Zain Group, a leading mobile innovator with operations in eight markets across the Middle East and Africa, announces its consolidated financial results for the six months to 30 June 2019.
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Zain served 49.2 million customers at the end of the period, reflecting 4% increase yearon- year (Y-o-Y).
For the first six months of 2019 (H1), Zain Group generated consolidated Revenue of KD 811 million ($ 2.7 billion), reflecting a growth of 61% Y-o-Y. EBITDA for H1 2019 reached KD 354 million ($ 1.17 billion), up 109% Yo- Y, reflecting an EBITDA margin of 44%. Net Income for H1 2019 reached KD 97.3 million ($ 321 million), up 13% Y-o-Y, refl ecting Earnings Per Share of 22 Fils ($ 0.07).
For H1 2019, foreign currency translation impact, predominantly due to the 43% currency devaluation in Sudan from an average of 26.5 in H1 2018 to 46.5 in H1 2019 (SDG / $), cost the Group $ 101 million in Revenue, $ 44 million in EBITDA and $ 15 million in Net Income.
Group Key Performance Indicators (KD and $) for the second quarter (Q2) of 2019 In the second quarter of 2019 (Q2), Zain Group generated consolidated Revenue of KD 407 million ($ 1.34 billion), reflecting a growth of 66% when compared to the same period in the previous year. EBITDA for the quarter reached KD 177 million ($ 582 million), up 108% Y-o-Y, reflecting an EBITDA margin of 43%.
Net Income for the quarter amounted to KD 50 million ($ 165 million), up 10% Y-o- Y, reflecting earnings per share of 12 Fils ($ 0.04). For Q2 2019, foreign currency translation impact, predominantly due to the 38% currency devaluation in Sudan from an average of 28.1 in Q2 2018 to 45.6 in Q2 2019 (SDG / $), cost the company $ 46 million in Revenue, $ 19 million in EBITDA and $ 6 million in Net Income.
Key Operational Notes for H1 2019
- The consolidation of Zain Saudi Arabia (KSA) into Zain Group that started in Q3 ’18 resulted in an additional $ 1.1 billion in Revenue and $ 506 million in EBITDA during H1 2019.
- Expansion of 4G LTE networks across key markets and the launch of 5G commercial services in Kuwait, coupled with numerous data monetization initiatives saw Zain Group data Revenue grow 114% Y-o-Y, to represent 36% of the Group’s consolidated Revenue. The consolidation of Zain KSA was the primary contributor to the data growth.
- The adoption of new accounting standard IFRS 16 – ‘Lease’ from the beginning of 2019 resulted in a benefit to EBITDA of KD 37 million ($ 121 million), and an increase in net income of KD 3.2 million ($ 11 million)
Commenting on the results, Chairman of the Board of Directors of ZainGroup, Ahmed Al Tahous said, ‘The Group’s performance in the first halfof the year was very pleasing given the numerous operational andcompetitive challenges we face in several key markets. The Board isworking closely with senior management in maintaining our leadershipposition in many of our markets and future-proofing the business byinvesting heavily in our networks and seeking new opportunities in thedigital space. We are committed to the region’s economic and socialprosperity and are sincerely grateful for the enabling environmentcreated by the governments and regulatory authorities across ourfootprint.’
Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEOcommented, ‘The first six months of 2019 were exceptional as we recordedimpressive Net Income and EBITDA growth in all key operations, namelyKuwait, Saudi Arabia, Iraq, Jordan and Bahrain. We also continue toperform remarkably well in all key financial indicators in local SDGcurrency terms in Sudan, though this progress is negated by currencydevaluations. Overall, these robust set of results reconfirm that ourdigital transformation program, efficiency drive, and growth strategy ison track in delivering the ambitious financial targets we have set in abid to exceed all expectations from our stakeholders.’
Al-Kharaficontinued, ‘Zain Group’s financial growth during the period inmany key indicators was underpinned primarily by the strategicconsolidation of Zain KSA, combined with the Saudi operator’s impressiveperformance, which has driven it to profitability for four consecutivequarters. Zain KSA’s market capitalization has more than doubled in thelast 12 months, offering further testament of investor confidence in thesuccessful implementation of the company’s turnaround strategy andfuture roadmap.’
