ShareKUWAIT: Zain Group, a leading provider of innovative technologies and digital lifestyle communications operating in seven markets across the Middle East and Africa, announces its consolidated financial results for Q2 and six months ended June 30, 2023. Zain served 52.7 million customers at the end of the period, a 2 percent increase year-on-year (YoY).
In the second quarter of 2023 (Q2), Zain Group generated consolidated revenue of KD 461 million ($1.5 billion), up 10 percent YoY. EBITDA for the quarter reached KD 182 million ($594 million), up 10 percent YoY, reflecting an EBITDA margin of 40 percent. Net income for the quarter amounted to KD 57 million ($187 million), up 14 percent YoY, reflecting earnings per share of 13 fils ($0.04).
For the first six months of 2023 (H1), Zain Group generated consolidated revenue of KD 930 million ($3.03 billion), an increase of 12 percent YoY. EBITDA for the period reached KD 348 million ($1.1 billion), up 9 percent YoY, reflecting an EBITDA margin of 37 percent. Net income for the first six months amounted to KD 112 million ($364 million), up 14 percent YoY, reflecting earnings per share of 26 fils ($0.08).
Key Operational Notes for H1' 2023
1. For the 3rd consecutive year, Board declares an interim dividend of 10 fils per share for first six months of 2023 that will be payable to entitled shareholders on 14 September 2023.
2. Zain Kuwait wins the number range fees litigation amounting to KD 24.68 million ($80.3m)
3. Zain Group receives a first-ever cash dividend of SAR 158 million ($42m) from Zain KSA
4. Data revenue reaches $1.2 billion, representing 39 percent of Group revenue
5. Over the six months, Zain Group invested $178 million in CAPEX (tangible and intangible)
6. Operations in Kuwait, KSA, and Bahrain witness impressive growth in 5G revenues, and soft launch of 5G in Jordan
7. Establishment of Zain Omantel International (ZOI) set to revolutionize the international telecommunications wholesale landscape
8. Zain and TASC Towers Holding enter exclusive negotiations with Ooredoo to create a joint independent tower entity comprising of 30,000 towers
9. Fintech services witness exponential growth as total revenue increased 294 percent YoY, customers grew 73 percent to reach 1.3 million, with transaction value doubling YoY
10. Zain's "Tamam" platform in Saudi Arabia awarded 'Best Personal Finance Solution' in Middle East
11. Enterprise revenue up 27 percent as ZainTech and local B2B teams secure multiple deals offering compelling ICT services to businesses and governments across the region
12. ZainTech acquires Adfolks, a UAE-based cloud transformation services firm and enters strategic partnerships with UAE operator du and Mastercard
13. Dizlee API platform and VAS digital services witness healthy revenue growth of 15 percent
14. Zain's digital operator Yaqoot in KSA, and oodi in Iraq, report strong YoY growth in key KPIs
15. Playhera Max cloud gaming platform launched in KSA in June 2023
16. Zain wins World Finance Best Corporate Governance Award 2023 and Best Corporate Governance of a listed company in Kuwait by the Arab Federation of Capital Markets
17. Zain publishes 12th sustainability report entitled, 'An Inclusive Transition for Future Generations'
Osamah Al-Furaih, Chairman of the Board of Directors of Zain GroupCommenting on Q2 and H1 2023 results, Chairman of the Board of Directors of Zain Group, Osamah Al-Furaih said, "This exceptional performance is a result of the Board and management's focus on driving sustainable shareholder value through effective environmental, social and governance (ESG) practices, network upgrades expansion, and growing new lucrative business verticals with a focus on providing customers with an exceptional telecom experience."
He added, "Our conducive relationships with the management of Omantel and government authorities across our markets is supporting us in our mission to reap the benefits of digital transformation as we drive systemic change and provide meaningful connectivity to the communities we serve and beyond."
On the ongoing situation in Sudan, the Chairman commented, "We are extremely proud of our people who are working 24/7 and making personal sacrifices in providing vital connectivity to the Sudanese community. The Board and group management are in constant and close cooperation with the management teams there in supporting them on multiple fronts, taking all reasonable measures to protect our people, assets, and commercial operations during this turbulent time. We pray for the safety of all the people in Sudan and are hopeful that the conflict will end soon."
Bader Al-Kharafi, Zain Vice Chairman and Group CEOBader Al-Kharafi, Zain Vice-Chairman and Group CEO commented, "The solid growth in Enterprise, Digital and Fintech revenues combined with operational efficiencies across our markets was key to the impressive financial performance for the first half of 2023. On the back of these robust results combined with our strong balance sheet and financial solvency, and in accordance with our declared 35 fils per share minimum dividend policy for the next three years starting 2023, the Board is pleased to declare a third consecutive half-year dividend of 10 fils per share."
"The sound performance of all our operations is a testament to our firm commitment and success in executing our ambitious '4Sight' corporate strategy to drive growth through digital transformation and new lucrative business streams, as we methodically manage the continuing competitive and socio-economic challenges that several of our markets face."
"The $42 million cash dividend received from Zain KSA for its 2022 financial year, is significant in that apart from being the operator's first ever-cash dividend distribution to shareholders, it is indicative of the successful achievement of Zain KSA's transformational turnaround in recent years whereby it reported record revenues and profits in 2022, and likewise for the first six-months of 2023. We are very optimistic of the growth potential of Zain KSA in creating shareholder value and playing a key role in Saudi Vision 2030."
