Zain Group 2nd quarter 2022 net profit soars 22% to reach KD 50 million Board declares interim dividend of 10 fils per share

KUWAIT: Zain Group, a leading telecommunications innovator operating in seven markets across the Middle East and Africa, announces its consolidated financial results for the six months to June 30, 2022. Zain served 51.7 million customers at the end of the period, a 7.1% increase year-on-year (Y-o-Y).

Group Key Performance Indicators (KD and USD) for the second quarter (Q2) of 2022

In the second quarter of 2022 (Q2), Zain Group generated consolidated revenue of KD 421 million (USD 1.4 billion), up 14% Y-o-Y. EBITDA for the quarter reached KD 166 million (USD 544 million), up 9% Y-o-Y, reflecting an EBITDA margin of 40%. Net income for the quarter amounted to KD 50 million (USD 165 million), up 22% Y-o-Y, reflecting earnings per share of 12 fils (USD 0.04).

Group Key Performance Indicators (KD and USD) for first six months (H1) of 2022

For the first six months of 2022 (H1), Zain Group generated consolidated revenue of KD 829 million (USD 2.7 billion), an increase of 10% Y-o-Y. EBITDA for the period reached KD 320 million (USD 1.1 billion), up 3% Y-o-Y, reflecting an EBITDA margin of 39%. Net income amounted to KD 98 million (USD 321 million), up 14% Y-o-Y, reflecting earnings per share of 23 fils (USD 0.07).

Key Operational Notes for H1, 2022

1. Board declares 2nd consecutive interim dividend of 10 fils per share for first six months of 2022.
2. Data revenue reaches USD 1.1 billion, representing 40% of Group
3. Over the six months, CAPEX investments focused predominantly on 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, KSA, and Bahrain.
4. Zain Kuwait becomes the first telecom operator globally to launch Vo5G with nationwide coverage; also completes first live trial in region for 4G / 5G Open and Cloud Native Radio Access Network (cRAN).
5. ZainTech, the Zain Group enterprise (B2B) arm, witnesses’ strong growth across markets landing key regional clients and new partnerships, with B2B revenues growing 21% Y-o-Y.
6. Dizlee, the Zain Group Application Program Interface (API) platform, grows exponentially with 26 digital partnerships, offering 51 live services, resulting in an impressive 5.5 million transactions per month and a 34% Y-o-Y increase in revenue.
7. Zain Esports in cooperation with Zain KSA launches PLAYHERA MENA gaming tournament platform targeting region’s lucrative gaming market of an estimated 100 million gamers.
8. Zain’s pure digital operator ‘Yaqoot’ in KSA and ‘oodi’ in Iraq witness robust growth.
9. Zain Group publishes thought leadership report entitled ‘The Climate Crisis – Achieving Net-Zero for a Sustainable Future’.
10. Zain Group awarded ‘Best Telco Operator’ and ZainTech awarded ‘Best Digital Service’ at the 2022 Telecom World Middle East Awards.
11. Zain recognized with World Finance Best Corporate Governance Award 2022 for Kuwait.

Commenting on Q2 and H1 2022 results, Chairman of the Board of Directors of Zain Group,

Mr. Ahmed Al Tahous said, "The Board and management are focused on driving sustainable shareholder value through strong environmental, social and governance (ESG) practices, diligent investments in 4G and 5G network upgrades expansion, and seeking new lucrative business verticals to drive growth. We thank all the government authorities across our markets for their proactivity in supporting the telecom sector as we strive to provide meaningful connectivity to the communities we serve.”

Mr. Bader Al-Kharafi, Zain Vice-Chairman and Group CEO commented, "We are delighted by the company’s robust financial and operational performance for the first six months of the year, which reassured the Board to declare a second consecutive half-year dividend of 10 fils per share. Our solid balance sheet and financial solvency is a result of the company's success in the execution of its ‘4Sight’ corporate strategy, which is, driving growth, digital transformation, and optimal efficiencies across all operations.”

Al-Kharafi continued, "The healthy revenue and net income growth across multiple key markets vindicates the strategic investments we have made over recent years in network upgrades and cutting-edge digital platforms. By offering our individual and enterprise customers state-of-the-art technologies and services, we are enhancing our customer and revenue share across our markets.”

