Zain sees sharp drop in Q2 profit but highlights resiliency amid COVID-19

Zain Group reported a sharp decline in net profit in the second quarter of 2020 as the COVID-19 pandemic spread throughout its eight markets in the Middle East and Africa.

Net income for the quarter amounted to the equivalent of US$117 million, down 28% year on year. Revenue fell by 7%, to $1.22 billion, while EBITDA was also 7% lower, at $533 million.

Like many operators, Zain found the April-to-June period more challenging than the first three months of the year, as the pandemic worsened from the second half of March. In the first six months as a whole, revenue fell by a more moderate 3%, to $2.6 billion, while EBITDA fell 5%, to $1.1 billion, and net profit by 14%, to $273 million.

Bader Nasser Al-Kharafi, Zain's vice chairman and Group CEO, described the first six months as a "mission-critical period as all our operations were focused on providing connectivity during the lockdown to minimize the impact of the pandemic on socio-economic life."

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Al-Kharafi noted that although its financial results had been affected by the crisis, the group's management had been "reassured that the business fundamentals of Zain remain strong." The group particularly cited the 10% increase in data revenue, which now accounts for 42% of total revenue.

Zain pointed to efforts to mitigate some of the effects of the pandemic, such as a $68 million reduction in operational expenses. The group also continued to invest in fiber-to-the-home, 4G and 5G networks, and completed the sale and leaseback of its 1,620 mobile towers for $130 million to IHS Holding Limited.

Zain operates in Kuwait, Saudi Arabia, Iraq, Sudan, Jordan, Bahrain and Lebanon. It uses the Zain brand in all markets except Lebanon, which operates under the Touch brand.

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— Iain Morris, International Editor, Light Reading

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