Zain Saudi Arabia completes capital restructuring, remaining offer of priority shares oversubscribed by 469 Percent

Zain Group, a leading mobile telecom innovator in seven markets across the Middle East and Africa announces the successful competition of its subsidiary Zain Saudi Arabia (Zain KSA) capital restructuring. This follows the high demand by institutional investors in the remaining priority shares that were oversubscribed by an unprecedented 469%.

These last steps came as part of Zain KSA's plan to restructure its capital, which included the reduction of the capital and then raising it, through the offering of priority rights shares. This contributed to extinguishing most of the telco’s accumulated losses, paying part of the Murabaha financing, and capitalizing part of other dues. The transaction paves the way for the company to enter a new era of strategic transformation of its financial performance.

Bader Nasser Al-Kharafi, Vice-Chairman and CEO of Zain Group said, "The successful competition of the company's capital restructuring and the massive demand in the remaining priority rights subscription reflects the confidence of shareholders and investors in Zain KSA’s operational strategy and future growth plans, reinforced by the company’s return to profitability over the last three years. The transaction enhances Zain KSA's capabilities to expand its strategic investments in the Kingdom’s telecommunications sector, growing its profitability and paving the way for dividends."

Zain KSA's management is targeting the further growth of its operations in the areas of digital innovation, cloud computing, the Internet of Things, and artificial intelligence, with the view to becoming the preferred digital service provider for individuals and businesses.

The operator is set to continue its expansion of 5G into new cities, as well as increasing coverage in current locations, raising the quality of services provided in a manner that ensures the superiority of the company locally and internationally.

The capital restructuring process coincided with Zain KSA maintaining its profitability for the ninth consecutive quarter, after its conversion to profit three years ago. The company recorded net profits during the first nine months of 2020 amounting to SAR 224 million, while total revenues for the third quarter of this year amounted to SAR 1,928 million, compared to SAR 1,889 million, up 2% from the previous quarter.

Zain KSA's accumulated losses have continued to decline based on the net profit achieved during the third quarter of 2020, with the capital restructuring having taken place during the fourth quarter of the year, and thus, most of the accumulated losses were amortized to SAR 34 million. Hence, since the capital restructuring, the company's share price has increased to reach its highest level this year with a value of over SAR 13 per share, compared to just SAR 6 last year.

Zain KSA recently announced its success in signing an agreement to reschedule the joint Murabaha financing with a consortium of several banks, with an estimated value of SAR 3.85 billion on preferential terms. This agreement extends for a period of five years to 2025. The funds will be drawn down according to the company's requirements, at a much lower interest than before, and with better commercial terms. In addition, this agreement includes working capital facilities worth SAR 1 billion until 2025, which will provide additional liquidity to finance the company's business growth plans.

In the last 12 months, Zain has launched one of the largest 5G networks in Europe, the Middle East, and Africa, and has since become the only operator in the Kingdom to cover all administrative regions, with its network being judged as the best performing one in 12 of the 13 administrative regions, according to a report issued by the Kingdom’s Communications and Information Technology Commission.

Zain KSA also recently announced the launch of the frequency integration feature for its 5G network, becoming the first telecom operator in the world to provide this feature to customers, enabling connection speeds of up to 2.4 gigabits per second.

Recently, Zain KSA was awarded three accolades at the 14th Telecom Review Leaders’ Summit, for the Best 5G Infrastructure Deployment, Best 5G User Growth, and Best Cloud Provider. Earlier in the year, Zain KSA gained international recognition by being recognized as running the fastest fixed Internet in Saudi Arabia by Ookla, owner of SpeedTest, the globally acclaimed Internet speeds measuring website.