"Our pioneering Tower sale and leaseback strategy is making substantial progress and creating shareholder value on multiple fronts. We are quietly confident that our recently announced deal of Zain and TASC Towers entering exclusive negotiations with Ooredoo to create a jointly owned independent tower entity comprising of 30,000 towers, will materialize and create enormous value for all our respective stakeholders. We are thankful of Ooredoo's board and management for their trust and genuine spirit of partnership to take these exclusive discussions forward."
"I'm very excited by the potential opportunities that the strategic establishment of 'Zain Omantel International' (ZOI), a first-of-its-kind joint venture will bring as it will revolutionize the telecommunications wholesale landscape. It will become the Middle East's premier wholesale powerhouse serving regional operators, international carriers, and global hyperscalers. The partnership will create new opportunities for growth and innovation, with Zain and Omantel customers benefiting from quality internet connectivity, voice, roaming, and messaging. ZOI will manage all international wholesale requirements of Zain and Omantel operations in eight countries, serving over 55 million customers, and benefitting both entities on financial, commercial and operational levels."
"Our enterprise solutions arm ZainTech is fast becoming the digital transformation partner of choice for governments and businesses across our markets, the UAE and beyond. The recent acquisition of Adfolks, a UAE-based cloud transformation services firm brings a wealth of expertise in developing bespoke and agile technology solutions that will enable ZainTech to drive even more value for its clients in the dynamic and constantly evolving technology landscape by streamlining their digital transformation journey, making it simpler and more seamless than ever before."
"Furthermore, the recent go-to-market strategic partnership between ZainTech and prominent UAE operator 'du' will unlock synergies while embracing ESG principles towards a Net Zero future. The collaboration will enable both companies to offer enterprise customers an innovative and comprehensive suite of solutions across various areas, including Sustainability, IoT, Drones-as-a-Service (DaaS), Data Practice, Cloud Managed Services, and App Modernization, as well as international connectivity."
"Our fintech entities in KSA, Iraq, Jordan and South Sudan, as well as our pure digital operators in Saudi Arabia and Iraq are witnessing exponential revenue and customer growth, as are the Dizlee API platform and related digital VAS activities in all our markets. We will continue to foster and grow these lucrative areas of business across our footprint."
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 three years in a row by World Finance Publishing House as well as the award of the Best Corporate Governance of a listed company in Kuwait by the Arab Federation of Capital Markets. 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, 2023
Kuwait: Maintaining its market leadership, the flagship operation of Zain Group saw its customer base grow 2 percent YoY, to serve 2.6 million customers. The Group's most profitable operation, revenue remained stable at KD 173 million ($563 million), with EBITDA increasing by 39 percent to reach KD 90 million ($295 million), reflecting an EBITDA margin of 52 percent, mainly due to the successful number range fees litigation of KD 24.68 million ($80.3 m) which also impacted net income reaching KD 63 million ($206 million). Data revenue represented 39 percent of total revenue. Despite the intense competition, the operator continues to expand and grow its leading nationwide 5G network capturing the largest 5G customer base and revenue market share in the country. Winning key corporate and government accounts through its unrivaled B2B offerings, as well as the continual introduction of new appealing digital services including Zain Max, a quad-play redefining a new generation of Internet and entertainment plans for postpaid customers, are key parts of the operator's focus.
Saudi Arabia: Revenue grew 10 percent YoY to reach $1.3 billion, with EBITDA amounting to $401 million, reflecting an EBITDA margin of 31 percent. Net income grew 220 percent for the six-month period reaching $183 million. The operator's 5G network covering over 50 cities saw data revenue represent 41 percent of total revenue and customers served stood at 8.7 million.
Iraq: Revenue grew 17 percent to reach $455 million, EBITDA reached $166 million, reflecting an EBITDA margin of 37 percent, with net profit jumping nearly eight-fold to reach $43 million compared to $5 million last year. The operator's customer base reached 17.7 million customers maintaining its market leading position.
Sudan: Despite the ongoing conflict, revenue soared 46 percent to reach $303 million, with strong EBITDA growth of 46 percent reaching $154 million, reflecting an EBITDA margin of 51 percent. Net income for the period grew 23 percent reaching $136 million. Data revenue grew by 67 percent representing 35 percent of total revenue, customers base increased by 3 percent to reach 16.9 million, maintaining its market leadership position.
Jordan: Revenue grew 4 percent YoY to reach $261 million, EBITDA reached $106 million, reflecting an EBITDA margin of 41 percent, with net income reaching $38 million. With the ongoing expansion of FTTH and 4G services across the country and soft launch of 5G in parts of the Kingdom, data revenue grew 2 percent representing 49 percent of total revenue. Zain Jordan served 3.8 million customers (up 5 percent YoY) maintaining its market leadership.
Bahrain: Revenue grew 11 percent YoY reaching $98 million. EBITDA for the period was stable at $29 million, reflecting an EBITDA margin of 30 percent. Net income reached $7.3 million, with data revenue growing 7 percent to represent 45 percent of total revenue.
