Saudi Telco, Zain's Net Profit Drops 18%

Mobile Telecommunication Company Saudi Arabia (Zain KSA) reported a net profit after Zakat and tax of $ 57 million for 2021, down 18 percent from $69 million a year earlier. 

In addition, it has seen a 17.7 percent decrease in net profit in 2021 as COVID-19 driven repercussions weighed on revenues. 

The company explained that the profit decline to revenue that was almost stable despite the cumulative impact of the pandemic, which led to a minimal number of visitors for Umrah, whereby it was compensated by the growth in B2B and 5G revenues. 

As such, the cost of revenue increased by 22 percent, which resulted in a decrease in gross profit by a cumulative impact of 10.28 percent. Meanwhile, the increase in cost is the result of the release of certain provisions in 2020 amounting $ 129 million, the telco said. 

Revenues remained almost unchanged, pressed down by the pandemic limiting Umrah visits, but led by a growth in business to business and 5G network revenues, it added. 

However, the Riyadh-headquartered firm succeeded in narrowing operating expenses by $ 65 million and limit finance costs by $ 109 million, sustained by debt restructuring. 

Total Capex investment for the full year 2021 was $ 266 million, to further expand the 5G network, boost the quality of services provided to customers. 

In Q4 2021, the company reported a net profit of $ 18.95 million, a rise of 98 percent year-on-year (YoY), due to higher B2B and 5G revenues, despite the increase in the cost of revenue by 12 percent to SAR 78 million. Compared with the previous quarter, net profit rose 17.7 percent from $16.10 million. 

Meanwhile, shareholders’ equity, excluding minority interest, amounted to $ 2 billion in 2021, up 3.56 percent compared to $ 2 billion a year earlier. 

It is worth mentioning that Saudi Arabia’s telecom and ICT sectors continue to benefit from the variety of programs aimed at diversifying the economy away from a dependence on oil, and establishing a wider digital transformation over the next decade.