Mobilk - Zain Saudi Arabia (Zain KSA), announces historical record-high financial results for all key indicators for the full-year and fourth quarter ended 31 December, 2018 with the operator serving 8.2 million customers.
For the full-year 2018, Zain KSA generated revenues of SAR 7.5 billion , a 3% Y-o-Y increase of SAR 225 million, while EBITDA for the year increased by 20% Y-o-Y to reach SAR 3 billion , reflecting an EBITDA margin of 40%. Net income soared to reach SAR 332 million , reflecting a 27-fold increase on the 2017 full-year net income of SAR 12 million.
For the fourth quarter of 2018, Zain KSA recorded revenues of SAR 2, a 19% increase to the same three-month period in 2017. EBITDA for the quarter reached SAR 1.1 billion, reflecting a 54% EBITDA margin, up 86% from SAR 590 million recorded in Q4 2017 . Net income for the three months reached an unprecedented SAR 399 million, reflecting a marked improvement on the loss of SAR 45 million recorded forQ4 2017.
Key Operational and Financial notes for the 12 months ended 31 December, 2018:
1.On 16 December 2018, Zain KSA signed an agreement with the Kingdom’s Ministry of Finance (MoF), Ministry of Communications and Information Technology (MCIT), and Communications and Information Technology Commission (CITC) to consolidate and reduce the annual royalty fee for commercial service by 5% from 15% to 10% of net revenues retrospectively, backdated to 1 January, 2018. The financial impact of applying the unified annual royalty fees in the first nine months of 2018 resulted in a decrease of fees payable and provisioned for in an amount totalling SAR 220 million. The royalty reduction thus positively impacted the full-year 2018 and Q4 results when applied at the updated rate, with this 5% reduction set to positively impact the companys financial results going forward.
2.Furthermore, this aforementioned agreement included the settlement of disputed amounts related to the payment of annual royalty fees by Zain KSA to the CITC for the nine-year period between 2009 and 2017, under the condition that Zain invests further in expanding its infrastructure in addition to other conditions over the coming three years. Financial impact of this settlement is expected to reach SAR 1.7 billion.
3.Additional relevant financial issues of note include:
a) Revenues increased by SAR 225 million as a result of the increasing demand for the company’s appealing array of products and services.
b) Earnings before Interest and Tax (EBIT) improved by 35%, reflecting an amount of SAR 316 million for the full-year 2018.
4.Zain KSA was able to reduce its accumulated deficit to SAR 1,800 million for 2018 representing 30.8% of its Share Capital of SAR 5,837 million, a marked improvement when compared to SAR 2,263 million for 2017 which represented 38.8% of its Share Capital.
5.Total capex investment for the full-year ended 31 December, 2018 was SAR 1.924 billion
6.During the fourth quarter of 2018, the Company made a second early voluntary payment for the Murabaha financing agreement amounting SAR 525 million, following a SAR 600 million voluntary payment in September 2018. The total voluntary payments since the refinancing of the Murabaha financing agreement in June 2018, brings the total voluntary payment to SAR 1.125 billion. These early payments in reducing debt portray the company’s solid cashflow generation ability and shrewd cash management in containing interest charges as interest rates rise.
HH Prince Naif bin Sultan bin Mohammed bin Saud Al-Kabeer, Chairman of Zain KSA commented, “Zain Saudi Arabia has experienced an incredible year, which has been underpinned by the company’s executives, employees and strategic partners dedicated efforts to implement our turnaround strategy, while also benefitting from the positive environment the Saudi Ministry of Finance, Ministry of Communications and Information Technology, and Communications and Information Technology Commission have created through their vision and wisdom.”
His Highness expressed his sincere gratitude to the leadership of Saudi Arabia for creating an environment in which companies such as Zain can thrive, stating, “The Board and executive management are committed to playing a key role in the ICT sector and offer customers quality and life empowering telecommunication services in line with Vision 2030. It is gratifying to have authorities at all levels of government support and commit to our presence in the Kingdom in such a positive manner. Such support further increases the attractiveness of the Kingdoms economy, contributing to its ongoing prosperity."
Eng. Sultan bin AbdulAziz Al-Deghaither, Zain KSA CEO said, “This historic phenomenal performance in 2018 was achieved as the company celebrates a decade of commercial operations in the Kingdom. The year shall go down as a milestone for us and shall be looked back on many years from now as the year Zain KSA truly came into its own. We sincerely thank the Kingdom’s leadership and government authorities for their wisdom in supporting the ICT sector.”
Eng Al-Deghaither continued, “Numerous favorable regulatory and financial developments in recent times has solidified our fiscal position and created an air of confidence for the future prosperity of Zain KSA. We feel extremely confident that the decisions we are making with respect to company’s positioning are the correct ones. The programs around driving operating efficiencies; investment in 4G and 5G network upgrades and fiber (FTTH) expansion; customer service and acquisition strategies, and new innovative service developments (including digital wallet in partnership with Halalah) and B2B projects such as cloud computing in partnership with AliBaba Cloud are all proving to be gaining significant momentum and creating greater shareholder value.”
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