Gaining Strength Delivering Results
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Gaining strength Delivering results Annual Report 2020 The significant progress in executing our new GAIN corporate strategy during 2020 powered “ our strong financial performance, catalyzed new operational achievements, unlocked value for our shareholders, and enabled us to safeguard and support our people, communities and country through this unprecedented year. 9th most valuable Saudi Arabian brand, valued at over SAR 4 billion #1 Customer Care Ranking* #1 in Facebook, Instagram, Twitter and video conferencing platforms response time* * CITC reports 03 ENVIRONMENTAL, SOCIAL AND GOVERNANCE TABLE OF Environmental Safeguarding our Environment 49 Social Supporting our People 50 Contents Caring for our Community and Country 54 01 OVERVIEW Governance At a Glance 06 Board of Directors 56 About Mobily 08 Executive Management 68 Year in Review 10 Related Party Transactions 72 COVID-19 Response 14 Compensation and Remuneration 74 Geographic Footprint 16 About Mobily 78 Shareholders Information 18 Important Events 80 Forward-Looking Statements 81 Social Responsibility Activities 82 02 STRATEGIC REVIEW Shareholders 84 Chairman’s Statement 22 Dividend Policy 86 Theme of the Year 24 Risks 87 CEO’s Message 26 Statement of Compliance 90 Investment Case 30 Summary of Assets, Liabilities and Business Results 91 Market Review 32 Loans 93 CFO’s Review 34 Statutory Payments 96 Business Model 36 Lawsuits and Penalties 97 Strategy and KPIs 38 Annual Review of the Effectiveness of 99 Business Review 40 Internal Control Procedures Corporate Governance Compliance 100 Declarations of the Board of Directors 103 04 FINANCIAL STATEMENTS Independent Auditors’ Report 106 Consolidated Statement of Financial Position 109 Consolidated Statement of Profit or Loss 110 Consolidated Statement of Comprehensive Income 111 Consolidated Statement of Changes in Equity 112 Consolidated Statement of Cash Flows 113 20 Notes to the Consolidated Financial Statements 114 46 104 Mobily has turned obstacles into “ opportunities during 2020. Overview At a Glance 06 About Mobily 08 Year in Review 10 COVID-19 Response 14 Geographic Footprint 16 Shareholders Information 18 08 18 14 2020 AT A GLANCE Mobily has delivered significant financial and operational achievements during 2020, as we executed our GAIN strategy to drive transformation and growth. Awards AND RECOGNITION First Place Award for Best Annual Report Saudi Arabia Data Center Service in the Middle East – Digital Category Provider of the Year MarCom Gold Award 2020 MarCom Platinum Award 2020 6 MOBILY • ANNUAL REPORT 2020 01 OVERVIEW Financial HIGHLIGHTS Revenues EBITDA and EBITDA Margin Operational Cash Flow (EBITDA-CAPEX) 14,046 38% 5,350 2,558 +4.4%. +8.2% +17% 13,450 37% 4,947 2,187 11,865 38% 4,531 1,712 Deleveraging Net profit/ (Loss) Dividend Distributions (Net Debt and Net Debt/EBITDA) 2.26x 10,602 783 SAR 0.5 per Share (0.2%) +2,411.8% 2.46x 10,626 31 2.49x 11,288 (123) (SAR million) 2020 (SAR million) 2019 (SAR million) 2018 Margin HIGHEST ANNUAL HIGHEST ANNUAL NET DEBT TO MULTIPLIED OUR REVENUES IN THE LAST EBITDA IN THE LAST EBITDA RATIO AT NET PROFIT BY MORE THAN 5 years 7 years 2.26x 24x VS 2019 Operating HIGHLIGHTS Execution of new corporate strategy 5G Network Completed 1st coverage extends 5G voice call (VoNR) GAIN to 50 cities in the Middle East Winner +73%mobile internet average of Saudi Arabia Data Center download speeds* Service Provider of the Year** * CITC report Q4 2020 vs Q4 2019 ** Frost & Sullivan Best Practices Awards 2020 7 About MOBILY Etihad Etisalat (Mobily) was established in 2004 by a consortium led by Etisalat, the UAE- based telecommunications conglomerate, as the winning bidder for Saudi Arabia’s second Global System for Mobile communications (GSM) license. The Company’s major shareholders are Etisalat Emirates Group (27.99%) and the General Organization for Social Insurance (6.90%), with the remaining shares owned by institutional and retail investors. The launch of Mobily provided choice in national mobile The Company serves its diverse customer base across the telecommunications services to the Saudi population for the Kingdom – made up of individuals, business and carriers – first time. It attracted over one million subscribers in its first with integrated telecommunications services. It does so by 90 days of operation in 2005, having ended a monopoly in the leveraging its modern wireless network, which is among the wireless industry. It continued its rapid rise in 2006, the same largest by coverage in Saudi Arabia and the Middle East, as well year it launched 3.5G services, being named the Middle East as through one of the region’s widest fiber-to-the-home (FTTH) and North Africa’s fastest growing mobile operator. 