Kuwait City – 6 August, 2017

Zain Group, the leading mobile telecommunications pioneer with operations in eight markets across the Middle East and Africa, announces its consolidated financial results for the six months to 30 June, 2017. The company ended the period serving 45.2 million customers.

Group Key Performance Indicators (KD and USD) for the first half of 2017

Total Managed Active Customers	45.2 million
Revenues	KD 508 million (USD 1.67 billion)
EBITDA	KD 212 million (USD 695 million)
EBITDA Margin	41.7%
Net Income	KD 82 million (USD 270 million)
EPS	KD 0.021 (USD 0.07)

For the first six months of 2017, Zain Group generated consolidated revenues of KD 508 million (USD 1.67 billion) down 8% year-on-year (Y-o-Y) in KD terms. The Group’s consolidated EBITDA for the period reached KD 212 million (USD 695 million), down 17% Y-o-Y in KD terms, reflecting an EBITDA margin of 41.7%. Consolidated net income remained stable at KD 82 million (USD 270 million). Earnings per share for the half-year stood at 21 Fils (USD 0.07).

For the first six months of 2017, foreign currency translation impact, predominantly due to the 61% currency devaluation in Sudan from 6.4 (SDG / USD), in H1 2016 to 16.5 cost the company USD 305 million in revenue, USD 131 million in EBITDA and USD 58 million in net income.

Excluding this currency translation impact, Y-o-Y revenues and net income would have grown by 8% and 21% respectively for H1, 2017.

Group Key Performance Indicators (KD and USD) for the second quarter of 2017

In Q2 2017, Zain Group recorded consolidated revenues of KD 261 million (USD 860 million), down 5% compared to the same period in the previous year. EBITDA for the quarter reached KD 104 million (USD 344 million), down 21% Y-o-Y in KD terms, reflecting an EBITDA margin of 40%. Net income for the quarter amounted to KD 44 million (USD 145 million), down 2% Y-o-Y in KD terms reflecting earnings per share of 11 Fils (USD 0.04).

For the second quarter of 2017, foreign currency translation impact, predominantly due to the 61% currency devaluation in Sudan cost the company USD 157 million in revenue, USD 62 million in EBITDA and USD 25 million in net income.

Excluding the above-mentioned currency translation impact, Y-o-Y revenues and net income would have grown by 12% and 15% respectively for Q2, 2017.

Key Operational Notes for H1 2017:

-Launch and expansion of high-speed 4.5G LTE networks across key markets saw Zain Group data revenues (excluding SMS and VAS) increase 4% Y-o-Y, representing 25% of the Group’s consolidated revenues.

- Zain Saudi Arabia’s turnaround and cost optimization program, combined with network upgrades and new data monetization initiatives bolstered key financial indicators

- The significant currency devaluation impact in Sudan at the beginning of November 2016 negatively affected Zain Group’s H1 and Q2 2017 financial results. Nevertheless, Zain Sudan continues to perform exceptionally well in local currency terms

- Intense price competition in Kuwait coupled with additional operational costs in network expansion and upgrades hampered the operation and consequently Zain Group’s overall financial metrics

- The continued social unrest in Iraq, coupled with intense price competition affected all key financial indicators from the operation. Similarly, social unrest and currency devaluation impacted Zain South Sudan results

- Zain launched iflix, the leading Streaming Video on Demand (SVoD) service for emerging markets, across several markets. This follows the announcement earlier in the year that Zain and iflix had formed a joint venture entity named ‘iflix Arabia'

Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mr. Mohannad Al-Kharafi said, "The company’s performance in the first half has been satisfactory given the various operational and forex challenges we face across our footprint. It is our focus on innovation, customer service, and the driving of efficiencies that allows us to consistently deliver strong operational results and maintain our leadership position in the majority of our markets. The Board is working closely with management to continually evaluate new business and value-creating opportunities."

Mr. Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO commented, "The first six-months of 2017 produced some defining positive developments such as the progress being achieved through the turnaround program in Saudi Arabia and robust growth in our data monetization, Enterprise (B2B), and smart city initiatives in several key markets.”

The Group CEO added, “Our revenues reached KD 508 million with an EBITDA margin of 41.7%, and data revenues continue to grow which now represents 25% of our total revenues. It is unfortunate that one main factor outside of our control, namely the Sudan currency devaluation issue, has impacted overall performance considering the sound operational progress and transformation we have undertaken across all our markets. At the same time, the various operational management teams are focused on dealing with such costly and unavoidable socio-economic challenges across several key markets and are laying the foundations to take full advantage of improving conditions, once they occur.”

Mr Bader Al-Kharafi concluded, “We also entered into several key strategic partnerships and ramped up our investment in digital technologies to further maximize the output of our modern networks with the aim of improving the customer experience and future-proofing the company’s growth. We strongly believe in our strategic direction to unlock the many lucrative opportunities in the connected society space and look forward to the second half of the year with optimism as we deliver further on our transformation objectives in becoming a digital lifestyle operator.”

