Zain Group generated revenues of KD 552 million (USD 1.83 billion) and recorded net income of KD 82 million (USD 272 million) for the first half of 2016

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• - Net income and EBITDA up 14% and 7% respectively for Q2 2016
• - Customers served total 45.2 million as of 30 June, 2016
• - Focus on leveraging 4G networks generated a 7% increase in Group consolidated data revenues, representing 22% of total Group revenues
• - Company's efficiency drive increases EBITDA margin to a healthy 46.2%
• - Continued civil instability and sales tax in Iraq impacts consolidated results, while intense price competition also affects key operations
  
      
  
  Kuwait - 31 July, 2016
  
  Zain Group, a pioneer of mobile telecommunications across the Middle East and Africa, announces its consolidated financial results for the six months to 30 June, 2016. The company ended the period serving 45.2 million customers.
  
   

H1-2016 Consolidated Group Key Performance Indicators (USD and Kuwaiti Dinars)

Group Key Performance Indicators (Kuwaiti Dinars and USD) for the first half of 2016​

For the first six months of 2016, Zain Group generated consolidated revenues of KD 552 million (USD 1.83 billion) down 2% year-on-year (Y-o-Y) in KD terms. The Group's consolidated EBITDA for the period reached KD 255 million (USD 846 million), up 6% Y-o-Y in KD terms. EBITDA margin increased to a healthy 46.2% at the end of the period, compared to 42.8% for the same period of 2015. Consolidated net income reached KD 82 million up 2% Y-o-Y. Earnings per share for the period stood at 21 Fils (USD 0.07).

The Group incurred foreign currency variance losses amounting to USD 57 million for the first six-month period of 2016, a USD 15 million increase from a USD 42 million impact for the same period in 2015, predominantly accounted for by operations in Iraq and Sudan.

Group Key Performance Indicators (Kuwaiti Dinars and USD) results for Q2 2016

For the second quarter of 2016, Zain Group recorded consolidated revenues of KD 275 million (USD 912 million), down 3% on the same period in the previous year. EBITDA for the quarter reached KD 132 million (USD 439 million), up 7% Y-o-Y in KD terms, reflecting an increased EBITDA margin of 48.1%, compared to 43.7% for the same period of 2015. Net income for the quarter reached KD 45 million (USD 148 million), up 14% Y-o-Y in KD terms reflecting earnings per share of 11 Fils (USD 0.04).

For the second quarter of 2016, the Group incurred foreign currency variance losses amounting to USD 22 million, a USD 13 million decrease from a USD 35 million impact for the same period in 2015.

Key Operational Notes for H1-2016:

1. Consolidated Group data revenues (excluding SMS and VAS) witnessed a 7% growth Y-o-Y, with data now constituting 22% of the Group's total revenues.  
2. The continued civil instability in Iraq and implementation of a 20% sales tax on mobile services, as well as wide-ranging tax increases on other sectors in the country affect spending on mobile services, impacting Zain Iraq's operational results and consequently the Group's overall key financial metrics.
3. Zain Sudan launched high-speed 4G LTE marking the first time the mobile technology has been made available in the country and the sixth Zain operation to introduce it.
4. Zain Sudan and Zain Saudi Arabia enjoyed impressive data revenue growth of 44% and 57% respectively.
   
   
    Commenting on the solid results, the Chairman of the Board of Directors of Zain Group, Mr. Asaad Al Banwan said: "It is pleasing to report growth in several of our key financial metrics for the second quarter and six-month 2016 periods given that Zain Group is exposed to conflict zones and currency fluctuations that continue to impact the growth potential of our business."
   
    
   
   Al Banwan continued, "Zain is committed to innovation, quality of service and maintaining our leadership position in our markets, and the Board continues to work closely with management to continually evaluate business-enhancing and value-creating opportunities and to deal with the diverse market and social challenges that we face."
   
    
   Zain Group CEO, Scott Gegenheimer noted, "The effectiveness of our data monetization initiatives and cost optimization drive in such challenging conditions across several of our key markets has been reflected in our improved results for the second quarter and six-month periods of 2016, outperforming our peers across many of our country operations. We are committed to a growth strategy in which we are successfully leveraging our state-of-the-art 4G infrastructure and implementing numerous data monetization initiatives. We draw confidence from the consolidated 7% growth in data revenues for the six-month period, with data now accounting for 22% of overall service revenues."
   
