Zain KSA achieves significant improvement, capital restructuring helps dividend payment: CEO

Mobile Telecommunication Company Saudi Arabia (Zain KSA) witnessed an uptick in its operational performance since 2017, with revenues growing by over SAR 1 billion in two years, CEO Sultan Al Deghaither told Argaam in an exclusive.

Zain KSA reported a profit margin of more than 70%, backed by the development of its services and products, which target more diversified clients. The telecom operator gained a higher market share in the wholesale market, driven by its high-quality 5G services.

The company’s profit margin outperformed the sector, leading to an over SAR 1.3 billion growth in earnings before interest, tax, depreciation and amortization over the last two years.

“We know what shareholders paid for their company. Today, Zain KSA is turning better, reporting solid results,” Al Deghaither said.

Additionally, Zain KSA incured much costs for its SAR 16 billion debt; however, to reduce them, the company should get a better credit rating, he noted.

Following the capital restructuring process, the proceeds will be used for debt repayment and borrowing cost reduction, a matter that will pave the way for the company to distribute dividends.

Answering a question about the debts owed to Kuwait’s Zain Group, Al Deghaither said the capital hike proceeds will be used for the repayment of Murabaha facilities. Moreover, the debt will be partly capitalized to maintain the group’s 37.04% holding in the company.

This move affirms Zain Group’s confidence in the Saudi unit’s future plans, as well as the local telecom market.

Al Deghaither explained that Zain KSA owes SAR 5.9 billion out of the total SAR 16 billion debt to the founders.

Zain KSA shareholders will vote on a 23% capital cut to SAR 4.487 billion from SAR 5.837 billion in the extraordinary general meeting (EGM) to be held on Oct. 8, Argaam earlier reported.

If the capital reduction is approved, shareholders will convene, on Oct. 14, to vote on the board of directors’ recommendation to increase the company's capital from SAR 4.48 billion to SAR 8.98 billion through SAR 4.5 million rights issue.

Read: Zain KSA shareholders to vote on raising capital to SAR 8.98 bln on Oct. 14

Elsewhere, Al Deghaither said that Zain KSA and Etihad Etisalat Co. (Mobily) are still studying investor bids for purchasing the telecommunications towers owned by both companies, adding that any updates will be announced in due course.

“Now, we believe that competition is more relevant to enhancing the efficiency of telecommunications towers, rather than building new ones. Telecom operators are also vying for distinct products and after-sale services,” he explained.

Telecommunications towers should be owned by a specialized firm. Accordingly, its investments will be focused on new services and technical solutions, including the national initiative for distance learning, especially as the telecom sector was proven to have a solid, advanced infrastructure base during the coronavirus pandemic, Al Deghaither concluded.