Zain Group 1st quarter 2022 net profit grows 6% to reach USD 156mln

Zain Group, a leading telecom innovator with operations in seven markets across the Middle East and Africa, announces its consolidated financial results for the first quarter (Q1) ended March 31, 2022. Across its footprint, Zain increased its active customer base by 2.3 million to serve 50.9 million. 

Zain Group generated consolidated Revenue of KD 408 million (USD 1.3 billion) for the Q1 2022, up 7% year-on-year (Y-o-Y). EBITDA for the quarter reached KD 154 million (USD 507 million), down 3% Y-o-Y, reflecting an EBITDA margin of 38%. Net income for the quarter reached KD 47 million (USD 156 million), up 6% Y-o-Y reflecting an Earnings Per Share of 11 Fils (USD 0.04).

For Q1 2022, foreign currency translation was impacted mainly due to the currency devaluation in Sudan from an average of 271 (SDG / USD) during Q1 2021 to an average of 483 (SDG / USD) during Q1 2022, cost the Group USD 120 million in Revenue and USD 80 million in EBITDA.  

Key Operational Notes for Q1 2022

  1. Zain Group consolidated data revenue reached USD 536 million, representing 40% of the Group’s overall revenue
  2. Over the quarter, Zain Group invested USD 74 million in CAPEX (tangible and intangible) reflecting 5.5% of total revenue, mainly in expansion of Fiber-to-the-Home (FTTH) infrastructure; spectrum fees; 4G upgrades and new network sites across its markets, as well as ongoing 5G rollouts in Kuwait, Saudi Arabia and Bahrain
  3. Kuwait, Saudi Arabia and Bahrain witness impressive growth in 5G customers
  4. Focus on government and enterprises accounts results in 19% B2B revenue growth
  5. Zain KSA approves sale of its 8,069-tower infrastructure for SAR 3.03 billion (USD 807 million) to the Kingdom’s Public Investment Fund
  6. Zain Global Connect (ZGC) announces first investment in PEACE cable through the J2M (Jeddah, KSA to Marseille, France) submarine cable system
  7. ZainTech launches a comprehensive range of managed cloud services and cybersecurity solutions for corporate customers in Kuwait, with other key Zain markets to follow
  8. Zain Group API platform rebrands to Dizlee, continues to grow with 20 digital partnerships offering 41 compelling services
  9. Zain Esports teams up with PLAYHERA to rollout gaming tournament platform targeting region’s lucrative gaming market with an estimated 100 million gamers
  10. Zain’s pure digital operator Yaqoot in Saudi Arabia and oodi in Iraq witness robust growth
  11. Zain publishes its 11th annual sustainability report, entitled ‘A resilient journey across a challenging year’
  12. Brand Finance, a leading valuation and strategy consultancy based in London, values the Zain brand at USD 2.4 billion, a 9.6% annual increase 

Commenting on the Q1 2022 results, Chairman of the Board of Directors of Zain Group,

Mr. Ahmed Al Tahous said, “Our future-ready approach to invest heavily in 5G technology and 4G network expansion across all markets in recent years is paying off, evident by the 2.3 million additional customers and resulting revenue growth during the first quarter. The Board is working closely with executive management in seeking new lucrative opportunities and we are well primed to exploit the next phase of growth in the telecommunications sector to drive shareholder value.”

Mr. Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEOcommented, “The overall profitable growth and impressive performances in key markets witnessed during Q1 2022 reaffirms the success of the 4Sight strategy in driving digital transformation and cost optimization initiatives. Our operational focus on expanding and monetizing our 4G, FTTH and 5G networks has created lucrative revenue streams particularly related to Enterprise (B2B) services to government and businesses of all sizes, a key area we will continue to nurture and expand. We have made giant strides transforming Zain into the digital partner of choice for governments and enterprises across our markets.”

“The solid performances of our operations in Kuwait and KSA, where net profits increased 22% and 97% respectively, are predominantly on the back of 5G and B2B customer and revenue growth, are extremely pleasing, as is the 156% net profit increase in Sudan where 4G customer uptake combined with currency mitigation related price revamps have contributed positively to all its financial metrics. The Group financial performance would have been even more impressive if not for the unfortunate currency devaluation mainly in Sudan that impacted revenues by USD 120 million.”

“We have witnessed exponential revenue and customer growth in several of our digital initiatives, particularly in regard to our fintech, pure digital operator, esports and API platform categories.”

