Zain Group Financial Results Q4 2018 Disclaimer ❖ Mobile Telecommunications Company KSCP “Zain Group” has prepared this presentation to the best of its abilities, however, no warranty or representation, express or implied is made as to the adequacy, correctness, completeness or accuracy of any numbers, statements, opinions, estimates, or other information contained in this presentation. ❖ Certain portions of this document contain “forward-looking statements”, which are based on current expectations and reasonable assumptions, we can however give no assurance they will be achieved. ❖ The information contained in this presentation is subject to change and we disclaim any obligation to update you of any such changes, particularly those pertaining to the forward-looking statements. ❖ Furthermore, it should be noted that there are a myriad potential risks, uncertainties and unforeseen factors that could cause the actual results to differ materially from the forward-looking statements made herein. ❖ Accordingly, this presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of, securities in any company within Zain Group. For further information about Zain Group, or the materials contained within this presentation, please direct your enquiries to our Investor Relations team via email at [email protected] or visit www.zain.com/en/investor-relations/ 2 Content 1. Results Review 2. Operations review 3. Financial Statements Zain At A Glance – 2018 39% 8,427 TB EBITDA MARGIN 16 AVERAGE ONE OF THE HIGHEST IN MILLION DAILY DATA THE REGION CUSTOMERS VOLUME $4.4 IN IRAQ BILLION IN REVENUES 4G $1.7 LONG TERM BILLION EVOLUTION IN EBITDA 49 (LTE) NETWORK MILLION IN KUWAIT, SAUDI ARABIA, ACTIVE JORDAN, BAHRAIN, SUDAN & $649 LEBANON CUSTOMERS MILLION IN NET INCOME AROUND 14.6 MILLION 6,000 MARKET CUSTOMERS IN REPUBLIC EMPLOYEES LEADER 1 IN KUWAIT, IRAQ, OF SUDAN REPUBLIC OF SUDAN, JORDAN & LEBANON 4 The World of Zain ZAIN’S WORLD CATERS TO 49 MILLION CUSTOMERS IN 8 COUNTRIES* LEBANON IRAQ Ownership: Ownership: 76% Management Contract Revenues: $1.1 b Customers: 2.4 m Customers: 16 m Prepaid: 86% Prepaid: 98% Market Share: 44% JORDAN Ownership: 96.52% KUWAIT Revenues: $494 m Ownership: 100% Customers: 3.7 m Revenues: $1.1 b Prepaid: 78% Customers: 2.6 m Market Share: 36% Prepaid: 64% Market Share: 37% MOROCCO SUDAN Ownership: 15.5% Ownership: 100% BAHRAIN Revenues: $316 m Ownership: 55.4% Customers: 14.6 m Revenues: $176 m Prepaid: 98% Market Share: 48% SOUTH SUDAN SAUDI ARABIA Ownership: 100% Ownership: 37.05% Customers: 873K Revenues: $2.0 b Prepaid: 99% Customers: 8.1 m * exclusive of Morocco, in which Zain Prepaid: 52% has a 15.5% ownership in the mobile operator “INWI” 5 Group Financial Highlights – Q4 2018 CUSTOMERS (000) REVENUES (USDm) +5% +56% 48,993 1,355 46,608 868 Q4-17 Q4-18 Q4-17 Q4-18 EBITDA (USDm) NET INCOME (USDm) +97% 58% 642 196 124 326 Margin EPS % 38% 47% (Cent) 3 5 Q4-17 Q4-18 Q4-17 Q4-18 6 Group Financial Highlights – 2018 CUSTOMERS (000) REVENUES (USDm) +5% +28% 48,993 4,362 46,608 3,398 2017 2018 2017 2018 EBITDA (USDm) NET INCOME (USDm) +26% +23% 1,717 649 1,367 527 Margin EPS % 40% 39% (Cent) 13 15 