Operational review of key markets for the six months ended 30 June, 2017

Kuwait: Maintaining its market leadership, Zain Group’s flagship operation saw its customer base serve 2.6 million customers. The first half of the year was characterized by intense price competition coupled with additional operational costs in network expansion and upgrades, which impacted the operation’s financial performance for the period. Nevertheless, Zain Kuwait remains the Group’s most profitable operation with revenues reaching KD 167 million (USD 549 million), EBITDA amounting to KD 66 million (USD 215 million) and net income came in at KD 39 million (USD 128 million). Zain Kuwait’s EBITDA margin stood at 39% at the end of the six-month period, with data revenues (excluding SMS & VAS) accounting for 32% of total revenues. Notably, during the second quarter of 2017, Zain Kuwait’s financial performance was better than the first quarter of the year due to diversification of innovative broadband offerings and increased revenues from new business streams. Zain Kuwait was awarded and is currently implementing a smart meter project, in one of the sector’s largest ICT projects for the country’s Ministry of Electricity and Water. This Smart Meter project is a key step of the company's strategic plans to deploy smart city solutions in Kuwait and beyond.

Iraq: Despite the exceptional socio-economic circumstances coupled with the continuation of intense price competition Zain Iraq managed to achieve USD 523 million revenues due to the impressive growth in data usage and numerous customer acquisition initiatives in the northern regions of the country. The operation’s efficiency drive saw EBITDA reach USD 179 million, reflecting a 34% EBITDA margin. Net income amounted to USD 11 million for the period. Zain Iraq leads the market serving 12.9 million customers, which represented an impressive 15% Y-o-Y increase.

Sudan: A significant 61% currency devaluation in Sudan from 6.4 (SDG / USD) to 16.5 (rate change started at the beginning of November 2016) affected this operation’s financial results in USD terms for the first six months of 2017. Nevertheless, in local currency (SDG) terms, the operator continues to perform remarkably well as revenues grew by 38% Y-o-Y to reach SDG 3.4 billion (USD 213 million, down 44% in USD terms) for the first six months of 2017. EBITDA increased by 22% to reach SDG 1.3 billion (USD 81 million, down 50% in USD terms), and net income increased by 14% to SDG 545 million (USD 34 million, down 54% in USD terms). Data revenues (excluding SMS and VAS) accounted for 15% of total revenues, with an impressive annual growth rate of 69%. The operation saw its customer base expand 3% to reach 12.9 million.

Saudi Arabia: The turnaround and cost optimization program in place at the operation, combined with investment in network upgrades and the introduction of appealing data monetization initiatives bolstered all key financial indicators in H1, 2017. The operator recorded its first-ever half yearly net profit of USD 14 million, compared to net losses USD 154 million in H1 2016. Revenues for the period were up by 9%, reaching USD 1.04 billion. The company recorded a significant 59% increase in EBITDA to reach USD 346 million in H1 2017. The company’s EBITDA margin rose to 33%, up from 23% in H1 2016. The introduction of the biometric identification requirement during the year and the impact of seasonality saw the operator’s total customer base shrink by 15%, to stand at 9 million customers at the end of June 2017. Impressively, the operator witnessed a 42% rise in data revenues (excluding SMS and VAS) Y-o-Y, representing 50% of total revenues.

Jordan: Zain Jordan grew its customer base by 3% Y-o-Y, serving 4.2 million customers at the end of June, and maintaining its market leading position despite intense price competition. Y-o-Y revenues increased 2% to reach USD 241 million, with EBITDA up 1% to reach USD 116 million, reflecting an impressive 48% EBITDA margin. Net income decreased 5% to USD 48 million for the six-month period. With the continual expansion of 4G services across the country, data revenues (excluding SMS & VAS) represented 37% of total revenues, up by 15% Y-o-Y.

Bahrain: Zain Bahrain generated revenues of USD 100 million for the first six months of 2017, up 17% Y-o-Y. EBITDA for the period amounted to USD 30 million, down 8%, reflecting an EBITDA margin of 30%. Net income amounted to USD 4 million, reflecting a 21% decrease. Data revenues (excluding SMS & VAS) increased 36% Y-o-Y, representing 43% of overall revenues. END

About Zain Group: Zain is a leading telecommunications operator across the Middle East and Africa, providing mobile voice and data services to over 45.2 million active customers as of 30 June, 2017. With a commercial presence in 8 countries, Zain operates in: Kuwait, Bahrain, Iraq, Jordan, Saudi Arabia, Sudan and South Sudan. In Lebanon, the Group manages ‘touch’ on behalf of the government. In Morocco, Zain has a 15.5% stake in ‘INWI’, through a joint venture. Zain is listed on the Kuwait Stock Exchange (stock ticker: ZAIN).For more, please email info@zain.com or visit: www.zain.com; www.facebook.com/zain; www.twitter.com/zain; www.youtube.com/zain; www.instagram.com/zaingroup; www.linkedin.com/company/zain

Press Release

Zain Group Chairman Mohannad Al Kharafi

Zain Vice-Chairman & Group CEO, Bader Al Kharafi

Zain HeadQuarters Building

Zain Group Chairman Mohannad Al Kharafi

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Zain Vice-Chairman & Group CEO, Bader Al Kharafi

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Zain HeadQuarters Building

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