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Zain Group 9M 2023 net income up 13% to KD 172 m (USD 561 m) Revenues up 11% to reach KD 1.4 bn (USD 4.6 bn)

Zain Group, a leading provider of innovative technologies and digital lifestyle communications operating in eight markets across the Middle East and Africa, announces its consolidated financial results for the nine-month (9M) and third-quarter (Q3) periods ended 30 September, 2023, serving 52 million customers.

Group Key Performance Indicators (KD and USD) for the first nine months (9M) 2023

For 9M 2023, Zain generated consolidated revenue of KD 1.4 billion (USD 4.6 billion), up 11% year-on-year (YoY), while consolidated EBITDA for the period reached KD 530 million (USD 1.7 billion), up 8% YoY, reflecting an EBITDA margin of 37%. Consolidated net income increased 13% YoY, amounting to KD 172 million (USD 561 million). Earnings per share amounted to 40 fils (USD 0.13) for the nine-month period.

Group Key Performance Indicators (KD and USD) for third-quarter (Q3) 2023

In Q3 2023, Zain generated consolidated revenue of KD 485 million (USD 1.6 billion), up 10% YoY. EBITDA for the quarter reached KD 183 million (USD 594 million), an increase of 7% YoY, reflecting a 38% EBITDA margin. Net income for the three months amounted to KD 60 million (USD 196 million), a 11% increase YoY. Earnings per share for Q3 amounted to 14 fils (USD 0.05).

The robust consolidated results for the 9M 2023 is mainly attributable to the strong performances of all operations; the gains achieved from the sale and leaseback of towers in key markets; successful groupwide cost optimization initiatives and price revamp programs; the monetization and growth of consumer digital and fintech services; as well as ZainTECH and B2B initiatives building on strategic partnerships and exploiting the investments made in ICT entities, 4G, 5G and Fiber-to-the-Home (FTTH) expansion and upgrades.

Key Operational Notes for 9M 2023

1. The interim cash dividend of 10 fils totaling KD 43.3 million (USD 140 million) was distributed in September 2023
2. The 9M period highlighted by net income increases of 38% YoY in Zain Kuwait; 234% YoY in Zain Saudi Arabia; 561% YoY in Zain Iraq; 14% YoY in Zain Jordan and 8% YoY in Sudan
3. Data revenue grew 8% YoY to reach USD 1.8 billion representing 39% of consolidated revenue
4. Zain invested USD 275 million in CAPEX, mainly in FTTH; spectrum fees; 4G and 5G upgrades
5. Zain entered exclusive negotiations with Ooredoo Group and UAE based TASC Towers Holding to combine approximately 30,000 telecom tower assets in Qatar, Kuwait, Algeria, Tunisia, Iraq, and Jordan into a jointly owned independent tower company in a cash and share deal
6. The tower infrastructure sale and leaseback deal in KSA, Kuwait and Iraq generated net gains totaling USD 217 million for the nine-month period.
7. ZainTECH enters agreement to acquire STS, a leading digital transformation solutions provider  
8. Digital services including Dizlee API platform witness revenue growth of 10% for 9M
9. Digital operators 'Yaqoot' in KSA, 'oodi' in Iraq record revenue growth of 93% & 275% respectively
10. Zain KSA in partnership with Red Sea Global, launched the world's first zero-emission 5G network in The Red Sea powered entirely by renewable energy
11. Launch of Thought Leadership Report entitled 'Building Inclusive Societies Through Connectivity"
    
     

Chairman of the Board of Directors of Zain Group, Mr. Osamah Al Furaih said,

"Our operations have shown great resilience in overcoming many headwinds as the board continues to work closely with management on all facets of the business, including the development of new business verticals in the digital space and vast network upgrades. In parallel, our focus on implementing comprehensive ESG practices is complementing our mission to enhance sustainable shareholder value."

"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 three years starting 2023, on September 14^th, we distributed 10 fils per share as interim dividends for the third consecutive year to shareholders. This amounted to KD 43.3 million (USD140m)."

"We are mindful of the challenges faced by our operation in Sudan with the ongoing social unrest. We are supporting the local management team to safeguard our people and commercial operations to ensure the community stays connected, and hope that the conflict will end soon. Furthermore, through our internal BE WELL mental well-being program, we are supporting our people emotionally impacted by the ongoing regional conflict by providing various resources including professional therapy, creation of a communication platform offering advice and well-being checks from our Mental Health First Aiders team."

"With distinct merit, we recognize the various government authorities in Kuwait and across our markets for creating a conducive environment that supports the telecom sector and empowers Zain to provide meaningful connectivity and drive systemic change across the communities, businesses, and governments we serve."

Zain Vice-Chairman and Group CEO, Bader Al-Kharafi commented,
"Despite the many socio-economic and competitive challenges across our markets, the impressive 9M financial performance reflects the implementation of our value-creative '4Sight' strategy in propelling efficiencies, digital transformation and revenue growth. The remarkable operational performance of all our key markets is very gratifying and testament to the coherence between the Group and local management teams in driving synergies and growing the business through multiple initiatives."   
 
