Zain achieves significant cost efficiency last year

Zain Saudi Arabia for mobileTelecom operator Zain Group has achieved significant cost efficiency last year with several regions showing 30-45 percent EBITDA margin.

Data growth was the main highlight for the company – driven by investment in mobile data networks across markets.

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The telecom operator has posted revenue of $3.4 billion (–5 percent), EBITDA of $1.37 billion (–19 percent) with EBITDA margin of 40 percent and net income of $527 million (+2 percent) in 2017.

Zain Group reported revenue of $868 million (flat), EBITDA of $326 million with EBITDA margin of 38 percent and net income of $124 million (+16 percent increase) in Q4 2017.

Regional performance

Zain Kuwait posted $1.1 billion revenue with data bringing 32 percent of total revenues in 2017. $418 million was the EBITDA of Zain Kuwait with EBITDA margin of 38 percent for the full year.

Zain Iraq registered $1.1 billion revenue with data growing significantly. Zain Kuwait posted $382 million EBITDA with EBITDA margin standing at 35 percent.

Zain Sudan recorded $419 million (–41 percent) revenue with data contributing 16 percent of total revenue. $166 million (+37 percent) was the EBITDA of Zain Sudan.

Zain Saudi Arabia clocked $2 billion revenue with data adding 50 percent of the total revenue. Zain Saudi Arabia has $671 million (+40 percent) EBITDA with EBITDA margin of 33 percent.

Zain Saudi Arabia said the launch of the biometric identification requirement, capping the number of prepaid SIMs to two for each unique identity have resulted into 23 percent drop in customer base to 8.2 million in 2017.

Zain Jordan posted $497 million revenue with data contributing 37 percent of total revenue. Zain Jordan achieved $226 million EBITDA with EBITDA margin of 45 percent.

Zain Bahrain recorded $198 million revenue with data bringing 44 percent of total revenue. Zain Bahrain reported $58 million (–11 percent) EBITDA with EBITDA margin of 30 percent.

Zain faced huge foreign currency translation impact in both Q4 and 2017, mainly due to 53 percent currency devaluation in Sudan. The currency issue cost the company $494 million in revenue, $213 million in EBITDA and $82 million in net income in 2017.

The main concern for Zain Group would be the 3 percent in data revenues (excluding SMS and VAS) during 2017, representing 25 percent of the total revenues.

The main achievement for Zain was the $264 million net profit reported by Saudi Arabia unit where the transformation program is taking full effect resulting in the operation recording its first ever annual net profit.

Zain Iraq also returned to profitability in Iraq where socio-economic conditions are gradually improving.

Zain continues to focus on data monetization, smart city and Enterprise (B2B) initiatives to enhance profit.

Zain Vice-Chairman and Group CEO Bader Al-Kharafi said: “The implementation of digital lifestyle strategy combined with substantial investment in network technology upgrades and cost optimization initiatives is proving successful.”

“We are investing in other opportune growth digital initiatives such as Zain Cash mobile money services in Iraq and Jordan, iflix video-on-demand streaming services and are also exploring mobile education and health services,” Bader Al-Kharafi said.

Data growth in several of its key markets, at a compound annual growth rate (CAGR) of over 50 percent over the last two years, is creating a gigabit society, with users consuming up to 18 GB of data per month on average.

Factors such as higher smart device penetration, LTE and LTE-A subscribers, generous data plan offerings at lower prices, increased take-up of video and audio content streaming, social media and the use of personal and enterprise cloud and backup services are fuelling demand for data and faster speeds.

Data growth necessitates the use of more spectrum and sites to expand radio access networks and the use of fibre connectivity for backhaul.