2017 2018 2017 2018 7 CAPEX & CAPEX / REVENUES -30% +39% 635 618 445 18% 14% 13% 2016 2017 2018 Capex Capex / Revenues * 2016 & 2017 Capex are excluding Zain KSA * 2018 Capex includes Zain KSA Capex from Q3 2018 onwards * Capex includes only tangible assets 8 TOTAL CAPEX 2018 % OF CAPEX BREAKDOWN OPCO (USDm) REVENUES Kuwait 100 9% Kuwait Iraq 111 10% 16% Others 13% Sudan 106 34% KSA 23% *Total CAPEX KSA* 140 13% $618m Republic of Sudan 17% Jordan 79 16% Iraq Bahrain 18% 0% Bahrain 3 2% Jordan 13% S. Sudan 0.3 1% * Group Total Capex ( including Zain KSA H2 2018 Capex) = USD 618 million Others 79 N/A * Capex includes only tangible assets * Zain KSA Capex represents H2 2018 only 9 Group Financial Highlights 2018 TOTAL DEBT (USDm) NET DEBT (USDm) & NET DEBT/EBITDA 4,726 5,547 4,185 3,739 2,898 3.2 2,135 2.3 1,362 763 Without Zain KSA With Zain KSA Without Zain KSA With Zain KSA Long Term Short Term Net Debt Net Debt/EBITDA Net Debt = Total interest bearing debt (including letters of guarantee) after deducting cash and cash equivalents 10 Group Financial Highlights REVENUE CONTRIBUTION CUSTOMER CONTRIBUTION Bahrain 4% Bahrain Iraq Jordan 1% 11% 33% Iraq 26% Lebanon KSA 5% Group Revenues Kuwait Group Customers 17% 25% Kuwait $4.4B 49m 5% S.Sudan Jordan Republic Republic 1% 8% of Sudan of Sudan Others 30% 7% 3% KSA 24% 11 ZAIN DIVIDENDS DIVIDEND PAYOUT RATIO DIVIDEND YIELD (%) 95% 89% 87% 8% 8% 8% 8% 80% 76% 7% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 DIVIDEND PER SHARE (Fils) CASH DIVIDEND (USDm) 50 690 40 533 506 35 35 447 30 388 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 12 Content 1. Results Review 2. Operations review 3. Financial Statements ZAIN KUWAIT MARKET SHARE FINANCIALS (USDm) 1983 100% 168% Ownership Penetration Year of launch 273 265 Zain 37% VIVA ZAIN 2.6 m $26 35% 31% 38% 103 Customers ARPU EBITDA Margin 89 OOREEDOO 72 Viva31% Ooredoo 60 31% 32% 4G 2,384 100% Q4-17 Q4-18 Technology Number of sites Coverage 1,093 1,098 418 381 ▪ Stable revenue despite the USD34 million IFRS 15 impact 265 272 ▪ Lower enterprise projects and bulk sale margins impacted EBITDA ▪ Strong concentration on cost optimization initiatives 2017 2018 ▪ Data revenues (excluding SMS & VAS) grew 10% YoY, and Revenues EBITDA Net Income formed 35% of total revenues 14 ZAIN KSA FINANCIALS (USDm) 2008 37% 129% Year of acquisition Ownership Penetration 546 458 292 VIVA ZAIN 8.1 m $19 31% 38% 40% 157 Customers ARPU EBITDA Margin 106 OOREEDOO 31% (12) 4G 9,315 97% Q4-17 Q4-18 Technology Number of sites Coverage 1,948 2,008 802 ▪ Best-ever FY results since inception, showing record growth levels 671 ▪ Regulatory changes to reduce annual royalty fee for commercial service 3 89 from 15% to 10% of net revenues, improved Zain KSA’s financial position 2017 2018 ▪ Major focus on the enterprise B2B segment resulted in healthy growth Revenues EBITDA Net Income ▪ Data revenues (excluding SMS & VAS) formed 51% of total revenues 15 ZAIN IRAQ MARKET SHARE* FINANCIALS (USDm) 2003 76% 96% Year of acquisition Ownership Penetration 291 287 Zain 44% VIVA ZAIN 16.0 m $6 37% 31% 38% Customers ARPU EBITDA Margin 115 OOREEDOO 101 31% Korek* Asiacell 18% 38% 5 15 3G 4,646 99% Q4-17 Q4-18 Technology Number of sites Coverage 1,102 1,140 ▪ Solid full year performance, supported by cost optimization initiatives and significant growth of data revenues. 