Zain Saudi H1 2020 net profit drops 37% to SAR 164 mln

Mobile Telecommunication Company Saudi Arabia (Zain Saudi) posted a net profit after Zakat and tax of SAR 164 million for the first half of 2020, a 37% decline year-on-year (YoY), compared to SAR 260 million in the same period a year earlier.

The drop in profit is attributed to a decrease in revenue by SAR 222 million, which was partially compensated by lower cost of revenue by SAR 46 million and operational expenditure (opex) of SAR 120 million.

Depreciation and amortization increased by SAR 43 million while financing charges decreased by SAR 19 million.

The second-quarter net profit after Zakat and tax stood at SAR 59 million, a 55% drop YoY, compared to SAR 130 million in the same period last year, due to lower revenue by SAR 168 million.

The telecom operator cited that the estimated impact from COVID-19 outbreak on Q2 potential revenue is SAR 186 million, mainly from the drop in prepaid, postpaid, devices, and visitor packages and the halt of the Umrah season.

This was partially absorbed by a SAR 125 million decrease in opex as a result of better cost management to limit the impact of the pandemic.

Meanwhile, depreciation and amortization increased by SAR 34 million as a result of the capital expenditure (capex) investment, and the release of certain provision increased by SAR 35 million.

Finance cost decreased by SAR 14 million due to the drop in SAIBOR and Libor and as well to better cash management.

On a quarterly basis, net profit declined 43.8%, on lower revenue by SAR 150 million, offset by decrease in cost of revenue and opex.

The accumulated deficit decreased to reach SAR 1.44 billion in H1 2020, representing 24.7% of the company’s share capital of SAR 5.83 billion backed by the net profit in the second quarter.

During Q2 2020, the telecom provider made an early voluntary payment for financing agreements, amounting to SAR 1.1 billion, bringing the total payments within 21 months to SAR 2.5 billion.

Total capex investment for H1 2020 reached SAR 1.85 million, out of which SAR 607 million is related to the acquisition of new spectrum in addition to the rollout capitalization of the 5G investment.