Zain Group announces its consolidated financial results for the first quarter (Q1) ended March 31, 2024, with the company serving 42.4 million customers.
Group Key Performance Indicators (KD and USD) for first three months (Q1) of 2024
| Total Managed Active Customers | 42.4 million |
| Revenue | KD 466 million (USD 1.5 billion) |
| EBITDA | KD 148 million (USD 480 million) |
| EBITDA Margin | 32% |
| Net Income | KD 29 million (USD 95 million) |
| EPS | 7 fils (USD 0.02) |
Zain Group recorded stable consolidated Revenue of KD 466 million (USD 1.5 billion) for Q1 2024. EBITDA for the quarter reached KD 148 million (USD 480 million), reflecting an EBITDA margin of 32%. Net income for the quarter reached KD 29 million (USD 95 million), reflecting an Earnings Per Share of 7 Fils (USD 0.02).
Key Operational Notes for Q1 2024
- Zain Group maintained stable revenue due to strong top-line performance across main operations including Iraq (+14%), Kuwait (+7%), KSA (+5%) and Jordan (+3%). This is despite the ongoing crisis and associated network operational challenges in Sudan where network services and coverage areas are gradually improving
- Group customer base was significantly impacted by the Sudan crisis due to damaging military attacks on business operating systems, inaccessibility to customer data centers, limited network coverage and retail distribution challenges. Moreover, it is estimated that 6.5 million people have been internally displaced with 2 million migrating to neighboring countries. Nevertheless, the recovery plan and new data center is seeing an exponential uptake in customers in Q2 2024
- The decrease in Q1 2024 net income compared to the restated Q1 2023 net income, is mainly due to a one-time gain on sale and leaseback of the Zain KSA tower transaction
- The restatement of the Q1 2023 consolidated statement of profit and loss was due to the accounting of KSA tower transaction which was revisited in Q4 2023 due to the significant judgements and estimations involved in assessing transfer of control. Excluding this impact of the restated KSA tower net profit gains, the drop in Q1 2024 Y-o-Y net income would be significantly less
- There is no impact on Zain Group of above restatement and reclassifications on the net profit and the consolidated financial statement reported and issued as at 31 December 2023, as all necessary adjustments required have already been accounted for in the consolidated financial statements for the year ended 31 December 2023.
- Data revenue grows 1% to reach USD 595 million, representing 39% of the Group’s overall revenue
- During the quarter, Group invested USD 39 million in CAPEX rolling out 5G and FTTH
- Kuwait, KSA, Bahrain, and Jordan continue to grow their 5G customer bases
- Fintech services Group-wide (Tamam in KSA, Zain Cash in Iraq and Jordan) report exponential growth as total revenue grows 49%, with transaction value increasing 82% to reach USD 3 billion
- Enterprise revenues witness healthy growth as ZainTECH reports five-fold increase in revenues and key market’s B2B teams secure multiple deals with businesses and governments
- Digital services including Dizlee API platform continue to witness revenue growth totaling 22%
- Zain’s digital operator Yaqoot in KSA, and oodi in Iraq evolve their product offerings as customer base continues to grow
Osamah Al Furaih, Chairman of the Board said, “The Board is working closely with executive management to address major socio-economic challenges in several key markets. In Sudan in particular, we acknowledge and pray for the safety of our dedicated workforce, who are making many personal sacrifices to provide meaningful connectivity to the local community. Zain Sudan is an important member of the Zain Group family and we will spare no efforts in supporting the team there to maintain the network and general operations.”
“Notwithstanding, we remain focused on mitigating the impact of the Sudan crisis through different Group-wide operational measures including cost optimization, network upgrades, driving enterprise revenues, and the development of new lucrative business verticals across our footprint. Moreover, our Environmental, Social and Governance practices continue to be at the forefront of our sustainability and business strategies.”
Bader Al-Kharafi, Zain Vice-Chairman and Group CEO commented, “Considering the excellent operational progress and digital transformation we have undertaken across our markets, it’s unfortunate that exceptional circumstances and network challenges in Sudan severely impacted our financial performance and customer base. Nevertheless, we are pleased with the overall revenue growth across other key markets, and through our mitigation efforts, we are currently seeing improvements on multiple levels in Sudan from the many network service availability and customer initiatives we are undertaking.”
“Thanks to the on-the-ground efforts of our brave and talented team, whose safety remains a priority for us, they have focused on maintaining connectivity through the establishment of a new data recovery center in Port Sudan, which is playing a critical role in connecting families. This is a real success story as we continue to offer connectivity and grow the business in these uncertain times.”
“Our 5G customer base in Kuwait, KSA, Bahrain, and Jordan continues to grow, as these high-speed and reliable networks empower us to offer appealing digital technologies and services to both our individual and enterprise customers, enhancing their data experience.”
