Zain Q1 ’23 net profit soars 15% to reach USD 177 million, equivalent to KD 54 mln

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KUWAIT CITY, May 9: 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 the first quarter (Q1) ended March 31, 2023. Over the past 12 months, Zain added 2.2 million active customers, a 4% increase to serve 53 million customers.

Zain Group generated consolidated Revenue of KD 468 million (USD 1.53 billion) for Q1 2023, up 15% year-on-year (YoY). EBITDA for the quarter reached KD 165 million (USD 540 million), up 8% YoY, reflecting an EBITDA margin of 35%. Net income for the quarter reached KD 54 million (USD 177 million), up 15 YoY reflecting an Earnings Per Share of 13 Fils (USD 0.04).

Key Operational Notes for Q1 2023

1. quarter, Zain Group invested USD 112 million in CAPEX (tangible and intangible)
2. as total revenue soared five-fold, customer growth of 60% to reach 1.1 million customers with transaction value doubling
3. offering dynamic new and lucrative ICT services to businesses and governments. 

Newly appointed Chairman of the Board of Directors of Zain Group, Mr. Osamah Al Furaih said, “It is a distinct honor and privilege to be appointed as Chairman of Zain Group, a company with a proud history of having a positive socio-economic impact on communities across all the countries it has operated in over the years. I want to thank my predecessor, Mr. Ahmed Al Tahous for his contribution and legacy that took Zain to new heights, and I look forward to building on these strong foundations and working with fellow Board members and executive management to continue this upward trajectory of profitable growth and creation of shareholder value.” 

He continued, “A key focus of the Board will be to ensure that our Environmental, Social and Governance practices continue to be at the forefront of our sustainability and business strategies. The Board also looks forward to constructive cooperation with telecom regulators and government authorities across our footprint given the vital role they play in supporting Zain to provide meaningful connectivity to the communities, businesses, and governments we proudly serve.”

The Chairman concluded by commenting on the situation in Sudan, “With sincere sadness and concern, we are mindful of the challenges faced by our operation in Sudan and its dedicated workforce that are making personal sacrifices to provide vital connectivity to the local community. We pray for their safety and are hopeful that the conflict will end soon.”

Bader Al-Kharafi: “Zain maintains leadership position of A- in ‘CDP Score Report–Climate Change 2022′; commits to Science Based Targets initiative (SBTi)”

Zain has re-affirmed its commitment to setting emissions targets that are in line with the Science-Based Targets initiative (SBTi) guidance (@sciencetargets) to halve carbon emissions before 2030 and achieve Net-Zero carbon emissions by 2050.

Endorsing the company’s commitment and progress in this area, Zain maintained its leadership position of A- score in the ‘CDP Score Report – Climate Change 2022’, a grade it first achieved in 2021, becoming the highest ranked and only telecom operator in the Middle East and Africa to achieve this high rating.

Zain’s activities to mitigate the negative impact of its operations on the environment are in line with the reductions required to keep global warming to the 1.5C goal set by the Paris Agreement by 2050.

Bader Al-Kharafi commented, “Addressing climate change and protecting biodiversity should be key priorities for every organization and everyone living on this planet, and private-sector organizations have a crucial role to play in setting an example as to the importance of this matter. We are passionate about being one of the most active, transparent, and outspoken advocates for achieving Net-Zero greenhouse gas emissions throughout our operations.”

Furthermore, Zain has established near and long-term company-wide emission reductions targets that will soon be submitted to the SBTi for validation. The SBTi a partnership between the CDP; the United Nations Global Compact; World Resources Institute (WRI); the Worldwide Fund for Nature (WWF) and one of the We Mean Business Coalition commitments.

Mr. Bader Al-Kharafi, Zain Vice-Chairman and Group CEOcommented, “Our track record of sustainable growth sees Zain in solid financial position today, ideally positioned to invest further and exploit the next phase of growth in the telecom sector and beyond. The truly impressive Q1 2023 results are testament to the skilful execution of the company’s ‘4Sight’ strategy, focusing on innovative programs to improve the efficiency and profitability of the operations as well diversifying income sources from new lucrative business verticals in the digital and enterprise space.” 

“We have made giant strides in positioning Zain as the preferred digital lifestyle communications provider and transformation partner for our consumer, enterprises, and governments customers across our markets. Our future-ready approach to proficiently monetize the vast investments in 5G technology, 4G networks, and fiber expansion across all markets in recent years is paying off, evident by the 2.2 million additional customers and resulting revenue and net profit growth during Q1.”

