Kuwait: 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 2022, and fourth quarter ended 31 December, 2022. The Group ended the year with a customer base of 52.4 million, an annual increase of 7%, reflecting an addition of 3.5 million customers.

For the full-year 2022, Zain Group generated consolidated revenue of KD 1.7 billion (USD 5.6 billion), a year-on-year (Y-o-Y) increase of 14%. Consolidated EBITDA for the period increased by 7% Y-o-Y, to reach KD 673 million (USD 2.2 billion), reflecting an EBITDA margin of 39%. Consolidated net income reached KD 196 million (USD 640 million), up 6% Y-o-Y and reflecting earnings per share of 45 fils (USD 0.15).

The Board of Directors of Zain recommended a cash dividend of 25 fils per share for the second half (H2) of 2022.This dividend follows the semi-annual dividend of 10 fils distributed earlier in 2022, totaling 35 fils per share for the year and reflecting a 78% payout ratio, one of the highest of listed entities in the region. Furthermore, the Board made another recommendation to implement a minimum semi-annual and annual cash dividend policy of 35 fils in total, for the forthcoming three years, both recommendations are subject to Annual General Assembly and statutory approvals.

It is worth noting that the total recommended cash dividends of 25 fils for H2, 2022 and 35 fils each year for the next three years, will total 130 fils in cash dividends. This expected distribution based on the current share price of Zain as of 13 March 2023, will reflect an average annual yield of approximately 8% for entitled shareholders for the three-year period.

For the fourth quarter (Q4) of 2022, Zain Group generated consolidated revenue of KD 458 million (USD 1.5 billion), up 20% Y-o-Y. EBITDA for the quarter amounted to KD 182 million (USD 591 million), up 22% Y-o-Y, reflecting an EBITDA margin of 40%. Net income for the period amounted to KD 44 million (USD 143 million), representing earnings per share of 10 fils (USD 0.03).

Key Operational Notes for 4th quarter and 12 months ended 31 December 2022

1-Throughout 2022, Zain Group invested USD 936 million in CAPEX reflecting 17% of revenue, mainly on 4G and 5G rollouts as well as expansion of Fiber-to-the-Home infrastructure and spectrum license fees

2-Notable 7% customer growth of 3.5 million; and consolidated data revenue growth of 5% to reach USD 2.2 billion, representing 40% of the Group’s revenue for the year

3-Zain KSA completes sale of 8,069 towers for USD 807 million to the Public Investment Fund, to transfer at least 3,000 towers in January 2023, remaining towers to be transferred over 18 months

4-In January 2023, Zain Iraq entered into a definitive 15-year agreement with TASC Towers to sell and leaseback, plus the management rights of its 4,968 tower portfolio for USD 180 million

5-Zain fintech across the group attract 1 million customers, a 64% Y-o-Y increase, with revenue up 241% Y-o-Y and having transactions value of USD 3.6 billion in 2022

6-ZainTech completes acquisition of BIOS Middle East, a leading managed cloud service provider; Groupwide B2B revenues grow 28% as a result of new dynamic and lucrative ICT services

7-Digital services groupwide witness revenue growth of 52% Y-o-Y, inclusive of Dizlee (API) platform offering 51 live services, and having over 191 million API transactions since launch in mid-2018

8-The growth of Zain Esports saw it hold 28 tournaments in 2022, with over 30,000 gamers, more than 70 million social media impressions and 15 million engagements on social media channels

9-Zain maintains region’s highest A- rating on the ‘CDP Score Report–Climate Change 2022’, among the leaders globally; commits to Science-Based Targets initiative emission guidance

10-Zain named Best Telecom Brand in MENA for 2022 by Telecom Review, and as having the Best Diversity & Inclusion strategy and Best Women Development & Leadership Program by Informa

11-Zain brand valuation grows 14% to USD 2.74 billion according to Brand Finance 2022 rankings

Commenting on the 2022 full year results, the Chairman of the Board of Directors of Zain Group, Mr. Ahmed Al

Ahmed Al Tahous-Zain Group Chairman

said, “A challenging year where the Board and management focused on operational efficiency, ESG initiatives, and the development of lucrative business verticals to drive shareholder value among many other key initiatives. I would like to recognize the government bodies and regulatory authorities in Kuwait and across our markets for their foresight in creating a conducive environment that supports the telecom sector and empowers Zain to provide meaningful connectivity to the communities, businesses, and governments we serve.”

