Kuwait Times, Sunday, Mar 21, 2021 | Shaaban 7, 1442
Zain pays out dividend of 33 fils per share
Kuwait:
Zain Group Annual General Meeting (AGM) was held today at Zain Group’s
headquarters in Kuwait, with a livestreaming available for shareholders and
qualified parties, attended with a quorum of 72.49 percent that approved the
recommended cash dividend of 33 percent (33 fils per share) to the shareholders
already registered in the company’s record as of 1 April 2020. Cash dividends
will be paid to shareholders commencing April 7, 2021.
Excerpts from Zain Group Chairman Ahmed Al-Tahous’ statement at the AGM:
On behalf of the Board of Directors I would like to welcome you to the AGM. The
COVID-19 pandemic broadly affected economies across the globe, which were
plunged into a state of uncertainty. Society, governments and all economic
activity relied more than ever on telecommunication networks and digital
platforms, as the exceptional circumstances increased the demand for data use,
especially to remain in contact with loved ones and access other vital
day-to-day services and important information, given the limitations on
mobility, locally and travel abroad.
On its part, Zain Group mobilized all its resources to provide vital and
meaningful connectivity during the lockdowns, implementing more digitalization
initiatives to better serve businesses, governments, and societies, aiming to
lessen the impact of the pandemic on society. During these challenging times,
Zain Group undertook proactive measures to drive efficiencies and improve costs,
such as renegotiating contracts and managing cash flows. The company used its
infrastructure and digital solutions for quick access to clients and followed
through on key operational activities across all operations to mitigate the
impacts of the economic slowdown.
I would like to thank all the government ministries and regulatory authorities
across our markets for their wisdom and understanding of the emerging industry
dynamics, supporting us in overcoming challenges faced by the telecom sector
during these unique times.
Excerpts from Zain Group Vice-Chairman and Group CEO Bader Al-Kharafi’s AGM
statement:
It is an honor to address shareholders in these exceptional times, which have
been impacted so profoundly by the global pandemic. 2020 has been a turbulent
year in ways that governments, businesses, and individuals could not have
imagined or predicted at the start of the year. Zain Group stands in solidarity
with the multitudes around the world who have been affected by the scourge of
the COVID-19 pandemic and expresses its heartfelt sorrow for those who have and
continue to succumb to the virus.
Like many businesses, we were faced with the twin responsibilities of protecting
our own staff from the ravages of the virus, while also ensuring we continued to
provide meaningful connectivity with minimal disruption given the central
importance the telecom sector has continued to play in keeping people socially
distanced while remaining connected and productive.
I am pleased to report that Zain Group’s response to the modified operating
circumstances has been nothing but exemplary. We refocused on digital
transformation to better serve businesses, governments, and societies, granting
increased digital access to essential medical, commercial and financial
services.
We took numerous proactive measures across our footprint to ensure we take into
consideration the needs and challenges that our communities face during this
global pandemic. Early on, we equipped and empowered staff across our operations
to be able to work from home, while also improving our digital sales channels to
enable customers to stay connected and continue dealing with us from the safety
of their homes.
Our fixed and mobile broadband networks responded well to the increased data
traffic being exchanged as remote learning and working became the norm. Since
March 2020, we experienced over a 50 percent increase in high-speed broadband
data traffic across various markets across our footprint. To guarantee network
resilience and continued connectivity at high service quality levels, Zain
continued to actively engage with national regulatory authorities. Zain
collaborated closely with government entities across various sectors to ensure
that additional internet capacities and ICT solutions are provided to support
educational and health services online.
Internally, we took a decision not to reduce salaries of Zain staff during the
pandemic in a move aimed at expressing our appreciation for their ongoing
efforts despite difficult circumstances, as well to incentivize them to keep
giving their best. It is this type of regard for the well-being of staff that
saw Zain as the only company from Kuwait to be included in Forbes magazine’s The
World’s Best Employers list for 2020. The list saw Zain ranked fourth across all
employers in the Middle East, and as the region’s highest ranked telecom group.
