Bader Al-Kharafi: Zain Group Q1 2024 revenue $1.5bn, net profit $95m

Group’s consolidated EBITDA reaches $480 million • Data revenue grows to $595 million

2024-05-14 -

KUWAIT: Zain Group, a leading provider of innovative technologies and digital lifestyle communications operating in eight markets across the Middle East and Africa, announced its consolidated financial results for the first quarter (Q1) ended March 31, 2024, with the company serving 42.4 million customers.

Zain Group recorded stable consolidated revenue of KD 466 million ($1.5 billion) for Q1 2024. EBITDA for the quarter reached KD 148 million ($480 million), reflecting an EBITDA margin of 32 percent. Net income for the quarter reached KD 29 million ($95 million), reflecting an Earnings Per Share of 7 fils ($0.02).

Zain Vice-Chairman and Group CEO Bader Al-Kharafi commented: “Considering the excellent operational progress and digital transformation we have undertaken across our markets, it’s unfortunate that exceptional circumstances and network challenges in Sudan severely impacted our financial performance and customer base. Nevertheless, we are pleased with the overall revenue growth across other key markets, and through our mitigation efforts, we are currently seeing improvements on multiple levels in Sudan from the many network service availability and customer initiatives we are undertaking.”

Key operational notes for Q1 2024

1. Zain Group maintained stable revenue due to strong top-line performance across main operations including Iraq (+14 percent), Kuwait (+7 percent), KSA (+5 percent) and Jordan (+3 percent). This is despite the ongoing crisis and associated network operational challenges in Sudan where network services and coverage areas are gradually improving.

2. Group customer base was significantly impacted by the Sudan crisis due to damaging military attacks on business operating systems, inaccessibility to customer data centers, limited network coverage and retail distribution challenges. Moreover, it is estimated that 6.5 million people have been internally displaced with two million migrating to neighboring countries. Nevertheless, the recovery plan and new data center is seeing an exponential uptake in customers in Q2 2024.

3. The decrease in Q1 2024 net income compared to the restated Q1 2023 net income, is mainly due to a one-time gain on sale and leaseback of the Zain KSA tower transaction.

4.The restatement of the Q1 2023 consolidated statement of profit and loss was due to the accounting of KSA tower transaction which was revisited in the Q4 2023 due to the significant judgements and estimations involved in assessing transfer of control. Excluding this impact of the restated KSA tower net profit gains, the drop in Q1 2024 Y-o-Y net income would be significantly less.

5. There is no impact on Zain Group of the above restatement and reclassifications on the net profit and the consolidated financial statement reported and issued as of Dec 31, 2023, as all necessary adjustments required have already been accounted for in the consolidated financial statements for the year ended Dec 31, 2023.

6. Data revenue grows 1 percent to reach $595 million, representing 39 percent of the Group’s overall revenue.

7. During the quarter, Group invested $39 million in CAPEX rolling out 5G and FTTH.

8. Kuwait, KSA, Bahrain and Jordan continue to grow their 5G customer bases.

9. Fintech services Group-wide (Tamam in KSA, Zain Cash in Iraq and Jordan) report exponential growth as total revenue grows 49 percent, with transaction value increasing 82 percent to reach $3 billion.

10. Enterprise revenues witnessed healthy growth as ZainTECH reports five-fold increase in revenues and key market’s B2B teams secure multiple deals with businesses and governments.

11. Digital services including Dizlee API platform continue to witness revenue growth totaling 22 percent.

12. Zain’s digital operator Yaqoot in KSA, and oodi in Iraq evolve their product offerings as customer base continues to grow.

Osamah Al-Furaih, Chairman of the Board said, “The Board is working closely with executive management to address major socio-economic challenges in several key markets. In Sudan in particular, we acknowledge and pray for the safety of our dedicated workforce, who are making many personal sacrifices to provide meaningful connectivity to the local community. Zain Sudan is an important member of the Zain Group family and we will spare no efforts in supporting the team there to maintain the network and general operations.”

“Notwithstanding, we remain focused on mitigating the impact of the Sudan crisis through different Group-wide operational measures including cost optimization, network upgrades, driving enterprise revenues, and the development of new lucrative business verticals across our footprint. Moreover, our Environmental, Social and Governance practices continue to be at the forefront of our sustainability and business strategies.”

Zain Vice-Chairman and Group CEO Bader Al-Kharafi commented, “Considering the excellent operational progress and digital transformation we have undertaken across our markets, it’s unfortunate that exceptional circumstances and network challenges in Sudan severely impacted our financial performance and customer base. Nevertheless, we are pleased with the overall revenue growth across other key markets, and through our mitigation efforts, we are currently seeing improvements on multiple levels in Sudan from the many network service availability and customer initiatives we are undertaking.”

“Thanks to the on-the-ground efforts of our brave and talented team, whose safety remains a priority for us, they have focused on maintaining connectivity through the establishment of a new data recovery center in Port Sudan, which is playing a critical role in connecting families. This is a real success story as we continue to offer connectivity and grow the business in these uncertain times.”

“Our 5G customer base in Kuwait, KSA, Bahrain, and Jordan continues to grow, as these highspeed and reliable networks empower us to offer appealing digital technologies and services to both our individual and enterprise customers, enhancing their data experience.”

