Zain Group, a leading mobile telecom innovator in eight markets across the Middle East and Africa, announces its consolidated financial results for the full-year 2019, and fourth quarter ended 31 December, 2019. Zain served 49.5 million customers, reflecting a 1% increase year-on-year (Y-o-Y).
Group Key Performance Indicators (KD and USD) for the Full-Year 2019
| Total Active Customers | 49.5 million | |
| Consolidated Revenue | KD 1.66 billion | (USD 5.5 billion) |
| EBITDA | KD 728 million | (USD 2.4 billion) |
| EBITDA Margin | 44% | |
| Net Income | KD 217 million | (USD 715 million) |
| EPS | 50 fils | USD 0.17 |
For the full-year 2019, Zain Group generated consolidated revenue of KD 1.66 billion (USD 5.5 billion), an impressive 26% Y-o-Y growth, while consolidated EBITDA for the period rose by 40% Y-o-Y to reach KD 728 million (USD 2.4 billion), reflecting a healthy EBITDA margin of 44%. Consolidated net income reached KD 217 million (USD 715 million), up 10% and reflecting Earnings Per Share of 50 Fils (USD 0.17).
For the full-year, foreign currency translation impact, predominantly due to the 30% currency devaluation in Sudan from an average of 31.9 to 45.8 (SDG / USD), cost the Group USD 140 million in revenue, USD 61 million in EBITDA and USD 20 million in net income.
The Board of Directors of Zain Group recommended a cash dividend of 33 fils per share for 2019, and also as a first by a corporate entity in Kuwait, made another recommendation to implement a minimum cash dividend policy of 33 fils for the forthcoming two years, both subject to the Annual General Assembly and statutory approvals.
Group Key Performance Indicators (KD and USD) for the Fourth Quarter 2019
| Consolidated Revenue | KD 439 million | (USD 1.4 billion) |
| EBITDA | KD 191 million | (USD 629 million) |
| EBITDA Margin | 43.5% | |
| Net Income | KD 64 million | (USD 211 million) |
| EPS | 15 fils | USD 0.05 |
For the fourth quarter (Q4) of 2019, Zain Group generated consolidated revenue of KD 439 million (USD 1.4 billion), up 7% Y-o-Y. EBITDA for the quarter amounted to KD 191 million (USD 629 million), reflecting an EBITDA margin of 43.5%. Net income for the period amounted to KD 64 million (USD 211 million), up 8% Y-o-Y, representing Earnings Per Share of 15 fils (USD 0.05).
Key Operational Notes for 12 months ended 31 December, 2019
- Zain Group consolidated data revenue grew 36% Y-o-Y to reach USD 2 billion, representing 36% of the Group’s revenue for 2019
- Throughout 2019, Zain Group invested over USD 1 billion in CAPEX, predominantly in expansion of Fiber-to-the-Home (FTTH) infrastructure; spectrum fees; 4G upgrades and new network sites across its markets, as well as 5G rollouts in Kuwait and Saudi Arabia inclusive of 5G roaming.
- The adoption of new accounting standard IFRS 16 – ‘Leases’ from the beginning of 2019 resulted in a benefit to EBITDA of KD 73 million (USD 241 million), and an increase in net income of KD 7 million (USD 23 million) for the full-year 2019.
- The year was highlighted by the notable 46% increase in net income at Zain Saudi Arabia, 28% net income growth at Zain Iraq and 11% net income growth in Sudan in USD terms
- The Zain Group Application Program Interface (API) platform, which saw Zain revealing its APIs, removing a barrier to the development of potential digital partnerships globally, witnessed impressive customer uptake and resulting revenue
Commenting on the strong results, the Chairman of the Board of Directors of Zain Group, Mr. Ahmed Al Tahous said, "The company’s performance for 2019 is testament to the successful implementation of the strategic and sustainability-conscious roadmap set by the Board and management. We will maintain our resolve to rollout high quality telecommunication services across our markets in a responsible manner, empowering and improving the socio-economic well-being of the communities we serve. Furthermore, I would like to thank all the government ministries and regulatory authorities across our markets for their wisdom and understanding of the emerging industry dynamics, supporting us in overcoming challenges faced by the telecom sector.”