“We remain focused on further driving the revenue and customer growth in several of our digital and enterprise focused initiatives, namely our fintech services in KSA (Tamam), Jordan and Iraq (Zain Cash) which are witnessing impressive growth quarter on quarter. Likewise, our digital operators in KSA (Yaqoot) and Iraq (Oodi), Red Bull Mobile (Kuwait); the Dizlee API platform; and related VAS activities are all witnessing growth in revenue and customer terms. Our recently launched fintech ‘Bede’ brand in Bahrain is well positioned to offer much needed financial services and we look forward to receiving a Digital Bank license in Kuwait soon.”
“Our integrated digital solutions provider, ZainTECH is witnessing impressive revenue growth through working closely with operations across our footprint and we will continue to foster this lucrative collaboration. ZainTECH also took a significant step forward strategically having officially opened its offices in Riyadh, KSA, offering an extensive portfolio of ICT transformational solutions to enterprises and governments. The launch of ZainTECH in KSA follows a similar unveiling earlier in the year in Bahrain, reinforcing ZainTECH’s ambition to have the best in-country resources and expertise across the region.”
“Furthermore, additional subsea cables and partnerships implemented by Zain Omantel International (ZOI) are driving revenue growth and providing Zain with operational independence in empowering digital transformation initiatives for our regional operations, particularly for cloud and IoT services.”
“Our unrelenting operational activities do not distract us from our important parallel efforts to reduce any harmful impact of our business on the environment. The recent publication of our 2023 Sustainability Report highlights the company’s efforts to provide Meaningful Connectivity leading to equitable systemic change and empowering communities through the Sustainable Development Goals.
We are proud to have maintained our leadership position of A-score in the ‘CDP Score Report – Climate Change 2023’ for the third year in a row. This grade, first achieved in 2021, positioned Zain as the highest ranked and only telecom operator in the Middle East and Africa to achieve this high rating.”
Al-Kharafi concluded, “Our staff remain our greatest single asset, and we are extremely proud of our Diversity, Equity, and Inclusion initiatives, which resulted in Zain being included in the Fast Company Middle East’s inaugural edition of Best Workplaces for Women, which recognizes companies across the region that are empowering women by creating an inclusive environment, affirming our corporate leadership in this area.”
Financial KPIs of key markets for first quarter (Q1) ended March 31, 2024
Kuwait: Maintaining its market leadership, the flagship operation saw its customer base grow 2% to serve 2.7 million. Revenue for Q1 2024 reached KD 93 million (USD 303 million), a 7% YoY growth, EBITDA reached KD 31 million (USD 100 million), representing an EBITDA margin of 33%. Net income reached KD 18 million (USD 57 million) for Q1 2024, with data revenue accounting for 36% of total revenue.
Saudi Arabia: For Q1 2024, Zain KSA revenue grew by 5% to USD 676 million, EBITDA for the period increased 11% to reach USD 206 million, reflecting an EBITDA margin of 31%. Net income for the three months was USD 18 million (Q1 2023 restated: USD 303 million). The decrease in net income is mainly attributed to Tower transaction in Q1 2023. The operator’s data revenue grew 7%, representing 41% of total revenue, and active customers increased 1% to stand at 8.8 million.
The restatement of the Q1 2023 consolidated statement of profit and loss for Zain KSA was due to the accounting its tower transaction which was revisited in the fourth quarter of 2023 due to the significant judgements and estimations involved in assessing transfer of control. There is no impact on Zain KSA of above restatement and reclassifications on the net profit and the consolidated financial statement reported and issued as at 31 December 2023, as all necessary adjustments required have already been accounted for in the consolidated financial statements for the year ended 31 December 2023.
Iraq: Zain Iraq’s Q1 2024 revenue increased 14% to reach USD 253 million and EBITDA increased 22% to reach USD 93 million, reflecting an EBITDA margin of 37%. Net profit for the period reached USD 15 million. The customer base increased 2% to 18.7 million, reflecting a market leading position.
Sudan: The operational and network challenges in Zain Sudan impacted the results significantly. Revenue for the quarter reached USD 50 million, a drop of 70%, with EBITDA down 86% amounting to USD 12 million, reflecting an EBITDA margin of 23%. Net income decreased by 71%.
It should be noted that the operation’s customer base was significantly impacted by the crisis due to damaging military attacks on business operating systems, inaccessibility to customer data centers, limited network coverage and retail distribution challenges. Moreover, it is estimated that 6.5 million people have been internally displaced and 2 million migrating. Nevertheless, the recovery plan inclusive of a new data center in Port Sudan, is resulting in gradual improvements in network services and coverage areas, and seeing an exponential uptake in customers in Q2 2024.
Jordan: For Q1 2024, Zain Jordan revenue grew 3% to reach USD 132 million, EBITDA increased 6% to reach USD 55 million, reflecting an EBITDA margin of 41%, with net income at USD 17 million. Data revenue grew 7% on the back of its 5G network, representing 52% of total revenue. The customer base increased by 4% to stand at 4 million, maintaining a market leading position.
Bahrain: Zain Bahrain generated revenue of USD 52 million, an increase of 7% EBITDA increased 3% to reach USD 15 million, reflecting an EBITDA margin of 29%. Net income reached USD 2.8 million, with data revenue growing 7% to represent 45% of total revenue.
