Kuwait City, May 6: The Zain Group Annual General Meeting (AGM) was held at the Zain Group’s headquarters in Kuwait, attended with a quorum of 77% of shareholders whereby they were presented with the Zain Group’s 2023 annual report entitled “40 years of pioneering innovation and sustainable growth” which highlights the financial statements, Governance and Auditors reports and the major achievements of Zain Group and its operations and subsidiaries across Middle East and Africa, for the year ended December 31, 2023. Additionally, Zain Group released its 2023 Sustainability Report. 

The shareholders approved all items on the AGM agenda, including the recommended cash dividend of 25% (25 fils per share) to the shareholders already registered in the company's record date of Thursday, 23 May 2024. Cash dividends will be paid to shareholders commencing Wednesday, 29 May 2024.

Attractive dividends for Shareholders

This 25 fils dividend for H2 2023 follows the semi-annual dividend of 10 fils distributed earlier in 2023, totaling 35 fils per share for the year and reflecting a 70% payout ratio, one of the highest in the region. In 2023, Zain adopted a minimum cash dividend policy of 35 fils per share for three years.

2023 Financial Performance

During the AGM, Zain Group presented its financial results for the full-year 2023, whereby the company served 50.6 million customers. For the full-year 2023, Zain Group generated consolidated revenue of KD 1.9 billion (USD 6.2 billion), a Y-o-Y increase of 10%. Consolidated EBITDA for the period increased by 5% Y-o-Y, to reach KD 705 million (USD 2.3 billion), reflecting an EBITDA margin of 37%. Consolidated net income reached KD 215 million (USD 701 million), up 10% Y-o-Y and reflecting earnings per share of 50 fils (USD 0.16).

Excerpts from the Board of Directors statement at the AGM

The Board of Directors welcomes all shareholders and affiliated parties to the Annual General Assembly of Zain Group. Zain operates in a highly regulated, competitive, and rapidly evolving environment. Despite the difficult circumstances represented by geopolitical instability in the region, and the challenges associated with economic and social conditions in several markets, the progress of the company’s 4Sight strategy resulted in developing new value-accretive entities and driving operational efficiency, as the Group’s operations recorded strong growth in 2023. Our commitment to providing shareholders with a healthy dividend of 35 fils for 2023 reflects the strength of our financial solvency.

Digital transformation initiatives have changed the way governments and businesses are organized and managed, with 5G applications, cloud services, big data, AI, data analytics, machine learning, Internet of Things, blockchain, managed services, and cybersecurity becoming the main change drivers for the foreseeable future.

In addition to heavy investment in networks and technologies, Zain Group has entered multiple strategic partnerships with global and regional institutions to ensure that its transformational initiatives closely respond to market needs. These alliances have helped increase the value of Zain’s core business, and support the focus on new lucrative growth opportunities in the digital sector and beyond, providing customers a better telecommunications experience.

During 2023, the Group’s strategic investments in 4G networks, expansion of 5G infrastructure, development of fiber technology to the home, and digital platforms represented 16% of revenues, contributing to the improvement of customer retention and attracting new customer segments. Zain now operates the largest 5G network in the region, provided in four markets - Kuwait, Saudi Arabia (KSA), Bahrain, and Jordan.

Zain Group is committed to implementing a sound framework model for corporate governance, and demonstrating a strong commitment to environmental, social and economic development, as it has integrated its ESG indicators at a time when the challenges of climate change are increasing. As such, the Group continues to work towards achieving its ambition to achieve net zero emissions, having maintained the classification in the category Leadership at level A- in the CDP report.

On behalf of all members of the Board of Directors, executive management, and employees of Zain, we express our sincere appreciation for the confidence shown in us by our valued customers and shareholders, as well as by all the government ministries, and regulatory authorities across our markets.

Excerpts from Zain Vice-Chairman and Group CEO, Bader Al Kharafi’s AGM statement

2023 witnessed the ongoing implementation of our future-proof 4Sight strategy during our 40th year of pioneering innovation, which turned out to be a defining one for Zain, delivering strong performance, significant milestones, sustainable growth, and value to our customers and stakeholders.