Delivering on our dividend commitment of 33 fils
Last year, in a first by any corporate entity in Kuwait, the Board of Directors
recommended a new cash dividend policy committing the company to a minimum 33
fils for three years commencing 2019. Despite the USD 417 million loss of
revenues due to the impact of COVID-19 on the business and a foreign currency
translation impact of USD 110 on revenue, I am pleased to reaffirm the Board’s
commitment for 2020 will be fulfilled. This 33 fils represents a 77 percent
payout ratio of earnings, which is one of the highest in the region.
This confirmation is a result of the impressive operational performance attained
by the Group, that saw the company achieve a relatively stable consolidated
revenues of USD 5.3 billion, an EBITDA of USD 2.2 billion (41 percent margin)
and a net income of USD 605 million.
This achievement was supported by our decisive efficiency drive that succeeded
in reducing operational expenses by USD 168 million since the beginning of the
pandemic. It is also a result of several beneficial regulatory initiatives that
we achieved and the healthy revenues we attained from our strategic and
forward-looking investments in 5G, fiber and network upgrades across key
markets, which supported the ever-increasing demand for mobile and fixed
broadband services by individuals, businesses and governments during the
pandemic.
Huge investments to drive digital transformation and enhance mobile experience
Despite the unprecedented market conditions, Zain maintained robust commercial
activity throughout 2020, investing USD 1.4 billion in its 5G and 4G networks as
well as spectrum and license fees across its footprint, and producing strong
financial results that reflected our continuing market leadership. Seeking to
exploit the multiple and lucrative opportunities in the B2B space and provide
customers an enhanced mobile experience, we launched 5G services in Kuwait and
Saudi Arabia during 2019, followed by Bahrain in June 2020.
In addition, Zain continued to focus on 4G LTE technology in multiple
operations. In Iraq and South Sudan, we paved the way for the introduction of
LTE by modernizing the network, with Jordan and Sudan expanding their LTE and
FTTH networks to meet the demand for broadband during the pandemic. We launched
4G LTE in Iraq in early 2021, which will contribute immensely to the
socio-economic development of country and we forecast the Iraqi community to
heavily subscribe to the technology.
Notable regulatory highlights
The COVID-19 pandemic brought to light the critical importance of fixed and
mobile telecommunications infrastructure and the use of digital data and digital
services as an essential economic and social enabler. Across the Zain footprint,
in order to support the upsurge in demand, national regulatory authorities
granted Zain temporary spectrum or rights to use existing frequencies on a
technology-neutral basis. Moreover, Zain acquired additional spectrum in several
of our countries.
The region also witnessed the enactment of various forms of legislation and
regulations by the telecom and financial services sectors regulators to
accelerate digital transformation including in the areas of cloud computing,
electronic payments, enforcement of electronic contracts through the judicial
system. These initiatives will serve to boost the take-up of digital services
going forward, and Zain is primed to exploit the unlimited opportunities in this
space.
4Sight strategy gaining momentum
Zain made significant progress on its ‘4Sight’ strategy, centered on evolving
the company’s core telecom business to maximize value for shareholders and
building on its many strengths to selectively invest in growth verticals beyond
standard mobile services to support Zain’s vision of becoming a leading ICT and
digital lifestyle provider.
We aim to become one of the leading trendsetters in the digital revolution in
the region and provide our customers an exceptional mobile experience. During
the year we made several substantial investments and announced significant
developments. We also identified new business areas, value-adding strategic
partnerships, accretive acquisition opportunities and synergistic corporate
venturing investments which, collectively, will create new revenue streams to
fully maximize the Group’s high-speed broadband networks, customer assets,
network intelligence and payment and billing infrastructure.
The sale and leaseback of the passive physical infrastructure of Zain Kuwait’s
mobile tower portfolio for USD 130 million (KD 40 million) in February 2020
confirmed Zain’s pioneering role in the region, as the transaction was the first
sale and leaseback of telecom towers in the Middle East by a licensed mobile
operator.
In order to take advantage of the full potential of our infrastructure
investments across our footprint, we have entered into strategic partnerships
with respect to digital infrastructure and rolled out Zain Data Park (ZDP) in
Kuwait and Jordan, providing our government and enterprise customers with the
very best IT support services focused on cloud hosting and managed services
across the ICT stack, including applications, cybersecurity and networking.