Zain Vice-Chairman and Group CEO, Bader Al-Kharafi commented, “The impressive results for the 4th quarter and full-year of 2022 are a culmination of many cost optimization, digital innovation, and data monetization initiatives executed, bolstered by 5G network upgrades, lucrative enterprise deals, tower sales, proactive regulatory and sustainability practices implemented across our footprint in accordance with our 4Sight strategy, all of which are combining to future-proof the company.”

“The Board’s recommendation of 25 fils per share dividend for H2 2022, in addition to the earlier semi-annual 10 fils dividend, totaling 35 fils for the year, reflects a 2 fils increase on the previous three years and a 78% payout ratio, one of the highest in the region. This improved dividend, along with the Board’s minimum 35 fils recommendation for the forthcoming three years, provides a clear indication of the strong operational performance and strength of our financial solvency as we methodically grow the business and manage the continuing socio-economic challenges that several of our markets present.”

“Similar to previous completed transactions in Kuwait and Jordan, the recent sale and leaseback of our passive tower infrastructure in Saudi Arabia and Iraq for a combined value of approximately USD 1 billion, creates significant value for shareholders. By injecting the sale proceeds into the business, it gives both operations greater flexibility to invest in network upgrades and ICT technologies to meet the ever-increasing demand for reliable and high-speed broadband. Moreover, the deal enhances operational efficiencies and enables a laser focus on offering new services and providing customers a better mobile and data experience.”

“The impressive growth of several digital entities that were recently launched is a key part of the Zain’s financial performance and brand strength in recent years. One million customers are now benefiting from the numerous dynamic fintech solutions across several operations, recording over USD 3.6 billion worth of transactions in 2022. We will nurture this ever-growing demand and plan to extend much needed fintech offerings across all operations in the near future.”

“The impressive 52% growth of our Group-wide digital services revenue reflects the many data monetization initiatives maximizing our 5G, FTTH and 4G networks. The Dizlee API platform continues to attract more partners offering sort-after digital content and gaming solutions, resulting in profitable growth on multiple levels. Zain Esports’ tie-up with PLAYHERA MENA to offer a new tournament platform with e-commerce across the Zain footprint is driving gamers to us and cementing Zain as a leading regional gaming powerhouse.”

“ZainTech’s acquisition of managed cloud provider BIOS Middle East is a major milestone in our drive to transform Zain into a leading ICT and digital lifestyle provider. This strategic acquisition is set to supercharge our capabilities in hybrid and multi-cloud managed services and enable us to provide the best suite of digital and ICT transformation services in the region to organizations and government entities. The 28% annual growth in B2B revenues across our footprint reflects the sound cooperative business model between ZainTech and our local operations’ B2B teams.”

“Our wholesale division, ‘Global Connect’ focus on managing capacity, voice, roaming and cable business across the region witnessed the obtaining of approvals for the cable landing station in Sudan through the Africa1 submarine cable landing station. This follows Global Connect’s first investment in a portion of the state-of-the-art PEACE subsea cable, connecting the Middle East with Europe through the J2M (Jeddah, Saudi Arabia to Marseille, France) submarine cable system, that will offer Zain full operational independence. This is a critical factor for Zain operations to foster digital transformation initiatives in their markets, particularly for cloud and IoT services, that will accordingly contribute positively to increasing revenues and reducing operational costs.”

“The A- ranking that Zain maintained in the latest ‘CDP Score Report–Climate Change 2022’, positioned us first in the region and among leaders globally. We have recently committed to setting emissions targets in line with the Science-Based Targets initiative (SBTi) guidance to halve carbon emissions before 2030 and achieve Net-Zero carbon emissions by 2050, highlighting our mission to foster sustainable systemic change and provide meaningful connectivity by integrating technologies to generate safe energy to help reduce global warming. Protection of our planet should be a key priority for every organization and individual.”

“The multiple recognitions we received during 2022, which include the Best Telecom Brand, the Best Diversity, Equity & Inclusion (DEI) strategy, as well as the Best Women Development & Leadership Program in the region, solidify our reputation as one of the most exciting, progressive, and inclusive companies to work for. Zain is proactively embedding its shared values into its DNA to drive our business, sustainability, and DEI agenda, enriching our purpose for being as an organization.”

Al-Kharafi concluded, “As we enter 2023 on the back of these impressive 2022 results, Zain is primed to further execute on its 4Sight strategy, building on and maximizing the many opportunities within the core telecom business while diversifying into new lucrative business verticals in the ICT, digital infrastructure, fintech, and digital services arenas.