“Tamam in Saudi Arabia, Zain Cash in Iraq and Jordan, and M-Gurush in South Sudan continued their substantial customer growth of 180% over the year and we are currently in the process of applying for a digital banking license in Kuwait, where we expect similar success once operational.”

“In the pure digital telco space, Yaqoot continues to deliver healthy growth in Saudi Arabia, and equally so with oodi in Iraq. Both Yaqoot and oodi offer a simple, all-digital mobile experience for customers who are afforded the power to manage their mobile service through the app.”

“The Middle East is one of the fastest-growing gaming regions in the world and Zain Esports aims to unlock the many opportunities that will arise. The joint venture to establish PLAYHERA MENA creates a regional gaming powerhouse targeting the region’s lucrative gaming market.”

“The recent rebranding and transformation of the Group API platform into Dizlee is a game changer for our digital partners and customers. This powerful digital monetization ecosystem provider has already had over 132 million payment transactions and generated over US$125 million in gross revenues since its launch in mid-2018.”

“Our strategy to sell our passive tower infrastructures across our footprint creates significant value for shareholders as it enhances operational efficiencies and unlocks capital to invest in technologies. It also enables a laser focus on customers to offer them the best mobile and data experience. We expect the sale of the 8,069 towers in Saudi Arabia to be completed in the near future, following the successful transition we had in Kuwait, and most recently in Jordan.”

“The recent ground-breaking announcement of Zain Global Connect’s first subsea investment in the PEACE cable through the J2M (Jeddah, KSA to Marseille, France) submarine cable system will foster regional digital transformation initiatives, particularly for cloud and IoT services once operational.”

“Notably, ZainTech has introduced a comprehensive range of managed cloud services and cybersecurity solutions to corporate customers first in Kuwait, with other key regional markets in the pipeline, signifying our determination to transform Zain into a multi-core digital business, and vision of becoming a leading ICT and digital lifestyle provider.”

On a final note, Al-Kharafi commented on the latest 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 empowering and improving the lives of the communities we serve. This year’s 9.6% increase in brand valuation has been driven by the tangible developments occurring within the company, where talent development, customer-centric initiatives, heavy investment in network upgrades, and digital innovation is impacting customer experience positively. Our corporate sustainability programs, 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, 2022

Kuwait: Maintaining its market leadership, the flagship operation saw its customer base serve 2.5 million. It is the Group’s most profitable operation with revenue for Q1 2022 reaching KD 85 million (USD 280 million), a 7% YoY growth, EBITDA grew by 12% to KD 31 million (USD 104 million), representing an EBITDA margin of 37%. Net income increased 22% to reach KD 21 million (USD 68 million) for Q1 2022, with data revenue growing by 5% and accounting for 39% of total revenue.

Saudi Arabia: For Q1 2022, Zain KSA revenue grew by 12% to USD 582 million, EBITDA for the period reached USD 193 million, reflecting an EBITDA margin of 33%. Net income for the three months increased 97% reaching USD 21.5 million. Having the Kingdom’s largest 5G network covering 51 cities, the operator’s data revenue represents 44% of total revenue and active customers increased 17% to stand at 8.4 million.

Iraq: Zain Iraq’s Q1 2022 revenue increased by 5% to reach USD 194 million and EBITDA grew by 8% to USD 81 million, reflecting an EBITDA margin of 42%. The operation reported a net profit of USD 3 million for Q1 2022. The customer base increased 9% to 17.6 million, reflecting a market leading position.

Sudan: For Q1 2022, Zain Sudan witnessed a healthy growth in all its KPIs, revenue increased by 6% to reach USD 98 million, with EBITDA up 22% amounting to USD 51 million, reflecting an EBITDA margin of 53%. Net income for the period reached USD 46 million, up 156%. Data revenue grew by 13% representing 31% of total revenue. The customer base stood at 16.6 million, maintaining its market leadership.

Jordan: For Q1 2022, Zain Jordan revenue reached USD 124 million, EBITDA reached USD 56 million, reflecting an efficient EBITDA margin of 45%, with net income at USD 20 million. With the ongoing expansion of 4G services, data revenue grew 5% representing 50% of total revenue. The customer base increased by 3% to stand at 3.6 million, maintaining a market leading position.

Bahrain: Zain Bahrain generated revenue of USD 46 million, an increase of 4% for Q1 2022. EBITDA increased 3% reaching USD 15 million, reflecting an EBITDA margin of 33%. Net income increased 3% to USD 4.2 million, with data revenue growing 6% to represent 45% of total revenue.