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Zain 2021 net profit rises 2% to $616mn

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BOARD PROPOSES CASH DIVIDEND OF 23 FILS FOR H2 2021

KUWAIT CITY, Feb 10: Zain Group, a leading telecom innovator in seven markets across the Middle East and Africa, announces its consolidated financial results for the full-year 2021, and fourth quarter ended 31 December, 2021. The Group ended the year with a customer base of 48.9 million, an annual increase of 2.4%, refl ecting an addition of 1.2 million customers. For the full-year 2021, Zain Group generated consolidated revenue of KD 1.5 billion (USD 5 billion), a year-on-year (Y-o-Y)decrease of 5%. Consolidated EBITDA for the period declined by 5% Y-o-Y,to reach KD 628 million (USD 2.1 billion), refl ecting an EBITDA margin of 41%. Consolidated net income reached KD 186 million (USD 616 million), up 2% Yo- Y and reflecting earnings per share of 43 Fils (USD 0.14).

Ahmed Al Tahous, Zain Group Chairman and Bader Al-Kharafi , Vice-Chairman and Group CEO

For the full-year 2021, currency devaluations in Sudan from 55 in January 2021 to 436 (SDG/USD) end of December 2021;in South Sudan from 175 in January 2021 to 426 (SSP/USD); and a 19% currency devaluation in Iraq from 1,190 to 1,470 (IQD/USD) resulted in a foreign currency translation impact of USD 962 million in revenue and USD 479 million in EBITDA. Note, if the USD 962 million currency translation impact on revenue was excluded, YoY revenue would have grown by 13% to reach USD 6 billion, and EBITDA by 17% for 2021.

The Board of Directors of Zain recommended a cash dividend of 23 fils per share for the second half of 2021, subject to Annual General Assembly and statutory approvals. This dividend follows the semi-annual dividend of 10 fils distributed earlier in 2021, totaling 33 fils per share for the year. For the fourth quarter (Q4) of 2021, Zain Group generated consolidated revenue of KD 382 million (USD 1.3billion), down 11%Y-o-Y. EBITDA for the quarter amounted to KD 150 million (USD 496 million), down 12% Y-o-Y, refl ecting an EBITDA margin of 39%. Net income for the period amounted to KD 50 million (USD 167 million), down 5% Y-o-Y, representing earnings per share of 12fils (USD 0.04).

Key Operational Notes for 12 months ended 31 December, 2021

1. The year highlighted by the notable customer growth from 5G in Kuwait,Saudi Arabia and Bahrain, and 4G uptake in Iraq, Jordan and Sudan, resulting in the Group’s consolidated data revenue reaching USD 2.1billion, representing 42% of the Group’s revenue for 2021

2. Throughout 2021, Zain Group invested USD 1.1billionin CAPEX (21% of revenue), predominantly in 5G rollouts in Kuwait,Saudi Arabia and Bahrain; 4G upgrades across Iraq, Jordan, South Sudan and Sudan;expansion of Fiber-tothe- Home infrastructure;and spectrum license fees

3. Zain’s operation in Jordan completed the sale and leaseback of 2,607 towers for USD 88 million

4. Zain KSA fintech, ‘Tamam’; ZainCash in Iraq and Jordan; M-Gurush in South Sudan attract 1.5million customers recording over 25 million transactions with a value of USD 2.3 billion in 2021

5. Launch of ZainTech, unifying the Group’s ICT assets under one roof to provide comprehensive digital solutions and transformation services to enterprises and governments across the region

6. Zain Ventures invests in ZoodPay, ‘Buy Now Pay Later’ super app’s series B round, following earlier investments in PIPE and Swvl

7. The growth of Zain Esports saw it hold 16 tournaments in 2021, with18,000 gaming participants, 43 million social media impressions and 5.7 million engagements on social media channels

8. The Zain Group API platform grows, partnering16 global OTT and solutions providers offering 36 different digital innovations and processing 130 million payment transactions since launch in 2018.

9. Zain upgraded to A- in the latest ‘CDP Score Report– Climate Change 2021’, ranking it first in the region and among leaders globally

10. Zain named Best Telecom Brand for 2021 by Telecom Review

Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mr.Ahmed Al Tahous said,“The board and management’s focus on operational efficiency, significant investment in network upgrades,and meticulous execution of key elements of our sustainability-conscious 4Sight strategy continues to drive shareholder value. I would like to thank all the government bodies and regulatory authorities across our markets for their support and wisdom in creating an environment to raise the telecom sector to new heights and empower Zain to enhance the meaningful connectivity we provide the communities,businesses and governments we serve.” Zain Vice-Chairman and Group CEO, Bader Al-Kharaficommented,“The Group’s solid performancefor2021reflects the success of the many operational and monetization initiatives implemented by the management across all markets. The board’s recommendation of 23 fils per share dividend for H2 in addition to the semi-annual 10 fils dividend, totaling 33 fils for the year, reflects a 77% payout ratio, one of the highest in the region. This provides a clear indication of the strength of our financial solvency, and the company’s ability to execute on its strategic profitable growth plans,despite the continuing challenges of the pandemic and impact of unavoidable currency devaluations on the business.”