Zain Vice-Chairman and Group CEO, Bader Al-Kharafi commented, “Our Group financial performance across all operations, especially the robust profit growth in Saudi Arabia, Iraq and Sudan operations, and sound performance by our highly profitable Kuwait operation, tops off an incredible operational year and gives us enormous confidence going into 2020 and beyond. Our 4Sight strategy is taking shape, building on our many strengths while seeking value-creating new business verticals that support our vision of becoming a leading ICT and digital lifestyle provider that makes the world a better place.”
On the new cash dividend policy recommended by the Board of Directors committing the company to a minimum 33 fils for the forthcoming two years, a first by any corporate entity in Kuwait, Al Kharafi elaborated, “This recommendation is a result of the impressive operational performance attained by the Group in recent years and confidence in the future potential of our digital growth strategy in seeking new business verticals. We expect to reap healthy rewards from our investments in 5G, Fiber and network upgrades across key markets that support the ever-increasing demand for mobile and fixed broadband services by individuals and enterprises alike.”
Al-Kharafi continued, “We are focused on optimizing the synergies between the Group, Omantel and all operations as well as making significant investments in fiber combined with 4G and 5G network upgrades to fully exploit our data monetization initiatives. Moreover, we are setting up structures and entering into key partnerships in the FINTECH and e-Health arena, and opening our APIs across key markets to offer appealing entertainment and gaming services, so as to reap the lucrative opportunities in the digital space.”
Al-Kharafi further noted, “The successful mid -year launch of 5G in Kuwait, which was soon followed by Saudi Arabia in the region’s largest commercial rollout, is a clear indicator of our passion for this technology and its ability to provide customers a superior mobile experience. Zain is mobilizing resources to capitalize on the enormous opportunity that 5G technology provides, creating vast opportunities in the value chain proposition in numerous industries, especially with regard to Enterprise (B2B) services to government and businesses of all sizes. We believe 5G will push the telecom sector to a new and exciting phase of growth.”
On the point of Zain’s corporate sustainability focus, Al-Kharafi said, “Contributing to the socio-economic development of our operating countries, aligning to the climate change target and developing our employees, ultimately leads to a more successful and profitable organization. In our world, digital and technological advancements offer endless opportunities to not only address negative impacts but create positive ones. Through digitization, our wide range of services, and reach, we aim to unlock the many opportunities that the Sustainable Development Goals (SDGs) offer, as sustainability is an intrinsic part of our DNA. Most recently, for example, Zain became a member of the Climate Disclosure Project (CDP), thus paving the way to a structured reduction of our environmental footprint.”
Regarding the company’s internal initiatives, Al-Kharafi said, “I am inspired by the work we are doing inside the organization to foster understanding and offer great life and work opportunities to all employees. Our Diversity and Inclusion program is one of the most progressive of any entity in the region, with initiatives focusing on Gender Diversity (WE); our aim to be Disability Inclusive by 2022 (WE ABLE), becoming a signatory to the International Labor Organization (ILO) Global Business and Disability Network Charter; Reverse Mentoring and our Generation Z graduate program (ZY); and our internal innovation program (ZAINIAC), have all become central to our development as an organization. The overwhelming success of these initiatives has seen all our operations immediately enjoy many direct benefits as well as being appreciated by our people and all external stakeholders.”
Al-Kharafi concluded, “I would like to express my deep, personal gratitude to the Zain workforce, the Board of Directors, and the government agencies and bodies we cooperate with to deliver the experience we do at such a high level. I believe we can look ahead with confidence as we continue to make considerable progress and help uplift the societies we serve along the way.”
