Zain Group, a leading mobile telecom innovator in eight markets across the Middle East and Africa, announced its consolidated financial results for the third quarter (Q3) and nine-month periods (9M) ended 30 September, 2019. The company ended the period serving 49.1 million customers, reflecting a three per cent year-on-year (Y-o-Y) increase.
Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO commented, “The third-quarter saw numerous milestones and was characterised by profitable growth across all key operations, indicative of the success of our digital strategy. This is highlighted by Zain Kuwait recording impressive net income levels and the soaring net income of Zain Saudi Arabia. Moreover, robust revenue growth in our data monetisation programs, Enterprise (B2B), cloud services, as well as smart city initiatives in key markets are areas of the business that we will continue to foster, both in individual and enterprise segments.”
For 9M 2019, Zain Group generated consolidated revenue of KD 1.2 billion ($4 billion), up 35 per cent Y-o-Y, while consolidated EBITDA for the period reached KD 538 million ($1.8 billion), up 66 per cent Y-o-Y, reflecting a healthy EBITDA margin of 44 per cent. Consolidated net income amounted to KD 153 million ($504 million), reflecting a 12 per cent Y-o-Y increase. Earnings per share amounted to 35 fils ($0.12) for the nine-month period.
For 9M 2019, foreign currency translation impact, predominantly due to the 41 per cent currency devaluation in Sudan from an average of 27.1 in 9M 2018 to 46 in 9M 2019 (SDG / USD), cost the Group $141 million in revenue, $62 million in EBITDA and $21 million in net income.
In Q3’19, Zain Group generated consolidated revenue of KD 411 million ($1.4 billion), up two per cent Y-o-Y in KD terms. EBITDA for the quarter reached KD 183 million ($603 million), an increase of 18 per cent Y-o-Y, reflecting a 45 per cent EBITDA margin. Net income for the three months amounted to KD 56 million ($183 million), showing a 10 per cent increase Y-o-Y. Earnings Per Share for Q3 reached 13 fils ($0.04).
In Q3’19, foreign currency translation impact, predominantly due to the 38 per cent currency devaluation in Sudan from an average of 28.1 in Q3’18 to 45.0 in Q3’19 (SDG / USD), cost the company $42 million in revenue, $19 million in EBITDA and $5 million in net income.
Key Operational Notes for 9M 2019
Expansion of 4G LTE networks across key markets and the launch of 5G commercial services in Kuwait saw Zain Group consolidated data revenue grow 56 per cent Y-o-Y to reach $1.5 billion, representing 37 per cent of the Group’s revenue for 9M 2019.
The adoption of new accounting standard IFRS 16 – ‘Lease’ from the beginning of 2019 resulted in a benefit to EBITDA of KD 55 million ($181 million), and an increase in net income of KD 5.2 million ($17.1 million) for 9M 2019
The 9M period was highlighted by the notable 10 per cent increase in net income at Zain Kuwait; and healthy revenue growth of 12 per cent at Zain KSA that saw net income reach an unprecedented $102 million, a significant improvement on the $18 million net loss in 9M 2018.
Chairman of the Board of Directors of Zain Group, Ahmed Al Tahous said, "Impressive growth in key financial metrics for the Q3 and 9M periods of 2019 are primarily a result of the heavy investment we have undertaken in expanding our 4G and 5G networks, to enhance customer experience and increase market share. Given the many challenging socio-economic market conditions across our footprint, the Board is working closely with the management in dealing with these and seeking new lucrative opportunities in the ICT sector.”
Operational review of key markets for the nine months ended 30 September, 2019
Kuwait: Maintaining its market leadership, Zain Group’s flagship operation saw its customer base serve 2.7 million. It remains the Group’s most profitable operation with revenue for 9M 2019 remaining stable at KD 248 million ($818 million), EBITDA increasing 17 per cent to KD 98 million ($322 million), representing an EBITDA margin of 39 per cent. Net income increased an impressive 10 per cent to reach KD 66 million ($217 million) for 9M 2019, with data revenue growing eight per cent Y-o-Y and accounting for 37 per cent of total revenue.
Zain Kuwait’s launch of 5G services enhanced the operator’s position on the world telecom map as the first mobile operator in the region to offer the technology commercially, bolstering its transformation to a digital services provider. Through this launch, Zain Kuwait offers a smart lifestyle for consumers and boosts the business sector in ways that empower the achievement of the ambitious New Kuwait 2035 Vision.
Saudi Arabia: The operator continues to grow all its key financial metrics, recording positive net income for the last five consecutive quarters. For the 9M 2019, Zain KSA generated revenue of $1.64 billion, up 12 per cent Y-o-Y, while EBITDA for the period increased by 49 per cent to $761 million, reflecting an EBITDA margin of 46 per cent. Net income for the nine months soared to $102 million, reflecting a significant improvement on the net loss of $18 million a year earlier, highlighting an improvement of circa SAR 447 million ($120 million). Data revenue represents 44 per cent of total revenue and customers served stood at 7.7 million.
Iraq: Zain Iraq’s 9M 2019 revenue reached $792 million and EBITDA amounted to $335 million, up eight per cent Y-o-Y, reflecting a much-improved EBITDA margin of 42per cent. The operation reported a net profit of $36 million for 9M 2019, up seven per cent Y-o-Y. Zain Iraq’s focus on expansion of 3.9G services across the country combined with numerous customer acquisition initiatives, resulted in it serving 15.5 million customers, a three per cent increase Y-o-Y. Another contributing factor to the operation’s positive performance was the significant growth of data revenue and robust growth in the Enterprise (B2B) segment.
Sudan: Substantial currency devaluation (approximately 41 per cent) in Sudan affected the operation’s financial results in $terms for 9M 2019. Nevertheless, in local currency (SDG) terms, the operator continues to perform remarkably well as revenue grew by 47 per cent Y-o-Y to SDG 10.0 billion ($217 million, down 14 per cent in USD terms). EBITDA increased by 49 per cent to reach SDG 4.0 billion ($88 million, down 13 per cent in USD terms) and net income increased by 41per cent to SDG 1.6 billion ($35 million, down 19 per cent in USD terms). Data revenue accounted for 16 per cent of total revenue and grew 34 per cent in SDG terms, while the operator’s customer base increased eight per cent to reach 15.4 million.
Jordan: Zain Jordan served 3.8 million customers at the end of September 2019, maintaining its market leading position despite intense price competition and challenging economic conditions in the Kingdom. Y-o-Y revenue was stable at $369 million, with EBITDA up 14 per cent to reach $169 million, reflecting an EBITDA margin of 46 per cent. Net income increased 6per cent to $59 million for 9M 2019. With the ongoing expansion of 4G services across the country, data revenue represented 40 per cent of total revenue.
Bahrain: Zain Bahrain generated revenue of $121 million for 9M 2019, down six per cent Y-o-Y. EBITDA for the period amounted to $42 million, up 37 per cent, reflecting an EBITDA margin of 34 per cent. Net income amounted to $10 million, reflecting a four per cent increase.