“Our flagship operation in Kuwait continues to perform strongly, especially in the B2B sector, as well as through its introduction of Zain Max, a quad-play redefining a new generation of Internet and entertainment plans for postpaid customers. Similarly, the solid performances of our operations in Saudi Arabia, Sudan, and Iraq standout for the quarter, as the teams in these markets effectively navigate their respective competitive and socio-economic challenges.”

“The current conflict in Sudan is an unfortunate situation for humanity, and we are doing our utmost to maintain operational stability and provide connectivity to the community there. Crisis management teams have been established, implementing strategic initiatives to support our customers and workforce, and safeguard the network. Voice and data services remain functional in most parts of Sudan at this point, and we are doing everything in our power to ensure this remains the case, with Zain teams working 24/7. We are taking all reasonable measures to protect our people, assets, and commercial operations during this turbulent time and as soon as normality is restored, the entire network will become operational without much delay. Zain Sudan is a significant component of the Zain Group family given its outstanding performance in recent times, and we look forward to a peaceful solution in the country soon.”

“The exponential revenue and customer growth in several of our digital initiatives, particularly in regard to our fintech, pure digital operators in Saudi Arabia and Iraq, and the Dizlee API platform and related VAS activities, are extremely gratifying, and we will continue to foster their growth. We look forward to receiving a Digital Bank license in Kuwait soon, and we are actively preparing the go-to-market roadmap and resources to launch fintech services in the country thereafter.”

Al-Kharafi concluded by commenting on the increased brand valuation of Zain. “We are proud to have one of the most powerful brands in the region and all that it represents with respect to providing meaningful connectivity and empowering and improving the lives of the communities we serve. This year’s 14% increase in brand valuation to reach USD 2.74 billion has been driven by the demonstrable developments within the company, where strong corporate governance, customer-centric initiatives, heavy investment in network upgrades, B2B strategies and digital innovation are all impacting stakeholders and customer experience positively. Our corporate sustainability program and talent development through our Diversity, Equity and Inclusion initiative, eye-catching marketing, and social media campaigns have captured the hearts and minds of the region.”

Financial KPIs of key markets for first quarter (Q1) ended March 31, 2023

Kuwait: Maintaining its market leadership, the flagship operation saw its customer base grow 4% to serve 2.6 million. Revenue for Q1 2023 reached KD 87 million (USD 285 million), a 3% YoY growth, EBITDA grew by 2% to KD 32 million (USD 105 million), representing an EBITDA margin of 37%. Net income reach KD 19 million (USD 62 million) for Q1 2023, with data revenue growing by 1% and accounting for 38% of total revenue.

Saudi Arabia: For Q1 2023, Zain KSA revenue grew by 11% to USD 644 million, EBITDA for the period reached USD 189 million, reflecting an EBITDA margin of 29%. Net income for the three months increased six-fold reaching USD 151 million mainly driven by the gain on sale of towers. The operator’s data revenue represented 40% of total revenue and active customers increased 4% to stand at 8.7 million.

Iraq: Zain Iraq’s Q1 2023 revenue increased by 15% to reach USD 223 million and EBITDA recorded was USD 76 million, reflecting an EBITDA margin of 34%. The operation reported eight-fold increase in net profit of USD 30 million for Q1 2023 mainly driven by the gain on sale of towers, noting this Tower sale represents an intergroup transaction that was eliminated upon Zain Group consolidation. The customer base increased 4% to 18.2 million, reflecting a market leading position.

Sudan: For Q1 2023, Zain Sudan witnessed a robust growth in all its KPIs, that saw revenue increase by 70% to reach USD 167 million, with EBITDA up 66% amounting to USD 86 million, reflecting an EBITDA margin of 51%. Net income for the period reached USD 77 million, up an impressive 68%. Data revenue grew by 90% representing 34% of total revenue. The customer base increased 2% to 16.8 million, maintaining its market leadership.

Jordan: For Q1 2023, Zain Jordan revenue grew 4% to reach USD 129 million, EBITDA reached USD 52 million, reflecting an EBITDA margin of 40%, with net income at USD 18 million. Data revenue grew 2% representing 50% of total revenue. The customer base increased by 5% to stand at 3.8 million, maintaining a market leading position.

Bahrain: Zain Bahrain generated revenue of USD 48 million, an increase of 6% with EBITDA reaching USD 15 million, reflecting an EBITDA margin of 30%. Net income reached USD 3.8 million, with data revenue growing 5% to represent 45% of total revenue.

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