Industry Updates

Zain Group generated revenue of USD 5.3 billion and Net Profit of USD 605 million for 2020; Board recommends cash dividend of 33 fils per share

• Chairman Ahmed Al Tahous, “During COVID 19 pandemic, key focus has been on providing meaningful connectivity and implementing more digitalization initiatives”
• Vice Chairman and Group CEO, Bader Al Kharafi: “Board adhering to its three-year dividend commitment, 77% payout ratio of earnings is one of the highest in the region”
• Q4 2020 revenues KD 432 million (USD 1.4 bn), net income KD 54 million (USD 176 million)
• The Group’s revenues incur foreign currency translation impact of USD 110 million
• Efficiency drive by management reduced operational expenses by USD 168 million
• 2020 highlighted by 9% increase in data revenues due to expansion of 4G & 5G services and monetization initiatives
• 4Sight strategy driving future growth as company enters new lucrative business verticals
• Zain Group has most number of 5G network sites across the region
• Zain Kuwait maintains its market leadership in 5G and all key indicators
• Zain Saudi Arabia successful capital restructuring paves the way for dividends
• Zain Iraq records a 28% increase in net profits, recent 4G launch to drive revenues

Kuwait – 23 February, 2021

Zain Group, a leading mobile telecom innovator in seven markets across the Middle East and Africa, announces its consolidated financial results for the full-year 2020, and fourth quarter ended 31 December, 2020. The Group ended the year with a customer base of 47.8 million customers.

Group Key Performance Indicators (KD and USD) for the Full-Year 2020

For the full-year 2020, Zain Group generated consolidated revenue of KD 1.63 billion (USD 5.3 billion), reflecting a 2% Year-on-Year (Y-o-Y) decrease, while consolidated EBITDA for the period declined by 8% Y-o-Y, to reach KD 673 million (USD 2.2 billion), reflecting a healthy EBITDA margin of 41%. Consolidated net income reached KD 185 million (USD 605 million), down 15% and reflecting Earnings Per Share of 43 Fils (USD 0.14).

For the full-year, foreign currency translation impact, mainly due to the 16% currency devaluation in Sudan from an average of 45.6 to 54.4 (SDG / USD), cost the Group USD 110 million in Revenue, USD 50 million in EBITDA and USD 16 million in Net Income.

The Board of Directors of Zain Group recommended a cash dividend of 33 fils per share for 2020, adhering to the Group’s commitment made last year of a minimum 33 fils dividend for 3 years. This is subject to the Annual General Assembly and statutory approvals.

Group Key Performance Indicators (KD and USD) for the Fourth Quarter 2020

For the fourth quarter (Q4) of 2020, Zain Group generated consolidated revenue of KD 432 million (USD 1.4 billion), down 2% Y-o-Y. EBITDA for the quarter amounted to KD 172 million (USD 563 million), down 10% Y-o-Y, reflecting an EBITDA margin of 40%. Net income for the period amounted to KD 54 million (USD 176 million), down 16 % Y-o-Y, representing Earnings Per Share of 13 fils (USD 0.04).

For Q4 2020, foreign currency translation impact, cost the Group USD 33 million in Revenue, USD 14 million in EBITDA and USD 7 million in Net Income.