4G services networks and one of the largest data center systems worldwide. were launched in 2011 and 5G services in 2019. Mobily’s network comprises its own infrastructure, Mobily has grown both organically and through strategic complemented by those of Bayanat al-Oula and SNFN. This is acquisitions over the years. In 2008, it acquired Bayanat Saudi Arabia’s newest fiber-optic network, with access to all al-Oula, a licensed data service provider, and later that year major cities and more than 58,060 km. The network has been it acquired an absolute majority stake in Zajil, the leading expanded to connect to neighboring countries including Yemen, Saudi internet service provider. It now owns 66% of the Saudi the United Arab Emirates, Bahrain, Qatar, Kuwait and Jordan. National Fiber Network (SNFN), one of the world’s largest fiber-optic networks, which enables Mobily to rely on strong Mobily has been listed on Saudi Arabia’s Tadawul stock backhauling capacity to offer its customers comprehensive exchange since it went public in 2004. It has a share capital of communication, mobile and broadband services. SAR 7,700 million, comprising 770 million shares of SAR 10.00 each, paid in full as of 31 December 2020. VALUES AGILE We are open, flexible, and make every second count. COURAGEOUS We are brave enough to take bold steps and determined to see them through. CLEAR We keep things black and white. CARING We treat you as an individual and value diversity in thought and perspective. 8 MOBILY • ANNUAL REPORT 2020 01 OVERVIEW Mobily has grown both organically and through strategic acquisitions “ over the years. VISION Empower the Digital Economy to Unlock Possibilities. Empower: our winning role in the envisioned future The Digital Economy: the long-term future that we envision To Unlock Possibilities: the value we add to this envisioned future 9 Year IN REVIEW 01 JANUARY Implementation of new corporate strategy to accelerate sustainable growth Mobily unveiled and began to implement GAIN, its new corporate strategy designed to propel the Company to faster, more profitable growth over the coming years by ‘Empowering the digital economy to unlock possibilities’. 05 JANUARY Partnering with Ericsson for advanced IoT solutions and new generation networks In line with Mobily’s strategy to support digital transformation initiatives to achieve the Kingdom’s Vision 2030 aspirations, Mobily and Ericsson signed an agreement to empower digital transformation and IoT across the Kingdom’s public and private sectors. 11 FEBRUARY Joining SAMENA Telecommunication Council’s Board of Directors Mobily, represented by CEO Eng. Salman bin Abdulaziz Al Badran, became a Member of the Board of Directors of the SAMENA Telecommunication Council, a tri-regional, non-profit industry association spanning more than 25 countries, for the period 2020-2022. 28 FEBRUARY First 5G voice call in the Middle East Mobily has successfully made the first 5G voice call (VoNR) in the Middle East, using 5G standalone (SA) network, as well as 5G (SA) network capability for data services, which offers independent 5G technology without any reliance on a 4G network. 10 MOBILY • ANNUAL REPORT 2020 01 OVERVIEW 31 MARCH Raising awareness about COVID-19 across Saudi Arabia The Saudi Red Crescent Authority thanked Mobily for its contribution in broadcasting awareness messages to all subscribers to raise awareness and prevent the spread of the COVID-19 pandemic, in line with Mobily’s concern for the health of the Kingdom’s citizens and residents. 01 APRIL One of the most valuable Saudi brands Mobily’s brand value rose 31% to more than SAR 4 billion, making it the 9th most valuable Saudi Arabian brand, and placing it for the first time among the top 10, according to London-based Brand Finance, a leading independent brand valuation and strategy consultancy. 13 APRIL Rollout of eSIM services in Saudi Arabia Mobily announced the activation and launch of Mobily eSIM for customers across the Kingdom for the latest smart devices through the Mobily e-Store. 13 MAY Support the Local Content Initiative to enhance the Saudi Economy The Saudi Arabian Local Content and Government Procurement Authority and Mobily signed a cooperation agreement with the aim of increasing the percentage of local content, localizing industries and shifting technologies in the telecommunications sector, and supporting the Saudi economy. 11 Year IN REVIEW (continued) 05 JULY Maximizing the efficiency of existing tower infrastructure With the support and supervision of CITC, Mobily signed a non-binding memorandum of understanding (MoU) with ZAIN KSA to form a joint committee to prepare and offer a request for proposal (RFP) with the options of purchasing the telecommunications towers owned by the 2 companies, merging them into one company with other investors or operating them on their behalf. 27 AUGUST Supporting students’ education and safety Mobily stepped up to support the health and safety of students and teachers across the Kingdom when going back to school by providing discounted packages for distance learning in coordination with the Saudi Government. ‘Green is Go’ on Saudi Arabia’s 90th National Day 22 SEPTEMBER In celebration of the 90th Saudi National Day, Mobily launched its “Green is Go” campaign, which celebrated the unity of the Kingdom and its people during this challenging year, with an original song composed and performed by a talented group of inspiring Saudis.