“We continue to manage significant currency devaluations in Iraq and Sudan, which impacted key financial indicators during 2021, costing the company USD 962 million in revenue and USD479 million in EBITDA. To mitigate this impact, we have revamped prices and focused on monetizing new digital services while seeking lucrative opportunities in the enterprise space to capitalize on 4G rollouts in these countries.” “Despite the Sudan currency impact, we are very pleased that for the first time since 2007, the Zain Sudan board decided to distribute SDG15 billion ($30m) of dividends to Zain Group, representing45% of the operators 2021 net income. We thank the Central Bank of Sudan and regulatory authorities for their support on this milestone.”

“In Kuwait, Saudi Arabia and Bahrain we are focused on monetizing our significant investments in 5G networks and international connectivity across all operations through our revamped wholesale business, seeking lucrative opportunities in the enterprise and government space. Across all operations, we invested USD 1.1 billion during 2021 in network upgrades and digital infrastructure to enhance the mobile experience and drive growth.”

“Similar to the deal in Kuwait, the sale of our passive tower infrastructure in Jordan for USD 88 million creates significant value for shareholders. It gives Zain Jordan greater fl exibility to invest in network upgrades and ICT technologies to meet the ever-increasing demand for reliable broadband access. It also enhances operational efficiencies and enables a laser focus on customers, allowing us to offer them the best mobile and data experience in the Kingdom.” “It is extremely pleasing to record impressive growth in all key indicators in various digital entities we have launched in recent years. Our fintech aspirations of creating the first telco-led challenger bank in the region are energized by the customer uptake and transaction growth we have experienced with ‘Tamam’ in Saudi Arabia, ‘ZainCash’ platforms in Jordan and Iraq,and ‘M-Gurush’ in South Sudan.” “The API platform continues its positive trajectory of profitable growth on multiple levels, and Zain Esports is proving itself as a leading regional gaming powerhouse.

Zain Saudi Arabia’s digital operator ‘Yaqoot’ continues to deliver healthy growth in the digital telco space, as does Zain Iraq’s digital operator, ‘oodi’, and together the operations offer a simple, all-digital mobile experience that frees customers from the traditional retail buying experience.” “The A- ranking that Zain achieved in the latest ‘CDP Score Report–Climate Change 2021’, positioned us first in the region and among leaders globally,highlighting our mission to foster sustainable systemic change and provide meaningful connectivity by integrating technologies to generate safe energy to help reduce global warming.

Zain is committed to implementing programs that make us a more efficient and environmentally friendly organization.” Al-Kharaficoncluded, “I would like to recognize and thank over7,200dedicated and talented Zain colleagues across our operations who despite the pandemic, continue to provide exemplary services to our customers.We enter 2022 with confidence, as well continue to deliver on the 4Sight growth strategy and take advantage of evolving opportunities within the core telecom business while diversifying into new lucrative business verticals in the ICT, digital infrastructure, fintech and digital services arena.”

Financial KPIs of key markets for the 12 months ended December 31, 2021

Kuwait: Maintaining its market leadership, the flagship operation saw its customer base serve 2.5 million.The Group’s most profitable operation saw its 2021 revenue grow by 1%Y-o-Y to reach USD 1.06 billion (KD 318 million), with EBITDA increasing by 13% to USD 416 million (KD 125 million), reflecting an EBITDA margin of 39%. The operator recorded a net income of USD 266 million (KD 80 million) reflecting a 7% increase. Data revenue grew by 6% Y-o-Y and represented 40% of total revenue. The operator continues to grow its 5G mobile and broadband customers and resulting revenue, capturing the largest 5G customer and revenue market share in the country.

Jordan: For 2021, Zain Jordan revenue increased by 3% to USD 500 million, EBITDA grew by 6% to reach USD 230 million, reflecting an EBITDA margin of 46%, with net income growing 66% Y-o-Y and reaching USD 132 million, mainly from the gain on tower sale. With the expansion of 4G services across the country, data revenue grew 11% representing 50% of total revenue. Zain Jordan served 3.6 million customers maintaining its market leading position.

Saudi Arabia: For 2021, the operator generated Revenue of SAR 7.9 billion (USD 2.1 billion), with EBITDA amounting to SAR 3.1billion (USD 836million), reflecting an EBITDA margin of 40%. Net income for the period reached SAR 214 million (USD 57 million). Having the Kingdom’s largest 5G network covering 50 cities, data revenue represented 48%of total revenue and customers served stood at 8 million, a 14% increase.

Iraq: Zain Iraq’s 2021 revenue reached USD 769 million, and EBITDA amounted to USD 312 million, reflecting an EBITDA margin of 41%. Net profit reached USD 42 million for the period. The operator’s customer base increased by 2% to reach 16.4 million customers. It should be noted that the Iraqi dinar devaluation also impacted Zain Iraq’s revenue by USD 172million for the year.

Sudan: For 2021, Zain Sudan generated revenue of USD 330 million, with EBITDA amounting to USD 164 million, reflecting an EBITDA margin of 50%. Net income for the period reached USD 103 million (SDG 33 billion), compared to USD 61 million last year, a growth of 70%. Data revenue represents 27% of total revenue, while the operator’s customer base stood at16.3 million, maintaining its market leadership.

Bahrain: For 2021, Zain Bahrain generated revenue of USD 172 million, up 5% Y-o-Y. EBITDA increased by 2% to USD 58 million, reflecting an EBITDA margin of 34%. Net income increased 3% amounting to USD 15 million, with data revenue growing 4% to represent 46% of total revenue.

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