382 423 ▪ Robust growth in enterprise (B2B) segment 49 ▪ Customer base grew by 9%, to reach 16 million 29 ▪ Improved customer service due to the call center revamp 2017 2018 ▪ Personalized BTL offers under the “Know Your offer” program to increase Revenues EBITDA Net Income usage *Korek market share estimated based on Q1 2018 16 ZAIN SUDAN MARKET SHARE FINANCIALS (SDGm) 2006 100% 72% Year of acquisition Ownership Penetration 2,934 Zain 48% VIVA ZAIN 1,890 14.6 m $2 38% 31% 38% Customers ARPU EBITDA Margin 941 OOREEDOO 776 MTN31% Sudani 26% 249 26% 53 4G 2,576 90% Q4-17 Q4-18 Technology Number of sites Coverage 9,731 ▪ Impressive YoY growth in local currency SDG terms 7,078 ▪ Customer base grew by 8%, to reach 14.6 million 3,650 ▪ ~47% currency devaluation affected the financial results in USD terms 2,823 1,206 (from an average of 16.9 in 2017 to 31.9 SDG/USD in 2018) 1,085 ▪ Significant cost optimization savings 2017 2018 ▪ Data revenues (excluding SMS & VAS) grew 56% YoY, and formed Revenues EBITDA Net Income 18% of total revenues 17 ZAIN JORDAN MARKET SHARE FINANCIALS (USDm) 2003 96.52% 80% Penetration Year of launch Ownership 126 125 Zain 36% VIVA ZAIN 3.7 m $10 39% 31% 38% 51 Customers ARPU EBITDA Margin 46 OOREEDOO Orange Umniah31% 32% 32% 18 16 4G 2,881 100% Q4-17 Q4-18 Technology Number of sites Coverage 497 494 226 ▪ Stable full year revenue supported by interconnect and data revenues 194 ▪ EBITDA decreased by 14%, due to lower gross margin (IFRS 15 90 73 impact) and higher Opex due to higher electricity and regulatory charges 2017 2018 ▪ Data revenues (excluding SMS & VAS) grew by 1% YoY, and formed Revenues EBITDA Net Income 38% of total revenues 18 ZAIN BAHRAIN FINANCIALS (USDm) 2003 55% 164% Year of launch Ownership Penetration 49 46 $17 23% ARPU EBITDA Margin 14 11 4 4 Q4-17 Q4-18 4G 587 100% Technology Number of sites Coverage 196 176 ▪ Net Income jumped by 20% YoY due to better monetization and 58 41 operational efficiencies. 11 14 ▪ Data revenues (excluding SMS & VAS) formed 45% of total 2017 2018 revenues Revenues EBITDA Net Income 19 TOUCH - LEBANON Management Contract MARKET SHARE 2004 MC 76% Year of acquisition Ownership Penetration Touch 54% VIVA ZAIN 31% 38% 2.4 m 1,334 99% OOREEDOO 31% Customers Number of sites Coverage Alfa 46% 4G Technology ▪ Zain operates in Lebanon under a management contract since June 2004, when it was rebranded to mtc-touch, and subsequently to “touch” 20 Content 1. Results Review 2. Operations review 3. Financial Statements BALANCE SHEET 2018 2017 2018 2017 ASSETS KD ’000 LIABILITIES AND EQUITY KD ’000 Current liabilities Current assets Trade and other payables 956,272 467,616 Cash and bank balances 311,916 244,398 Deferred revenue 105,308 47,768 Trade and other receivables 572,783 455,801 Due to banks 412,971 199,564 Contract assets 66,062 - 1,474,551 714,948 Inventories 45,957 34,402 Non-current liabilities Investment securities at fair value