    
   Gegenheimer continued, "The severe impact of ongoing civil instability in Iraq is a concern for us, both from the perspective of the human suffering that it causes, but also due to the detrimental impact it has on our business. The sales tax instituted in the country also had a determined negative effect on our overall financial results, though we remain optimistic that the strategy we have in place is the correct one for our circumstances. Similarly, for our home operation in Kuwait, we are focused on dealing with the intense price competition there and we are confident that the initiatives we are implementing will result in incremental revenue generation. All the same, we are encouraged to see growth on several fronts in key markets, with Jordan, Saudi Arabia and Sudan witnessing healthy growth with respect to numerous key financial indicators."
   
    
   Gegenheimer concluded, "We are actively seeking and securing sources of incremental revenue in the digital space including enterprise M2M services and smart city solutions to governments and mega real estate projects across the region. We have entered into several strategic partnerships recently, which we strongly believe will fast-track and further enhance our ambitions to unlock many lucrative opportunities in the connected society revolution."
   
   Operational review of key markets for the six months ended 30 June, 2016
   
    

Kuwait: Maintaining its market leadership, Zain Group's flagship operation saw its customer base serve 2.9 million in a very challenging six-month period that witnessed intense price competition impact its financial performance for the period. Revenues reached KD 165 million (USD 548 million), EBITDA amounted to KD 80 million (USD 264 million) and net income came in at KD 44 million (USD 144 million). Zain Kuwait's EBITDA margin stood at 48% at the end of the six-month period, with data revenues (excluding SMS & VAS) forming 35% of total revenues.

Iraq: The exceptional socio-economic circumstances facing the operation saw Zain Iraq's financial performance hampered, with revenues for the period reaching USD 536 million, a decrease of 11% Y-o-Y, and EBITDA reaching USD 194 million, down 12% Y-o-Y. Net income amounted to USD 24 million, a substantial reduction of 59% Y-o-Y. Currency variance loss also impacted net income. The operation's EBITDA margin stood at 36%, with data-related revenues forming 8% of overall revenues for the first half of 2016. Customers served totalled 11.2 million at the end of June, a 12% decrease.

Sudan: In local currency (SDG) terms, the operator's revenues grew by 9% Y-o-Y to reach SDG 2.4 billion (USD 380 million, up 7% in USD terms) for the first six months of 2016. EBITDA increased by 19% to reach SDG 1.04 billion (USD 162 million, up 17% in USD terms), while net income decreased 2% to SDG 480 million (USD 75 million, down 4% in USD terms). Data revenues (excluding SMS and VAS) formed 12% of total revenues, with an impressive annual growth rate of 47% (44% in USD terms). The operation saw its customer base expand 7% to reach 12.5 million.

Saudi Arabia: The operation served 10.7 million customers at the end of the first six months of 2016. Revenues grew 5% Y-o-Y to reach USD 956 million while EBITDA grew 4% to reach USD 218 million and net losses amounted to USD 154 million for the period. Zain Saudi Arabia's EBITDA margin reached 22.8%. Impressively, the operator witnessed a 57% Y-o-Y rise in data revenues (excluding SMS & VAS), representing 31% of total revenues as the company invested heavily and expanded its modern 4G LTE network.  

Jordan: Zain Jordan grew its customer base by 3% Y-o-Y, serving 4.1 million customers, maintaining its market leading position. Y-o-Y, revenues increased 7% to reach USD 238 million, with EBITDA up 18% to reach USD 115 million, reflecting an impressive 48% EBITDA margin. Net income increased 10% to USD 50 million. With the launch of 4G, data revenues (excluding SMS & VAS) represented 32% of total revenues, up by 25% Y-o-Y.

Bahrain: Zain Bahrain generated revenues of USD 86 million for the six-month period, down 9% Y-o-Y. EBITDA for the period reached USD 32 million, down 12%, and reflecting an EBITDA margin of 38%. Net income amounted to USD 4.9 million, reflecting a 11% decrease. Data revenues (excluding SMS & VAS) increased 5% Y-o-Y, representing 37% of overall revenues.