatives to better serve businesses, governments, and societies, aiming to lessen the impact of COVID19 on society.”
He continued, “Zain personnel have remained at the forefront of this mission of providing vital telecommunication services and business continuity as the business fundamentals of Zain remain strong. Our decisive efficiency drive succeeded in reducing operational expenses by USD 130 million since the start of the pandemic. Moreover, we believe the worst of the pandemic on our financials is behind us, given the healthy turnaround specifically in our Q3 2020 performance that saw revenue up 9% and net profit up 33%, when compared to Q2 2020, which was then a peak time of the pandemic.”
Al-Kharafi added, “Over the last nine-months we have invested USD 923 million in CAPEX including spectrum fees, expanding 5G networks in Kuwait, Saudi Arabia and most recently Bahrain as well as upgrading and expanding our 4G networks and FTTH services across our footprint. Such investments allow us to wisely monetize the networks and offer more innovative customer focused and B2B services to government, business, IoT, and smart city sectors. Moreover, our Group API platform continues to grow exponentially offering rich entertainment content and gaming, and we are making profitable progress in various fintech and e-health services. These initiatives are proven instrumental in countering the negative impact of the crisis to some extent with data revenue growing 9% Y-o-Y and now representing 41% of total revenue.”
Al-Kharafi highlighted the company’s significant progress on its ‘4Sight’ strategy which is centred on evolving Zain’s core telecom business to maximize value and building on the company’s many strengths to selectively invest in growth verticals beyond standard mobile services and support Zain’s vision of becoming a leading ICT and digital lifestyle provider. “We are very enthusiastic with the rollout of Zain Data Park (ZDP), providing our government and enterprise customers with the very best IT support services focused on cloud hosting and managed services across the ICT stack, including applications, cybersecurity and networking.”
Al Kharafi continued, “Furthermore, to exploit the full potential of our infrastructure investments across our footprint, we have entered into a strategic partnership with TASC Towers Holding with regards to digital infrastructure.”
Regarding key operations, Al Kharafi noted, “Zain Kuwait remains the company’s most profitable operation with its 5G network driving digital innovation across the country as well as focusing on profitable opportunities in the country’s B2B segment. Zain Saudi Arabia’s successful refinancing and extension of its Murabaha facility at preferential terms reflected a vote of confidence from the Kingdom’s and international banking community of Zain KSA’s financial strength and growth plans. The company is currently undergoing a capital restructuring that will further strengthen the company’s balance sheet and support its digital growth strategy.”
“Moreover, the impressive performance of Zain Iraq for the period is very encouraging as is the recent granting of a 4G license in Iraq coupled with our mobile license extension there to 2030. With the improving bilateral relations of Sudan with western powers and resulting currency stability, we are very hopeful that Zain Sudan’s recent growth trajectory in all key financials will continue in the years ahead. Regarding Zain Jordan, we will continue to expand our 4G and FTTH services there and seek to exploit the multiple opportunities in the B2B space there.”
Al-Kharafi concluded, “We are optimistic of the telecom sector’s resilience in such times and firmly believe 5G technology will create vast opportunities in the value chain proposition in numerous industries and will push the telecom sector to a new and exciting phase of growth."
Scott Gegenheimer: A successful eight years at Zain Group
Zain Group CEO-Operations, Scott Gegenheimer will be leaving his position at Zain after eight years with the company. On behalf of the Board of Directors, Bader Al-Kharafi, Zain Vice Chairman & Group CEO expressed his appreciation of all that Scott “had achieved for the company during his tenure and wished him success in his future endeavors.”
Operational review of key markets for the nine months ended 30 September, 2020
Kuwait: Maintaining its market leadership, Zain Group’s flagship operation saw its customer base serve 2.6 million. It remains the Group’s most profitable operation with revenue for 9M 2020 reaching KD 236 million (USD 770 million), EBITDA reaching KD 85 million (USD 277 million), representing an EBITDA margin of 36%. Net income reached KD 58 million (USD 189 million) for 9M 2020, with data revenue accounting for 39% of total revenue.
Saudi Arabia: For the 9M 2020, Zain KSA generated revenue of SAR 5.9 billion (USD 1.6 billion), EBITDA for the period reached SAR 2.6 billion (USD 695 million), reflecting an EBITDA margin of 45%. Net income for the nine months reached SAR 224 million (USD 60 million). Data revenue represents 51% of total revenue and customers served stood at 7.0 million.
Iraq: Zain Iraq’s 9M 2020 revenue reached USD 708 million and EBITDA amounted to USD 285 million, reflecting EBITDA margin of 40%. The operation reported an impressive net profit of USD 61 million for 9M 2020. The operator served 15.7 million customers maintaining its market leading position.
Sudan: For 9M 2020, Zain Sudan generated revenue of SDG 14.9 billion (USD 278 million), with EBITDA amounting to SDG 6.5 billion (USD 121 million), reflecting an EBITDA margin of 44%. Net income for the period reached SDG 1.9 billion (USD 36 million). Data revenue represented 25% of total revenue, while the operator’s customer base reached 16.0 million, maintaining its market leadership.
Jordan: For 9M 2020, Zain Jordan revenue reached USD 359 million, EBITDA reached USD 160 million, reflecting an EBITDA margin of 44%, with net income reaching USD 56 million. With the ongoing expansion of 4G services across the country, data revenue represented 46% of total revenue. Zain Jordan served 3.5 million customers maintaining its market leading position.
Bahrain: Zain Bahrain generated revenue of USD 123 million for 9M 2020. EBITDA for the period amounted to USD 42 million, reflecting an EBITDA margin of 34%. Net income amounted to USD 10 million.
Source: https://www.zain.com/en/press/ZainGroup2020Q3results/