Kuwait’s Zain Group posts $640m full-year profit

Zain Group’s annual net profit rose 6 per cent year-on-year to $640m (KWD196m) in 2022, driven by the Kuwait telecommunications firm’s cost optimisation, the 5G network upgrades, digital innovation, tower sales and data monetisation initiatives. The increase in the company’s net profit reflects earnings per share of 45 fils.

The telecoms giant reported a 14 per cent increase in revenues to KWD1.7bn in 2022 while its consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 7 per cent to KWD673m, reflecting a margin of 39 per cent.

Zain said data revenue grew 5 per cent to $2.2bn, which is 40 per cent of the group’s total revenues for the year.

On a quarter-on-quarter basis, Zain’s revenue jumped 20 per cent to KWD458m in Q4 2022 compared to the same period a year earlier.

The group’s EBITDA for the quarter went up 22 per cent to KWD182m while net income reached KWD44m, indicating earnings per share of 10 fils.

Zain’s board of directors proposed a cash dividend of 25 fils per share for H2 2022. The dividend follows the semi-annual dividend of 10 fils that was distributed earlier last year, totalling 35 fils per share for the year and a pay-out ratio of 78 per cent.

زين تنمو بإيراداتها المجمعة بنسبة 14% لتصل 1.7 مليار دينار (5.6 مليارات دولار)
ارتفاع التوزيعات النقدية إلى 35 فلس عن 2022 والتوصية بسياسة جديدة لتوزيع الأرباح لثلاث سنوات إضافية ورفعها إلى 35 فلسhttps://t.co/3DuQF87wBO pic.twitter.com/N0RvtQemHS

— Zain Group (@Zain) March 14, 2023

“This improved dividend, along with the board’s minimum 35 fils recommendation for the forthcoming three years, provides a clear indication of the strong operational performance and strength of our financial solvency,” said Bader Al-Kharafi, vice-chairman and group CEO at Zain.

The group’s customer base increased by 7 per cent to 52.4 million in 2022, an addition of 3.5 million customers.

The company spent $936m in capital expenditure last year, which is 17 per cent of revenue, mainly on 4G and 5G rollouts, expansion of fibre-to-home infrastructure and spectrum license fees.

It is seeking to further execute its 4Sight strategy this year, building on and maximising opportunities within the core telecom business while diversifying into new lucrative business verticals in the Internet of Things, digital infrastructure, fintech and digital services arenas.

Zain’s business expansion

Meanwhile, the company is leveraging a global increase in investor appetite for tower portfolios to derive more value from its assets. The company entered into a definite 15-year leaseback agreement for its 4,968 tower portfolio in Iraq with TASC Towers Iraq for $180m earlier in the year.

Under the agreement, TASC Towers Iraq, a unit of Dubai-based TASC Towers, will build 198 new sites next year to address the Middle Eastern nation’s growing demand for tower sites to support data connectivity.

Read: Tata Communications, Zain KSA to offer smart city solutions to Saudi Arabia

Zain Saudi Arabia, which is 37 per cent by Zain Group, completed the sale of 8,069 towers for $807m to the Public Investment Fund (PIF) with at least 3,000 towers transferred in January. The remaining towers will be transferred over the next 18 months.

Last year, a PIF-led consortium offered to acquire an 80 per cent stake in Zain Saudi Arabia’s 8,069 towers for SAR3bn.

The company’s fintech arm registered a 64 per cent increase in customers to one million in 2022 while its revenues shot up by 241 per cent y-o-y and it processed transactions valued at $3.6bn.

Its technology entity, ZainTech, which was set up in 2021, completed the acquisition of BIOS Middle East, a cloud solution provider. The group’s business-to-business revenues grew 28 per cent as a result of new dynamic and lucrative ICT services.

Read: Zain launches its new technology entity in the Middle East