Zain’s Board of Directors and executive management teams have worked effortlessly to overcome socio-economic regional challenges in our markets, where we maximized value creation by investing heavily in our networks, technologies, and people. This resulted in us extending our market leadership in many highly competitive and evolving markets.

The multiple digital transformational initiatives and expansion of new business verticals has driven business growth and positioned Zain firmly as a leading provider of innovative technologies and digital lifestyle communications, delivering meaningful connectivity that empowers societies. 

Zain brand valuation soars 11% to USD 3 billion

Our focus on catering to the evolving requirements of our individual, enterprise, and government customers has seen our sustainability-conscious mindset develop and proactively act with a sense of urgency, innovating to enhance the digital experiences and introduce appealing, demanded services.

As a result of our efforts, apart from reporting strong operational and financial results for 2023, we were awarded numerous accolades, and saw our brand valuation increase 11% from USD 2.7 billion to USD 3 billion by Brand Finance in its 2024 global valuation report, up a remarkable 37% on its USD 2.2 billion valuation in 2021.

This impressive growth in valuation some 16 years after the initial Zain brand launch is testament to the investment the company has placed in establishing its name and identity, and the successful media campaigns, corporate sustainability, diversity, equity, and inclusion initiatives it has instituted over the years. This well-regarded brand is also a reflection of our ongoing innovation and investment in network upgrades that result in quality mobile and data services and exceptional customer experience at every touch point, making Zain one of the most inspirational and recognized corporate brands in the region and beyond.

Network investments driving digital revenues

Significant investment in network and technology totally nearly USD 1 billion during 2023 ensured meaningful connectivity to the communities we serve in a reliable and high-speed manner. It also creates value by driving significant growth in data revenues, which grew 8% and reached USD 2.4 billion in 2023, representing 39% of Zain Group’s consolidated revenues for the year.

The impressive 9% growth of our Group-wide digital services revenue reflects the many data monetization initiatives maximizing our networks.

Our digital MVNO operators, Zain Saudi Arabia’s ‘Yaqoot’ and Zain Iraq’s ‘oodi’, continue to deliver healthy customer and revenue growth, offering a simple, all-digital mobile experience that frees customers from the traditional retail buying experience. Of note, Zain Jordan launched 5G commercially in December 2023, becoming the fourth Zain operation to offer this exclusive high-speed and reliable service. 

Fintech innovation and expansion

During 2023, Group-wide fintech customers grew 40%, with revenue up 195%, and total transaction volume tripling to USD 11 billion. The impressive and profitable growth of TAMAM in Saudi Arabia, and ZainCash in Iraq and Jordan has firmly established these fintech entities as market leaders for the unbanked and underbanked in their respective markets. In Kuwait, we acquired Bookeey to drive the development of cutting-edge financial solutions and provide advanced, creative offerings through strategic partnerships with banks and Zain Kuwait. We will continue to foster their growth through innovation while driving financial inclusion and contributing to the evolution of the region’s digital ecosystem.

Aiming to be the partner of choice for governments and enterprises

It was a momentous year for ZainTECH, Zain’s ICT solutions powerhouse, which has grown significantly organically and through acquisitions since its launch in October 2021.  The 20% annual growth in B2B revenues across our footprint reflects the synergistic business model between ZainTECH and our local operations’ B2B teams.

Following the closing of the strategic acquisition of leading managed cloud service provider BIOS Middle East, ZainTECH made two other strategic acquisitions during 2023: Adfolks and Specialized Technical Services Company (STS). In addition to Cloud services, growth areas that ZainTECH is driving include Cybersecurity, IoT, AI, Big Data, Smart Cities, Drones, Robotics, and other emerging technologies. By providing comprehensive ICT services, ZainTECH is paving the way to becoming the digital transformation partner of choice for governments and enterprises across our markets, the UAE, and beyond.

Sale of passive tower networks creating shareholder value

The tower sale and leaseback strategy across Kuwait, KSA, Iraq and Jordan to date has already unlocked over 17,000 towers with a total value of USD 1.3 billion and yielded a net gain of USD 415 million over the years.