New structures and entering into key partnerships
Zain is constantly setting up new structures and entering into key partnerships
in the fintech, e-Health, esports, and insurance arenas, and opening our APIs
across key markets to offer appealing entertainment and gaming services, so as
to reap the lucrative opportunities in the digital space. Throughout 2020, Zain
remained focused on our digital strategy of monetizing our broadband
infrastructure and the Group API platform through compelling initiatives and
packages for the B2B sector covering government, business, IoT, and smart city
sectors, as well as focusing on gaming, entertainment, fintech and e-health
services.
This focus proved instrumental in countering the negative impact of the global
crisis prompted by COVID-19, with data revenues (excluding SMS and VAS) growing
9 percent year-on-year in 2020, representing 41 percent of the Group’s
consolidated revenue at the end of the year.
New growth areas
Continuing our efforts to reach out to the youth of the region and find better
propositions for the broadband services being offered by Zain operations, Zain
esports was launched in December 2020. It has held several major tournaments to
date, and plans to organize more throughout 2021 to bolster the gaming ecosystem
and build an active community for gamers in the region. Zain is confident that
Zain esports will develop into a regional and international gaming powerhouse.
The first week of January 2021 witnessed a milestone in our regional Fintech
ambitions with the Saudi Central Bank (SAMA) granting Zain fintech subsidiary, ‘Tamam’,
the first consumer micro-financing license in region. This Sharia compliant
platform offers consumer micro-finance in less than 5 minutes via a seamless
digital customer experience through a mobile app. Innovation is key and
investing in viable digital services such as the fintech sector is critical to
Zain’s sustained evolution and success.
Sustainability, Gender Diversity and Inclusion are an intrinsic part of our DNA
Zain recognizes that contributing to the socio-economic development of our
operating countries, providing meaningful connectivity, aligning to the climate
change target and developing our employees, ultimately leads to a more
successful and profitable organization. Through digitization, our wide range of
services, and reach, we aim to unlock the many opportunities that the UN’s
Sustainable Development Goals (SDGs) offer, as both Sustainability and Diversity
& Inclusion are an intrinsic part of our DNA
Thank you
On a final note, on behalf of the Executive Management team, I would like to
express my deep, personal gratitude to Zain workforce, our individual and
business customers, the Board of Directors, and government agencies and bodies
we cooperate with across our footprint.
How Zain fulfilled its commitment to distribute 33 fils
Bader Al-Kharafi elaborates why the Board of Directors recommend the
distribution of cash dividends of 33 fils, representing the second year of the
new dividend policy that was approved by the General Assembly, that also
represents a 77 percent payout ratio of earnings, which is one of the highest in
the region.
* During 2020, cash flow is estimated at USD 350 million and debt reduction by
about USD 625 million. Accordingly, the total net debt was reduced by nearly USD
1 billion.
* The Group reduced the net debt / EBITDA (including Guarantees) which currently
stands at 2.0x, compared to 2.2x in 2019.
* An increase in initiatives with all operations resulted in the upstream of
approximately USD 900 million.
More than USD 900 million investment in networks and technology
Bader Al-Kharafi said Zain Group expanded its strategy and strengthened its
digital capabilities, investing more than USD 900 million in 5G and 4G networks.
This has created the lucrative environment to focus on digital transformation
monetization initiatives such as Fiber to the Home (FTTH), e-stores platforms,
and opening our APIs across key markets to offer appealing entertainment and
gaming services, so as to reap the lucrative opportunities in the digital space
as well as fintech services. As an example, Zain Cash in Iraq saw the platform
transferring Iraqi government employees’ salaries of USD 500 million in 2020,
and similarly with Jordan’s Zain Cash platform transferring USD 600 million.
Key achievements futureproof Zain Saudi Arabia
Bader Al-Kharafi noted the successful completion of Zain KSA’s capital
restructuring during Q4 2020 and the massive demand in the remaining priority
rights subscription that was oversubscribed by an unprecedented 469 percent,
reflected the confidence of shareholders and investors in the operator’s
operational strategy and future growth plans, reinforced by the company’s
profitability over the last four years. The transaction enhances Zain KSA’s
ability to expand its strategic investments in the Kingdom’s telecommunications
sector, growing its profitability and paving the way for dividends.