Operational review of key Zain markets for the 12 months ended 31 December, 2019
Kuwait: Maintaining its market leadership, the flagship and Zain Group’s most profitable operation saw its customer base increase 7% to serve 2.8 million in a highly productive year that saw the operator launch commercial 5G services and rollout numerous innovative digital services to enterprises and individual customers. Revenue increased by 1% to reach KD 333 million (USD 1.1 billion), EBITDA increased by 10% to reach KD 126 million (USD 417 million) and net income up by 1% to reach KD 83 million (USD 273 million). Zain Kuwait reported an EBITDA margin of 38%, with data revenue growing 7% Y-o-Y, to form 37% of total revenue. During 2019, Zain Kuwait made substantial progress in its digital transformation launching numerous applications and operational efficiency initiatives to support the expansion of 25 smart branches and further enhancement of its interactive zBot chat digital channel on the WhatsApp platform, that reduced customer waiting times by 90%. Notably, as the first operator to launch 5G services in the country in June 2019, Zain attained the largest market share of 5G customers in Kuwait. The operator meticulously prepared itself for the launch of 5G and rolled out commercial services immediately on the availability of 5G smartphones and compatible mobile broadband routers.
Saudi Arabia: Zain KSA recorded its highest ever financial results for the year, generating revenue of SAR 8.4 billion (USD 2.2 billion), a 11% increase Y-o-Y, while EBITDA for the year increased by 27% Y-o-Y to reach SAR 3.8 billion (USD 1.02 billion), reflecting an EBITDA margin of 46%. Net income soared to reach SAR 485 million (USD 130 million), reflecting a 46% increase Y-o-Y. With the rollout of FTTH services and the largest commercial 5G network in the region, Zain KSA reported total CAPEX investment of SAR 1.9 billion (USD 512 million) for full-year 2019. The operator’s total customer base stood at 7.6 million and data revenue represents 43% of total revenue.
Iraq: Zain Iraq’s revenue was stable at USD 1.1 billion despite a competitive landscape and economic and political issues in Zain stronghold regions. EBITDA grew strongly by 10% Y-o-Y amounting to USD 465 million (43% EBITDA margin) based on the operational transformation program. Accordingly, the operation reported a net profit of USD 63 million for 2019, up 28% Y-o-Y. Zain Iraq’s focus on customer experience, services expansion across the country and cost transformation combined with growth of data and digital revenue were key drivers of this exceptional performance. Retention and customer loyalty initiatives also resulted in the company serving 15.7 million customers.
Sudan: In local currency SDG terms, the operator continues to perform exceptionally well, as revenue grew by 43% Y-o-Y to reach SDG 13.9 billion (USD 304 million, down 4% in USD terms) for the full-year 2019. EBITDA increased by 52% to reach SDG 5.6 billion (USD 122 million, up 1% in USD terms), while net income increased 87% to reach SDG 2.3 billion (USD 49 million, up 11% in USD terms). Data revenue formed 18% of total revenue, with an impressive annual growth of 41% in SDG terms. The operation serves the largest customer base in the Group with 15.9 million customers.
Jordan: Maintaining market leadership, Zain Jordan served 3.6 million customers. Revenue was stable at USD 496 million, with EBITDA up 14% Y-o-Y to reach USD 221 million, reflecting an improved EBITDA margin of 45%. Net income reached USD 77 million, up 5% Y-o-Y. Expansion of fiber and 4G networks and related digital offerings including B2B services, saw data revenue represent 41% of total revenue.
Bahrain: Zain Bahrain generated revenue of USD 167 million, down 5% Y-o-Y. EBITDA for the period amounted to USD 56 million, up 35% Y-o-Y, reflecting an EBITDA margin of 33%. Net income amounted to USD 14 million, reflecting a 2% increase Y-o-Y. The operation recently revamped its 4G network and will soon launch 5G services. Data revenue represented 47% of overall revenue.