Key Operational Notes for 12 months ended 31 December, 2020

1. COVID-19 pandemic disrupted economic activity due to lockdowns and travel bans across all Zain markets, impacted Group’s revenue by USD 417 million for the full year
2. Decisive cost optimization measures such as contracts renegotiation and management of cashflows succeeded in reducing operational expenses by USD 168 million
3. The year was highlighted by the notable revenue growth from 5G in Kuwait and Saudi Arabia that underscored the Group’s consolidated data revenue growth of 9% Y-o-Y, to reach USD 2.2 billion, representing 41% of the Group’s revenue for 2020.
4. Throughout 2020, Zain Group invested USD 1.4 billion in CAPEX (26% of revenues), predominantly in 5G rollouts in Kuwait and Saudi Arabia; 4G upgrades and new network sites across Iraq and Jordan; expansion of Fiber-to-the-Home (FTTH) infrastructure; and spectrum license fees
5. Zain KSA completed its capital restructuring during Q4 2020 with massive demand in the remaining priority rights subscription that was oversubscribed by an unprecedented 469%
6. Zain Iraq granted 4G license with mobile license extended to 2030
7. Handover of Lebanon’s network to the Ministry of Telecom, effective October 30, 2020
8. Company launches a new powerhouse in gaming, ‘Zain eSports’ to boost the gaming ecosystem
9. The Zain Group Application Program Interface (API) platform witnessed impressive customer uptake, generating healthy revenues from having over 5 million transactions per month
10. Zain joins a global effort with GSMA to improve Digital Inclusion of Persons with Disabilities
11. Zain ranked best Telecom employer in the region by Forbes’ World’s Employers list for 2020. Also ranked 4th best regional employer across all industries and only company from Kuwait in Forbes list

Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mr. Ahmed Al Tahous said, “Since the start of the COVID 19 pandemic, the Group’s key focus has been on providing meaningful connectivity and implementing more digitalization initiatives to better serve communities, businesses and governments, aiming to lessen the impact of the pandemic on society. 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 during these unique times.”

Zain Vice-Chairman and Group CEO, Bader Al-Kharafi commented, “The Group’s performance for 2020 reflects the reality of the COVID 19 pandemic’s disruption on economic-social activity and the unavoidable impact it had on the financial results. The Board and management are working closely together in minimizing this impact across our footprint with a particular focus on driving efficiencies, cost optimization and monetizing our 4G and 5G networks. Our 4Sight strategy is taking shape, building on our many strengths while seeking new value-creating business verticals that support our vision of becoming a leading ICT and digital lifestyle provider.”

Al Kharafi continued, “Last year, in a first by any corporate entity in Kuwait, the Board of Directors recommended a new cash dividend policy committing to a minimum 33 fils per share for three years. Despite the USD 417 million loss of revenue due to the impact of COVID-19 on the business and a foreign currency translation impact of USD 110 million on revenue, I am pleased to reaffirm the Board’s dividend commitment for 2020 will be fulfilled. This 33 fils per share dividend reflects a 77% payout ratio of earnings, one of the highest in the region.”

The Vice-Chairman added, “The Board’s recommendation is a result of the operational performance attained by the Group in 2020, supported by our decisive efficiency drive that succeeded in reducing operational expenses by USD 168 million since the beginning of the pandemic. It also reflects the confidence in the future potential of our digital growth strategy in seeking new business verticals. Moreover, due to operational efficiencies, we managed to reduce the Group’s total net debt by approximately USD 1 billion, an achievement that has bolstered our financial position.”

“We are focused on optimizing the synergies between the Group and all operations and investing heavily in 5G rollouts, FTTH, 4G expansion and spectrum whereby we invested USD 1.4 billion in CAPEX during 2020, representing 26% of revenue. Moreover, we are mobilizing resources to capitalize on the enormous opportunity that 5G technology and FTTH provides, creating vast opportunities particularly related to Enterprise (B2B) services to government and businesses of all sizes. The recent establishment of Zain Data Park will provide cloud hosting and managed services across the ICT stack, including applications, cybersecurity and networking.”

Al-Kharafi further noted, “Zain is also focused on reaping the lucrative opportunities in the digital space. Management is very optimistic of the potential of Zain KSA’s fintech subsidiary, ‘Tamam’, which was recently granted the region’s first consumer micro-financing license by the Saudi Central Bank. Innovation is key and investing in viable digital services such as the fintech sector is critical to Zain’s sustained evolution and success.”

With respect to the recent launch of Zain esports, Al Kharafi said, “This initiative meets a number of different goals for Zain, including youth development, enriching the brand, fostering innovation and digital opportunities across our 4G, 5G and fiber networks. This initiative creates shareholder value on multiple fronts, and we are confident Zain esports will develop into a regional gaming powerhouse.”