In December 2023, Zain solidified its position as the regional leader in the tower arena with a pioneering agreement with Qatar’s Ooredoo Group and TASC Towers, which aims to incorporate nearly 30,000 towers across six countries, combining the service providers’ respective passive infrastructure portfolios. The tower deals enhance operational efficiencies and enable a laser focus on service provision, thus providing customers a better mobile and data experience as well as reducing our carbon footprint.

Zain Omantel International revolutionizing the wholesale telecommunications sector

Zain Omantel International (ZOI) is an unprecedented joint venture that will revolutionize the international wholesale carrier sector. ZOI is creating synergies by optimizing the existing wholesale businesses of both companies by reducing operating costs and increasing competitiveness through access to state-of-the-art, low-latency and high-capacity services over its extended footprint.

Imperative focus on Regulatory initiatives and Corporate Governance compliance 

The regulatory landscape in which Zain Group operates has changed significantly over the last 12 months, impacting all operations as they are subject to cross-sector, sector-specific, extraterritorial legislation, regulations, and national licenses.

As a leading listed entity on the Premier Market in Kuwait, with other local listings in Saudi Arabia, Bahrain, and Iraq, Zain Group is proactively exceeding the regulations issued by all governmental financial and regulatory bodies across these markets. Our Investor Relations, Corporate Governance, Regulatory and Sustainability teams’ high ethical standards, transparent reporting, and professionalism towards all our stakeholders, is promoting investor and market confidence in Zain. 

Our business has Sustainability and DEI at its core

Across our footprint, Zain is guided by the four pillars of our five-year corporate sustainability strategy, centered on Climate Change, Social Business, Inclusion, and Generation Youth. We are very proud of the ground breaking partnership between Zain KSA and Red Sea Global that unveiled the world's first zero-carbon 5G network. Our Diversity, Equity, and Inclusion (DEI) program continues to be a positive force within, boosting the company’s productivity and overall morale. It’s rewarding to see this initiative recognized through various external awards.

Conclusion

As we look back at our 40 remarkable years of creating value for our shareholders, serving our customers with absolute pride, I would like to take this opportunity to thank all those that have contributed to the Zain ecosystem over these years. Our focus for 2024 and beyond remains on the further execution of our corporate strategy, transforming our core telecom business to be more efficient and profitable, while fostering the growth of new business verticals that involve ICT, digital infrastructure, fintech and digital services.

Please feel free to download the online version of 2023 Zain Group Annual Report entitled ‘40 years of pioneering innovation and sustainable growth’ and the 2023 Sustainability Report, entitled ‘A Pathway to Value Creation”

Several key matters were discussed during the AGM:

1. Zain Sudan operations show signs of improvement after restoring the network

Regarding a question about the latest developments in Sudan given the social unrest in the country, Bader Al-Kharafi stated that Zain Sudan’s operation is gradually overcoming the network closure problem that saw the network completely shut down for several months from February 7, 2024.  Due to the continuous efforts of the Sudan team, the company succeeded in building a new disaster recovery center in Port Sudan at the beginning of March, with 1,064 sites out of 3,000 sites currently in operation. After restoring services, revenues are trending for the better, and the company expects further improvement, noting that Zain Sudan is the only operator whose network was not closed for a long period, and everyone is effortlessly working under very difficult conditions.

Growth of operations and new opportunities

In a question about the growth expectations of the group’s operations, especially after eliminating the one-off gain of the tower deals, Bader Al-Kharafi said, “The group continues to achieve growth in its operations, and if the impact of the tower deals was excluded, consolidated profits would have nevertheless increased by 4%. The group has diversified and made extensive investments in new growth areas, notably Zain Omantel International, which is revolutionizing and growing its carrier wholesale operations. Also in ZainTECH, which provides comprehensive ICT solutions, is becoming the preferred digital partner for governments and enterprises across the region. The group’s operations’ various Fintech platforms are witnessing healthy growth, and we are fostering this lucrative part of the business.

Digital Bank license in Kuwait

In a question about the developments in Zain’s desire to obtain a license to establish a digital bank, Al-Kharafi said that Zain is having ongoing discussions with the Central Bank of Kuwait pointing out that Zain’s recent acquisition of Bookeey will help the company implement its plans in this space.