The Vice-Chairman and Group CEO concluded, ‘The recentlaunch of 5G networks in Kuwait was a major milestone, as it allows usto offer more innovative and compelling services to our customers ingovernment, business, IoT, and smart city sectors, bolstering thedigital economy in these areas. 5G technology will create vastopportunities in the value chain proposition in numerous industries andwill push the telecom sector to a new and exciting phase of growth.
Zainis mobilizing all its resources to capitalize on this enormousopportunity in creating shareholder value.’ Operational review of keymarkets for the six months ended 30 June 2019 Kuwait: Maintaining itsmarket leadership, the fl agship operation of Zain Group saw itscustomer base serve 2.8 million in a very challenging period thatwitnessed improving Net Income for the quarter.
The Group’s mostprofitable operation saw its H1 2019 Revenue reach KD 165 million ($ 544million), and Net Income increase by 10% to reach KD 44 million ($ 144million). Zain Kuwait’s EBITDA amounted to KD 65 million ($ 213million), an 18% increase Yo- Y, refl ecting an EBITDA margin of 39%.Data Revenue grew by 9% Y-o- Y, representing 37% of total Revenue
Saudi Arabia: The operator continues to grow all its key financial metrics, recording Net Income for the last four consecutive quarters. For H1 2019, Zain KSA generated Revenue of SAR 4.2 billion ($ 1.1 billion), a 17% increase compared to the same period in 2018. EBITDA for H1 2019 amounted to SAR 1.9 billion ($ 506 million), up 60% Y-o-Y, reflecting an EBITDA margin of 46%. Net Income for the period soared to reach an unprecedented SAR 260 million ($ 69.2 million), reflecting a significant turnaround on the H1 2018 Net Loss of SAR 115 million ($ 30.6 million). Data Revenue represents 44% of total Revenue and customers served reached 8.3 million.
Iraq: Zain Iraq performed exceptionally well in H1 2019 when compared to H1 2018 with Revenue reaching $ 522 million and EBITDA reached $ 220 million, up 14% refl ecting an EBITDA margin of 42%. The operation reported a Net Income of $ 25 million for H1 2019, up 39% on the $ 18 million profit recorded for H1 2018. The operator added 600,000 customers (up 4% Y-o-Y) to reach 15.3 million and witnessed signifi- cant growth in data Revenue, as well as profitable progress in the enterprise (B2B) segment
Sudan: Despite the ongoing social and economic issues in the country, the operator continues to perform well in local currency (SDG) terms, as Revenue grew by 45% Y-o-Y to reach SDG 6.4 billion ($ 138 million, down 18% in $ terms) for H1 2019. EBITDA increased by 36% to reach SDG 2.4 billion ($ 52 million, down 23% in $ terms), reflecting an EBITDA margin of 37%, while Net Income increased by 31% to reach SDG 900 million ($ 19 million, down 30% in $ terms). Data Revenue formed 16% of total Revenue, with an impressive growth of 31% (Y-o-Y) in SDG terms. Zain Sudan saw its customer base expand 9% to reach 15.1 million customers. Jordan: Zain Jordan serves a customer base of 3.7 million at the end of June 2019, maintaining its market leading position. Y-o-Y Revenue was stable at $ 240 million, with EBITDA up 17% to reach $ 113 million, reflecting a 47% EBITDA margin. Net Income increased 9% to $ 39 million in H1 2019. With the continual expansion of 4G services across the country, Data Revenue grew by 4%, representing 40% of total Revenue.
Bahrain: Zain Bahrain generated Revenue of $ 81 million for the first six months of 2019. EBITDA for H1 2019 increased by 41% to reach $ 28 million, reflecting an EBITDA margin of 35%. Net Income amounted to $ 6.7 million, reflecting a 9% increase Y-o- Y. Data Revenue represents 48% of overall Revenue. Zain is a leading telecommunications operator across the Middle East and Africa, providing mobile voice and data services to over 49.2 million active customers as of 30 June, 2019.
With a commercial presence in 8 countries, Zain operates in: Kuwait, Bahrain, Iraq, Jordan, Saudi Arabia, Sudan and South Sudan. In Lebanon, the Group manages ‘touch’ on behalf of the government. In Morocco, Zain has a 15.5% stake in ‘INWI’, through a joint venture. Zain is listed on the Kuwait Stock Exchange (stock ticker: ZAIN).
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