On a final operational note, Al Kharafi emphasized the success of Zain KSA’s recent capital restructuring in Q4 2020 that saw the remaining priority rights subscription oversubscribed by an unprecedented 469%, saying, “This transaction enhances Zain KSA's ability to expand its strategic investments in the Kingdom’s telecommunications sector, growing its profitability and paving the way for dividends.”

Al-Kharafi concluded, “I would like to recognize and thank all the 7,500 dedicated and talented Zain colleagues across all our operations who have remained motivated to their duties and provided exemplary services, helping deliver on the critical role we play in maintaining connectivity and supporting the communities we serve throughout these exceptional times. Zain was committed to ensuring their wellbeing and safety, and the company took decisive actions to support and provide them with the tools needed to adapt and deliver during this time of crisis.”

“Moreover, I would like to express my deep, personal gratitude to our customers, the Board of Directors, and the government agencies and bodies we cooperate with to deliver the mobile experience we do at such a high level.”

Operational review of key markets for the 12 months ended 31 December, 2020

Kuwait: Maintaining its market leadership on all levels, Zain Group’s flagship operation saw its customer base serve 2.6 million. It remains the Group’s most profitable operation with revenue for full-year 2020 reaching KD 321 million (USD 1.05 billion), EBITDA reaching KD 112 million (USD 367 million), representing an EBITDA margin of 35%. Net income reached KD 76 million (USD 248 million), with data revenue accounting for 38% of total revenue.

Saudi Arabia: Zain KSA generated revenue of SAR 7.92 billion (USD 2.1 billion), EBITDA for the period reached SAR 3.44 billion (USD 918 million), reflecting an EBITDA margin of 43%. Net income reached SAR 260 million (USD 69 million). Data revenue grew by 8% Y-o-Y and represents 50% of total revenue with the operator serving 7.0 million customers.

Iraq: Zain Iraq’s revenue reached USD 943 million and EBITDA amounted to USD 378 million, reflecting EBITDA margin of 40%. The operation reported a net profit of USD 80 million, a 27% Y-o-Y increase. The operator served 16.2 million customers maintaining its market leading position.

Sudan: Zain Sudan generated revenue of SDG 22.5 billion (USD 416 million), a 62% increase in SDG terms and 37% increase in USD terms, with EBITDA amounting to SDG 9.3 billion, up 67% (USD 171 million, up 41%), reflecting an EBITDA margin of 41%. Net income for the period reached SDG 3.3 billion, up 47% (USD 61 million, up 23%). With the continual expansion of 4G services across the country, data revenue represented 26% of total revenue, growing an impressive 142% in SDG terms (104% in USD). The operator’s customer base grew 4% Y-o-Y to reach 16.6 million, further cementing its market leadership.

Jordan: Zain Jordan revenue reached USD 487 million, EBITDA reached USD 216 million, reflecting an EBITDA margin of 44%, with net income reaching USD 79 million, a 3% increase. With the expansion of 4G services across the country, data revenue represented 46% of total revenue, an impressive 12% increase. The operator served 3.5 million customers maintaining its market leading position.

Bahrain: Zain Bahrain generated revenue of USD 164 million, EBITDA for the year increased by 2%, to reach USD 57 million, reflecting an EBITDA margin of 34%. Net income amounted to USD 14 million, up 3% Y-o-Y. With the soft launch of 5G services mid-2020 and monetization initiatives, data revenue grew 7%, representing 51% of total revenue. END

About Zain Group: Zain is a leading telecommunications operator across the Middle East and Africa providing mobile voice and data services to over 47.8 million active customers as of 31 December, 2020. With a commercial presence in 7 countries, Zain operates in: Kuwait, Bahrain, Iraq, Jordan, Saudi Arabia, Sudan and South Sudan. In Morocco, Zain has a 15.5% stake in ‘INWI’, through a joint venture. Zain is listed on the Kuwait Stock Exchange (stock ticker: ZAIN). We recommend the Investor Community download the “Zain Group Investor Relations” Mobile App. For more information please email info@zain.com or visit: www.zain.com; www.facebook.com/zain; www.twitter.com/zain; www.youtube.com/zain; www.instagram.com/zaingroup; www.linkedin.com/company/zain

Source: Zain Press Release