"The 5G network of our flagship operation in Kuwait is the driving force of the 9% increase in customers and generation of multiple streams of profitable government and enterprise revenue, resulting in a 11% increase for all key financial indicators - revenue, EBITDA and net income.”

"Similarly, the 5G network and appealing data monetization initiatives in both Saudi Arabia and Bahrain are driving growth on multiple levels. In Iraq, Jordan and Sudan, the operations are monetizing their 4G networks profitably and we look forward to launching 5G services in those markets in the future, upon receipt of regulatory approvals.”

"We have recently applied for a digital banking license in Kuwait with Boubyan Bank and other investors, as we are keen of becoming the leading telco-led challenger bank in Kuwait. We are focused on fostering innovation and building on our success in the fintech space, given the exceptional accomplishments of Tamam in Saudi Arabia, Zain Cash in Iraq and Jordan, as well as MGurush in South Sudan.”

"Our all-digital-only operators ‘Yaqoot’ in KSA and ‘oodi’ in Iraq both continue to deliver healthy growth, offering a simple mobile experience for customers all through an app.”

"Moreover, our enterprise solutions arm ZainTech has gained enormous traction to date, establishing the groundwork for exponential profitable growth. We aim to be the digital partner of choice for governments and enterprises across our markets.”

Al-Kharafi concluded, "As a leading entity listed on the Premier Market in Kuwait, Zain seeks to exceed the regulations issued by all financial regulatory bodies including the Ministry of Commerce and Industry, the Capital Markets Authority and Boursa Kuwait. Accordingly, it was a gratifying achievement to be recognized as possessing the ‘Best Corporate Governance’ practice in Kuwait for two years in a row by World Finance Publishing House. This milestone justly rewards our Investor Relations, Corporate Governance, and Sustainability teams’ high ethical standards, transparency and professionalism towards all our stakeholders.

Financial KPIs of key markets for six-month period (H1) ended June 30, 2022

Kuwait: Maintaining its market leadership, the flagship operation of Zain Group saw its customer base grow by 9% Y-o-Y, now to serve 2.6 million customers. The Group’s most profitable operation saw its H1 2022 revenue grow by 11% to reach KD 173 million (USD 567 million), with EBITDA increasing by 11% to KD 65 million (USD 214 million), reflecting an EBITDA margin of 38%. The operator’ net income grew by 11% to KD 41 million (USD 135 million). Data revenue grew by 5% Y-o-Y and represented 38% of total revenue. The operator continues to grow its 5G mobile and broadband customers, capturing the largest 5G customer and revenue market share in the country.

Saudi Arabia: Revenue grew 14% Y-o-Y to reach USD 1.2 billion, with EBITDA amounting to USD 398 million, reflecting an EBITDA margin of 34%. Net income grew 159% for the six-month period reaching USD 57 million. The operator’s 5G network covering over 50 cities saw data revenue represent 44% of total revenue and customers served stood at 8.9 million, a 21% increase.

Iraq: Revenue grew 4% to USD 390 million, and EBITDA grew by 16% to USD 168 million, reflecting an EBITDA margin of 43%, with net profit reaching USD 5 million for the period. The operator’s customer base increased by 12% to reach 18 million customers maintaining its market leading position.

Sudan: Revenue soared 30% to reach USD 208 million, with strong EBITDA growth of 38% reaching USD 106 million, reflecting an EBITDA margin of 51%. Net income for the period grew 168% reaching USD 111 million. Data revenue grew by 44% representing 31% of total revenue, customers base stood at 16.3million, maintaining its market leadership position.

Jordan: Revenue grew 2% Y-o-Y to reach USD 250 million, EBITDA reached USD 111 million, reflecting an EBITDA margin of 44%, with net income reaching USD 41 million. With the ongoing expansion of FTTH and 4G services across the country, data revenue grew 4% representing 50% of total revenue. Zain Jordan served 3.7 million customers (up 4%) maintaining its market leadership.

Bahrain: Revenue grew 3% Y-o-Y reaching USD 89 million. EBITDA for the period increased by 2% to USD 29 million, reflecting an EBITDA margin of 33%. Net income increased 3% to USD 7.6 million, with data revenue growing 5% to represent 46% of total revenue.