This followed the successful signing of an agreement to reschedule the Zain
KSA’s SAR 3.85 billion syndicated Murabaha financing facility with a consortium
of eight banks on preferential terms that also extended the term for a period of
five years to 2025, with facilities of up to SAR 7 billion, which will provide
additional liquidity to finance the company’s business growth plans. Regarding
the selling and leaseback of Zain KSAs mobile towers, this is still ongoing, as
the operator is seeking the necessary approvals to complete this transaction in
a way that best serves shareholders and the operator’s targets.
Optimism in the Sudanese market
Al-Kharafi noted the Sudanese market is one of the most promising markets in the
region, as the operation there saw impressive growth on all financial indicators
during 2020 in both USD and local SDG terms. Moreover, Zain Sudan is preparing
to invest in home fiber optics (FTTH) and expand digital services.
Despite the impact of the recent float of the local currency has increased the
pressure on our operations, we have great optimism about the future of our
operations in Sudan, where the market enjoys a wide segment of the youth
category, and there are positive economic indicators that seem to be on the
horizon that will positively reflect on the economic and social conditions
there.
Tier III data center in Kuwait
Al Kharafi noted that the rollout of Zain Data Park (ZDP) in Kuwait and Jordan
will provide government and enterprise customers with the very best IT support
services focused on cloud hosting and managed services across the ICT stack,
including applications, cybersecurity and networking.
In Kuwait, in the South Sabahiya area, situated a safe 30km outside of the city
in case of emergency, Zain has built the country’s first uptime-certified Tier
III co-location data center that will change the digital landscape in the
country. ZDP is to contribute to Zain’s offer of world-class telecom and IT
infrastructure to Kuwait’s business and SME community. Zain is currently
planning to expand ZDP to another location in Kuwait and we are working closely
with the visionary team at CITRA to achieve this.
In Jordan, ZDP’s platforms are hosted in The Bunker, a nuclear-grade regional
data and disaster recovery center in Amman, which is the first-of-its-kind in
the region. As a certified Tier III Data Center, The Bunker gives comfort to
ZDP’s clients that their data will be preserved under all circumstances.
Acknowledging the Kuwait Clearing Company
Zain Group would like to express its sincere gratitude and appreciation to
Kuwait Clearing Company (KCC) for the support and cooperation that led to the
success of the ordinary general assembly. Zain’s general assembly was held
virtually via the electronic system provided by Kuwait Clearing Company. The
Group recognizes the continuous efforts of KCC to develop the mechanisms for
holding general assemblies in light of the current world pandemic, and in
accordance with the safety measures that the state and the regulatory
authorities have imposed.
Remembering the six colleagues we lost during the pandemic
Bader Al-Kharafi began his speech at the General Assembly with a tribute to the
six Zain employees who have passed away during the pandemic. Al-Kharafi said,
“We are all deeply saddened by the loss of our colleagues, we share the grief of
their families and relatives, and we pray to God to have mercy on their souls”.
To honor their memory, Al-Kharafi mentioned the name of each employee in
recognition of their efforts and achievements during the course of their
employment at the company.
Earlier, His Highness the Prime Minister Sheikh Sabah Al-Khaled Al-Hamad Al-Sabah
briefed the Cabinet about the reassuring recent medical checkups of His Highness
the Amir Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah in the United States. His
Highness the Premier and the fellow ministers wished His Highness the Amir
everlasting wellbeing. The Cabinet also mulled the grilling motion presented by
a number of lawmakers against His Highness the Premier. His Highness the Premier
stated that he will deal with the motion in line with the constitutional
articles, National Assembly bylaws and the verdicts of the Constitutional Court.
The Cabinet also approved the draft decree to appoint Advisor Wael Al-Asousi as
secretary general of the Cabinet and referred the decision to His Highness the
Deputy Amir. The ministers also tackled the latest international and regional
developments. In this regard, the Kuwaiti government welcomed the formation of a
new executive power in Libya and lauded the UN efforts to achieve this goal. It
also reiterated Kuwait’s support to international efforts to continue the
political process to meet the Libyan people’s aspirations of security and
stability.