"Zain is witnessing the maturing of its ZainTECH and B2B arm, digital operators in KSA and Iraq, fintech operations and digital services across various markets, which are developing to become compelling businesses in their own right, as monetization from these strategic activities is significantly growing."

"In Kuwait, we are very optimistic of the potential of marketing partnership with Red Bull Mobile, bringing together Zain's superior telecom expertise with the adventurous world of Red Bull. Targeting the youth, we are offering appealing options for prepaid voice and internet services. We will foster this partnership and our other digital operators in KSA (Yaqoot) and Iraq (oodi), as we continue to stay ahead of the digital curve, offering the latest innovative technologies and services to customers."
 
"Our exclusive negotiations with Ooredoo and TASC Towers Holding into a jointly owned independent tower company are continuing. This is a milestone development that raises the notion of collaboration and regionalization to an entirely new level."
 
"The establishment of 'Zain Omantel International' (ZOI), is revolutionizing the telecommunications wholesale landscape serving regional operators, international carriers, and global hyperscalers. The team is innovating and creating new growth opportunities, with Zain and Omantel customers benefiting from quality internet connectivity, voice, roaming, and messaging. We are very enthusiastic of ZOI's strategic growth roadmap in creating value for all stakeholders."
 
"ZainTECH's spectacular debut at GITEX 23 last month was very instrumental in firmly placing the fast- growing entity on the regional ICT enterprise map. The agreement to acquire Jordan headquartered STS, comes 20 years after Zain's first regional expansion into the Kingdom. The STS talented team, years of expertise and impressive customer base, will amplify ZainTECH and Zain B2B teams' capabilities to provide clients with cutting-edge and comprehensive digital transformation solutions, solidifying our position as leaders in the industry and driving digital transformation across the region."
"Zain FinTech, our financial services arm agreement with Al Ansari Financial Services sets the stage for an exciting partnership that will leverage the strengths of both companies to drive innovation, harness technologies and transform financial services delivery to cater to our evolving customer needs. We aim to expand our fintech service offerings to advance the region's digital ecosystem and will continue pushing the boundaries, leveraging on the vast network of strategic partners in each of our markets."

Operational review of key markets for the nine months ended 30 September, 2023
Kuwait: Maintaining its market leadership in all areas, Zain Group's flagship operation saw its customer base grow by 1% to serve 2.6 million customers. The Group's most profitable operation saw its 9M 2023 revenue grew 2% to reach KD 264 million (USD 859 million), EBITDA grew 26% to reach KD 124 million (USD 405 million), representing an EBITDA margin of 47%. Net income grew 38% to reach KD 84 million (USD 275 million), mainly due to the successful number range fees litigation of KD 24.68 million (USD 80.3 m). Data revenue represents 38% of total revenue.
Saudi Arabia: For the 9M 2023, Zain KSA revenue grew 10% to reach USD 2.0 billion, EBITDA for the period grew 5% and reached USD 627 million, reflecting an EBITDA margin of 32%. Net income for the nine months grew 224% to reach USD 259 million. Data revenue rose by 2% to represent 40% of total revenue and customers served stood at 8.9 million, a growth of 4%. The impressive net income is attributed to the increase in revenue driven by the growth in B2B, Yaqoot, TAMAM, and 5G revenues as well as the gain from the sale of its Tower network to the Kingdom's PIF.

Iraq: Zain Iraq's 9M 2023 revenue grew by 19% to reach USD 713 million and EBITDA grew by 11% to reach USD 268 million, reflecting EBITDA margin of 38%. Net income increased six-fold to reach USD 64 million for 9M 2023 driven by increased revenues and sale of its Tower network. The operator's customer base stood at 18 million customers, maintaining its market leading position.

Sudan: For 9M 2023, Zain Sudan generated revenue of USD 435 million (up 28%), with EBITDA amounting to USD 215 million (up 20%), reflecting an EBITDA margin of 49%. Net income reached USD 189 million, an 8% increase in USD terms. Data revenue grew 41% YoY and represented 35% of total revenue, while the operator's customer base reached 15.6 million, maintaining its market leadership.

Jordan: For 9M 2023, Zain Jordan revenue increased by 3% to USD 394 million, EBITDA reached USD 162 million, reflecting a healthy EBITDA margin of 41%, with net income reaching USD 58 million, an increase of 14% YoY. With the ongoing expansion of 5G services across the country, data revenue represented 50% of total revenue.  Zain Jordan served 4 million customers (up 4%) maintaining its market leading position. 

Bahrain: Zain Bahrain generated revenue of USD 143 million for 9M 2023 (7% growth). EBITDA reached USD 44.3 million, reflecting an EBITDA margin of 31%. The company reported a net income of USD 12 million, for 9M 2023.