“We remain focused on further driving the revenue and customer growth in several of our digital and enterprise-focused initiatives, namely our fintech services in KSA (Tamam), Jordan and Iraq (Zain Cash) which are witnessing impressive growth quarter on quarter. Likewise, our digital operators in KSA (Yaqoot) and Iraq (oodi), Red Bull Mobile (Kuwait); the Dizlee API platform; and related VAS activities are all witnessing growth in revenue and customer terms. Our recently launched fintech ‘Bede’ brand in Bahrain is well positioned to offer much-needed financial services and we look forward to receiving a Digital Bank license in Kuwait soon.”

“Our integrated digital solutions provider, ZainTECH is witnessing impressive revenue growth through working closely with operations across our footprint and we will continue to foster this lucrative collaboration. ZainTECH also took a significant step forward strategically having officially opened its offices in Riyadh, KSA, offering an extensive portfolio of ICT transformational solutions to enterprises and governments. The launch of ZainTECH in KSA follows a similar unveiling earlier in the year in Bahrain, reinforcing ZainTECH’s ambition to have the best in-country resources and expertise across the region.”

“Furthermore, additional subsea cables and partnerships implemented by Zain Omantel International (ZOI) are driving revenue growth and providing Zain with operational independence in empowering digital transformation initiatives for our regional operations, particularly for cloud and IoT services.”

“Our unrelenting operational activities do not distract us from our important parallel efforts to reduce any harmful impact of our business on the environment. The recent publication of our 2023 Sustainability Report highlights the company’s efforts to provide meaningful connectivity leading to equitable systemic change and empowering communities through the Sustainable Development Goals.

We are proud to have maintained our leadership position of A- score in the ‘CDP Score Report – Climate Change 2023’ for the third year in a row. This grade, first achieved in 2021, positioned Zain as the highest ranked and only telecom operator in the Middle East and Africa to achieve this high rating.”

Al-Kharafi concluded, “Our staff remain our greatest single asset, and we are extremely proud of our Diversity, Equity, and Inclusion initiatives, which resulted in Zain being included in the Fast Company Middle East’s inaugural edition of Best Workplaces for Women, which recognizes companies across the region that are empowering women by creating an inclusive environment, affirming our corporate leadership in this area.”

Financial KPIs of key markets for first quarter (Q1) ended March 31, 2024

KUWAIT: Maintaining its market leadership, the flagship operation saw its customer base grow 2 percent to serve 2.7 million. Revenue for Q1 2024 reached KD 93 million ($303 million), a 7 percent YoY growth, EBITDA reached KD 31 million ($100 million), representing an EBITDA margin of 33 percent. Net income reached KD 18 million ($57 million) for Q1 2024, with data revenue accounting for 36 percent of total revenue.

SAUDI ARABIA: For Q1 2024, Zain KSA revenue grew by 5 percent to $676 million, EBITDA for the period increased 11 percent to reach $206 million, reflecting an EBITDA margin of 31 percent. Net income for the three months was $18 million (Q1 2023 restated: $303 million). The decrease in net income is mainly attributed to tower transaction in Q1 2023.

The operator’s data revenue grew 7 percent, representing 41 percent of total revenue, and active customers increased 1 percent to stand at 8.8 million.

The restatement of the Q1 2023 consolidated statement of profit and loss for Zain KSA was due to the accounting of its tower transaction which was revisited in the fourth quarter of 2023 due to the significant judgements and estimations involved in assessing transfer of control. There is no impact on Zain KSA of the above restatement and reclassifications on the net profit and the consolidated financial statement reported and issued as of Dec 31, 2023, as all necessary adjustments required have already been accounted for in the consolidated financial statements for the year ended Dec 31, 2023.

IRAQ: Zain Iraq’s Q1 2024 revenue increased 14 percent to reach $253 million and EBITDA increased 22 percent to reach $93 million, reflecting an EBITDA margin of 37 percent. Net profit for the period reached $15 million. The customer base increased 2 percent to 18.7 million, reflecting a market leading position.

SUDAN: The operational and network challenges in Zain Sudan impacted the results significantly. Revenue for the quarter reached $50 million, a drop of 70 percent, with EBITDA down 86 percent amounting to $12 million, reflecting an EBITDA margin of 23 percent. Net income decreased by 71 percent.

It should be noted that the operation’s customer base was significantly impacted by the crisis due to damaging military attacks on business operating systems, inaccessibility to customer data centers, limited network coverage and retail distribution challenges. Moreover, it is estimated that 6.5 million people have been internally displaced and 2 million migrating. Nevertheless, the recovery plan inclusive of a new data center in Port Sudan, is resulting in gradual improvements in network services and coverage areas, and seeing an exponential uptake in customers in Q2 2024.

JORDAN: For Q1 2024, Zain Jordan revenue grew 3 percent to reach $132 million, EBITDA increased 6 percent to reach $55 million, reflecting an EBITDA margin of 41 percent, with net income at $17 million. Data revenue grew 7 percent on the back of its 5G network, representing 52 percent of total revenue. The customer base increased by 4 percent to stand at 4 million, maintaining a market leading position.

BAHRAIN: Zain Bahrain generated revenue of $52 million, an increase of 7 percent EBITDA increased 3 percent to reach $15 million, reflecting an EBITDA margin of 29 percent. Net income reached $2.8 million, with data revenue growing 7 percent to represent 45 percent of total revenue.

• Compared to previous period, 8 UL[ WYVÄ[ PZ PTWHJ[LK due to the one-off gains from KSA Tower sale in Q1 2023 and operational issues in Sudan due to crisis

• Revenue remained stable as strong revenue growth in Iraq (+14 percent), Kuwait (+7 percent), KSA (+5 percent) and Jordan (+3 percent) offset the negative impact from Sudan

• Group consolidated EBITDA reaches $480million (KD 148 million)