What a difference a year makes – especially during a global pandemic. In the second quarter (Q2) of 2020, about the time that the world was in full panic mode following the arrival of COVID-19, Zain Group reported a sharp decline in net profit as the pandemic spread throughout its eight markets in the Middle East and Africa.

Fast forward to Q2 this year, and the situation looks somewhat different for the Kuwait-based telecoms group. Zain was able to report a pretty sizable 17% year-on-year increase in Q2 net profit to 41 million Kuwaiti dinar (US$138 million). Revenue was stable at KD369 million ($1.2 billion), while EBITDA for the quarter was down 5% at KD152 million ($506 million).

Zain also noted that currency devaluations in Iraq and Sudan are continuing to adversely affect revenue and earnings, costing it $215 million in revenue and $175 million in EBITDA in Q2.

For the first six months of 2021 (H1), Zain Group reported consolidated revenue of KD750 million ($2.5 billion), a decrease of 3% year-on-year. EBITDA fell 6% to KD310 million ($1.03 billion), and net income increased by 5% to KD86 million ($285 million), reflecting earnings per share of 20 fils ($0.07). Currency fluctuations cost the group $378 million in revenue and $233 million in EBITDA.

Group CEO Bader Nasser Al-Kharafi also trumpeted a first for the group: the board's recommendation to pay a half-year dividend of 10 fils per share.

"This interim dividend recommendation is a first in Zain's history and follows the approvals received during the recent extraordinary general assembly, and reaffirms the three-year minimum 33 fils dividend policy commitments we made in 2019," he said.

Capex in the first half of the year amounted to $491 million, and was predominantly invested in fiber-to-the-home (FTTH) networks, spectrum fees, 4G upgrades and new network sites, and 5G rollouts in Kuwait, Saudi Arabia and Bahrain.

Star performers

Of course, the pandemic is still very much present and continues to affect the group's eight markets. Chairman Ahmed Al Tahous noted merely that the board "is focused on the next phase of growth and minimizing the impact of COVID-19 on the business."

Out of the eight markets, Kuwait and Saudi Arabia remain the group's biggest businesses, with 21% and 41% revenue share respectively in the first six months. Iraq is next with 15%, followed by Jordan with 10%, Sudan with 6%, Bahrain with 4% and South Sudan with 3%. Zain Kuwait remains the most profitable company within the group and recorded 4% revenue growth in H1.

Zain Saudi Arabia was also highlighted for praise: Zain said the business, for the first time ever, achieved positive retained earnings after 12 consecutive quarters of profits, "extinguishing all accumulated losses."

Meanwhile, the group is placing increasing focus on new revenue streams, including the investments made by venture capital fund Zain Ventures and services launched by Zain Fintech.

For example, Zain Cash mobile financial services have been launched in Jordan and Iraq, while M-Gurush digital financial services are now available in South Sudan. Tamam offers micro-financing in Saudi Arabia under a license with Saudi Central Bank.

In addition, Zain developed Shlonik as a digital health platform in Kuwait, in collaboration with the Ministry of Health, in response to the pandemic. Wasfa is a digital prescription platform that allows the Ministry of Health to control the prescription and dispensing of medications in Kuwait.

Digital drive

Like most telcos, Zain is also on a mission to become a digital and agile service provider and has launched the Zain Group application program interface (API) platform to enable the faster deployment of digital partnerships.

A total of 26 live services are now up and running, generating around 5 million transactions per month and with 49.6 million addressable customers. H1 2021 gross revenue from these services amounted to $28 million, with net revenues at $8.5 million across the group.

So-called digital operators have also now been launched in Saudi Arabia, with Yaqoot, and in Iraq, with oodi. "Both Yaqoot and oodi offer a simple, all-digital mobile experience that frees customers from the traditional retail buying experience. From the moment customers download the app, they have all the power they require to manage their mobile service," Al-Kharafi said.

Otherwise, Zain live streaming is a web application that provides digital attendance for events; and Zain esports held 11 tournaments during Q2 2021 with over 5,000 participants and attracting 6 million social media impressions.

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— Anne Morris, contributing editor, special to Light Reading