Zain Group, a leading mobile innovator with operations in seven markets across the Middle East and Africa, announced its consolidated financial results for the first quarter (Q1) ended March 31, 2021. Zain served 48.5 million customers at the end of the period.
Zain Group generated consolidated revenue of KD 382 million (USD 1.3 billion) for the first quarter of 2021, down 6% year-on-year (Y-o-Y). EBITDA for the quarter reached KD 158 million (USD 523 million), down 7% Y-o-Y, reflecting an EBITDA margin of 41%. Net income for the quarter reached KD 45 million (USD 147 million), down 5% Y-o-Y reflecting an Earnings Per Share of 10 Fils (USD 0.03). Significantly, Zain Group net income grew operationally by 4% Y-o-Y for Q1, 2021, when excluding the one-time gain from the sale and lease back of towers in Kuwait during Q1 2020.
For Q1 2021, foreign currency translation was impacted mainly due to the currency devaluation in Sudan from 55 to 375 (SDG / USD) during end of February, and a 19% currency devaluation in Iraq from an 1,190 to 1,470 (IQD / USD), cost the Group USD 177 million in Revenue and USD 66 million in EBITDA.
Zain Group’s resilient results for Q1 2021 were achieved despite the widespread disruption in economic and social activity caused by COVID-19, further compounded by the recent and significant currency devaluations in Iraq and Sudan.
It should be noted that the impact of the pandemic on the business was minimal during Q1 2020, given its early stage of spread at the time, however in Q1 2021 the impact was more profound.
Group Key Performance Indicators (KD and USD) for first three months (Q1) of 2021
| Total Managed Active Customers |
48.5 million |
|
Revenue |
KD 382 million (USD 1.3 billion) |
|
EBITDA |
KD 158 million (USD 523 million) |
|
EBITDA Margin |
41% |
|
Net Income |
KD 45 million (USD 147 million) |
|
EPS |
10 fils (USD 0.03) |
Zain Group consolidated data revenue reached USD 530 million, representing 42% of the Group’s overall revenue.
Throughout the quarter, Zain Group invested USD 415 million in CAPEX (tangible and intangible) reflecting 33% of total revenue, predominantly 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.
Kuwait witnessed impressive growth in 5G consumer and B2B customers, with Zain Saudi Arabia expanding its 5G network to over 50 cities covering all regions in the Kingdom.
Commenting on the Q1 2021 results, chairman of the board of directors of Zain Group, Ahmed Al Tahous said, “The board and executive management have been focused on minimizing the ongoing impact of COVID-19 and significant currency devaluations in Iraq and Sudan on the business. We are dedicated to ensuring our mobile networks are operating at optimal levels and providing meaningful connectivity to the communities we serve. I would like to thank all the government entities and regulatory authorities across our markets for their proactivity and cooperation with the telecom sector at large, in supporting operators, mobile consumers and societies during these times.”
Bader Nasser Al-Kharafi, Zain vice-chairman and Group CEOcommented,“The Group’s resilient performance for the quarter reflects the reality of the unavoidable combination of both COVID-19’s ongoing disruption on socio-economic activity and the impact of currency devaluations on the business. Nevertheless, our culture of innovation has been invaluable at this time of rapid change, and our business continuity strategy has been executed impressively to counter these factors. Management has proactively undertaken numerous decisive digital transformation and cost optimization initiatives while maintaining healthy cash flows, and both Zain Iraq and Zain Sudan have recently taken measures in dealing with currency devaluations by revamping prices and offering new attractive data monetization packages.”
“Our operational focus has been centered on expanding and monetizing our 4G, FTTH and 5G networks creating vast and lucrative opportunities particularly related to Enterprise (B2B) services to government and businesses of all sizes. At the same time, we continue to make significant progress in raising the company to new heights and maximizing value for shareholders through our ‘4Sight’ strategy. We are evolving the company’s core telecom business and building on its many strengths to selectively invest in growth verticals beyond standard mobile services.”
Financial KPIs of key markets
Kuwait
Maintaining its market leadership, Zain Group’s flagship operation saw its customer base serve 2.5 million. It remains the Group’s most profitable operation with revenue for Q1 2021 reaching KD 79.4 million (USD 263 million), EBITDA reaching KD 28 million (USD 93 million), representing an EBITDA margin of 35%. Net income reached KD 17 million (USD 56 million) for Q1 2021, with data revenue growing by 2% and accounting for 39% of total revenue.
During the quarter, the operator witnessed impressive growth in both 5G mobile and broadband customers and resulting revenue capturing the largest 5G market share in the country. Continual innovation and digital transformation saw the launch of a new and dynamic customer app offering many new features, as well as enhancement of its web and zBot chat service. From a B2B perspective, Zain Kuwait partnered with the Ministry of Interior to revamp the Kuwait TV app to live stream 9 local video and 11 radio channels. Also, the operator entered deals with Kuwait International Bank and Boubyan Bank for data related services.
Saudi Arabia
For Q1 2021, Zain KSA generated revenue of SAR 1.9 billion (USD 517 million), EBITDA for the period reached SAR 735 million (USD 196 million), reflecting an EBITDA margin of 38%. Net income for the three months reached SAR 41 million (USD 11 million). Having the Kingdom’s largest 5G network covering 50 cities, the operator’s data revenue represents 51% of total revenue and customers served stood at 7.2 million.
Iraq
Zain Iraq’s Q1 2021 revenue reached USD 184 million and EBITDA amounted to USD 75 million, reflecting an EBITDA margin of 41%. The operation reported a net profit of USD 12 million for Q1 2021. The operator served 16.2 million customers maintaining its market leading position. It should be noted that on December 19, 2020, the Iraqi dinar was officially devalued by 19% from 1,190 to 1,470 (IQD / USD), impacting Revenue by USD 43 million.
Sudan
For Q1 2021, Zain Sudan generated revenue of USD 92 million, with EBITDA amounting to USD 42 million, reflecting an EBITDA margin of 46%. Net income for the period reached USD 18 million. Data revenue grew by 32% representing 29% of total revenue, while the operator’s customer base reached a record 17.2 million, maintaining its market leadership. On February 21, 2021, Sudan's central bank sharply devalued the Sudanese pound from 55 to 375 (SDG / USD), impacting Revenue by USD 134 million.
Jordan
For Q1 2021, Zain Jordan revenue reached USD 124 million, EBITDA reached USD 56 million, reflecting an EBITDA margin of 45%, with net income reaching USD 20 million. With the ongoing expansion of 4G services across the country, data revenue grew 12% representing 48% of total revenue. Zain Jordan served 3.6 million customers maintaining its market leading position.
Bahrain
Zain Bahrain generated revenue of USD 44 million for Q1 2021. EBITDA for the period amounted to USD 14 million, reflecting an EBITDA margin of 33%. Net income amounted to USD 4 million, with data revenue growing 4% to represent 45% of total revenue.
