Zain’s First Quarter Profits Plummet 94% to SAR 67 Million

Saudi Mobile Telecommunications Company, Zain, reported a significant decline in net profit to SAR 67 million during the first quarter of 2024, a sharp 94.1% drop from SAR 1.13 billion in the same quarter last year. This follows the release of estimated financial results for the period ending March 31, 2024.

While operating profit saw a substantial increase, reaching SAR 251 million in the first quarter of 2024—a 31.4% rise from SAR 191 million in the same period last year—earnings per share plummeted to SAR 0.07 from SAR 1.27 previously.

The decline in net profit primarily reflects the completion of the lucrative tower transaction in Q1 2023, which had contributed SAR 1,144 million to the net profit last year, drastically skewing the year-over-year comparison. Excluding this one-time gain, net profit before zakat increased from SAR 24 million in Q1 2023 to SAR 79 million in Q1 2024, marking a growth of SAR 55 million, supported by an 11% increase in EBITDA equivalent to SAR 74 million.

Revenue in the first quarter grew modestly by SAR 113 million (4.67%), driven by expansions in B2B sales, 5G services, wholesale operations, and the “Tamam” business line.

Compared to the fourth quarter of 2023, Q1 2024 revenue was marginally lower by SAR 8 million due to reduced equipment revenue. However, TAMAM revenue surged by 20%, adding SAR 14 million. Despite these fluctuations, gross profit for the period rose by SAR 68 million compared to Q4 2023.

The period also saw a turnaround from a net loss of SAR 54 million in Q4 2023 to a net profit of SAR 67 million in Q1 2024. This was largely due to a dramatic increase in operating profit, which jumped from SAR 108 million in Q4 2023 to SAR 251 million in Q1 2024—a 131.3% increase, largely due to a reduction in expected credit losses.

Despite the restatement of certain profit and loss components related to the tower transaction accounting adjustments in Q4 2023, there was no impact on the consolidated financial statements as of December 31, 2023, as all necessary adjustments had been made.

To further enhance customer experience and service quality, the total capital expenditure (CAPEX) for Q1 2024 was SAR 52 million.