zain er q407 final2 - d364xagvl9owmk.cloudfront.net · zain 2007 earnings release page 2 of 27 as...

Zain Enterprise Information Portal TeamVersion 1.0

Earnings Release2007

Financial & Operational Highlights

* All customer numbers in this earnings release represent active customers who have made a chargeable event within the previous 90 days period. The customers number include the 3.112 million customers from the acquisition of mobile operator Iraqna in Iraq.

Zain 2007 Earnings Release

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As of 31 December 2007, Zain’s customer base exceeded 42.3 million active customers* across the Middle East and Africa, representing a 57% increase compared to 2006.

For the full year of 2007, Zain posted Consolidated Revenues exceeding USD 5.9 billion (KD 1.677 billion), an increase of 32% compared to the previous year.

During the same period, Zain recorded an EBITDA of more than USD 2.5 billion (KD 725 million), a 25% increase compared to 2006.

EBITDA Margin stood at 43% in 2007 compared to 46% in 2006.

The Group recorded a Net Income of USD 1.1 billion (KD 320 million) for the same period, an 11% increase compared to 2006.

Zain’s EPS stood at 0.61 cents (0.172 fils) by the end of 2007, an 11 % increase compared to the previous year.

Customers Table 1: Zain Group Customer Breakdown & Market Positioning

As of December 31, 2007

Ownership(%)

2007

Active Customers

(000s)2007

Active Customers

(000s)2006

Growth (%)

Prepaid (%)2007

Market Positioning

MIDDLE EASTBahrain 56.25% 448 233 92% 81.9% 2Iraq 7,287 1 3,198 128% 99.2% 2 1Jordan 96.52% 1,858 1,961 (5%) 86.1% 1Kuwait 100% 1,576 1,461 8% 72.3% 1Lebanon MC 3 630 560 13% 77.8% -Sudan 100% 3,883 2,754 41% 98.3% 1

Middle East Total - 15,682 10,167 54% 93.4% -

AFRICA Burkina Faso 100% 918 518 77% 99.9% 1Chad 100% 595 348 71% 99.8% 1Congo Brazzaville 90% 1,014 683 48% 99.8% 1DRC 98.5% 2,273 1,833 24% 99.7% 1Gabon 90% 666 514 30% 99.4% 1Kenya 80% 2,104 1,939 9% 98% 2Madagascar 100% 574 331 73% 97% 2Malawi 100% 654 357 83% 99.2% 1Niger 80% 666 397 68% 99.9% 1Nigeria 65% 11,098 6,396 74% 99.5% 2Sierra Leone 100% 349 243 44% 99.5% 1Tanzania 60% 2,507 1,517 65% 99.7% 2Uganda 100% 1,435 470 205% 99.7% 2

Zambia 88.88% 1,966 1,325 48% 99.6% 1

Africa Total - 26,819 16,871 59% 99.4% -

Zain Group Total - 42,501 27,038 57% 97.2% -

1- The customer number for Iraq includes the 3.1 million customers following the acquisition of Iraqna.2- Iraq prepaid percentage reflects MTC-Atheer’s & Iraqna customers.3- MC = Management Contract


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Zain Group Customers

Bahrain - 1%Iraq - 17%

Jordan - 4%Kuwait - 4%Lebanon - 1%

Sudan - 9%

Congo B - 2%D.R.C. - 5%

Gabon - 2%Kenya - 5%

Nigeria - 26%

Tanzania - 6%

Zambia - 5%

Others -13%

As of December 31, 2007, Zain operated on 2 continents and served over 42 million active customers. This represents an increase of 57% compared to December 31, 2006. The Company offers its services in 20 countries with a total population of over 500 million under license across Africa and the Middle East. The Company will start operations in the Kingdom of Saudi Arabia by Q3-2008. In December, 2007 the group also acquired 75% of Westel Ghana, Ghana’s second national operator. The Group intends to launch services in Ghana no later than Q3-2008. Following this acquisition, the group will have a presence in 22 countries, to become the 4th largest mobile operator in the world in terms of geographic footprint.

The Company’s customer increase was driven primarily by its high growth African operations including Nigeria, Uganda and Tanzania. In the Middle East, the operations in Iraq, Bahrain and Sudan showed solid growth. Of the 20 countries in which Zain operates 13 subsidiaries are the leading operators whereas 6 other Zain operations are the solid number 2 in their respective markets. This reflects Zain’s strategy to be the leading mobile operator in the markets it serves. As of December 31, 2007, Zain’s African operations, through its subsidiary Celtel International – represented 64% of the Company’s customer base while Middle East operations: Iraq, Bahrain, Sudan, Lebanon, Kuwait and Jordan represented the remaining customers.


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In percentage growth terms, Zain’s operation in Uganda – Celtel Uganda – was the fastest growing operator of the group, registering a 205% increase in customers. The second largest growth was registered in Malawi (83%), Burkina Faso (77%) and Nigeria (74%). In the Middle East, Zain in Iraq (formerly both MTC-Atheer and Iraqna) registered an impressive 128% increase in customers following the acquisition of Iraqna; Bahrain registered a 92% increase followed by Sudan with 41%. In total customer numbers, Celtel Nigeria represents 26% of Zain Group’s customer base, followed by Iraq (17%), Sudan (9%), Tanzania (6%) and Kenya (5%) as of December 31, 2007.

All in all, Zain’s African operations registered a 59% increase in customers in 2007, while the Middle Eastern operations registered a 53% increase over the same period.

The Zain Groups’ 20 operations are mainly made up of prepaid customers, representing 90% of the total customer base. Of the customer base in MEA operations, over 93% are prepaid and the group’s African operations almost entirely (99%) consist of prepaid customers. This phenomenon clearly reflects the effects of the cash based economies of Africa and some Middle Eastern countries such as Iraq. Prepaid customers significantly reduce the credit and collection risks for Zain’s operations.


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Key Operational Events of the Period


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December 1, 2007Zain announces the acquisition of Iraqna, one of Iraq’s major mobile operators; combined operations of Iraqna and MTC-Atheer serves 7 million customers in Iraq under the Zain brand.

22 November, 2007Zain’s African operations under the Celtel and Zain brands announce the extension of the ‘One Network’ service, the world’s first borderless mobile network in Africa to an additional six countries to include Burkina Faso, Chad, Malawi, Niger, Nigeria and Sudan, a total of 12 countries.

29 September, 2007Zain in Bahrain launches another telecommunications first with the launch Zain@home, the world’s first nationwide WIMAX network.

8 September, 2007The MTC Group with a presence in the Middle East and Africa, announces the re-branding to Zain, to become the Group’s corporate master and customer facing brand.

7 July, 2007Zain (formerly MTC) Consortium is awarded the third mobile license in the Kingdom of Saudi Arabia by the Communications and Information Technology Commission (CITC).

Financial ResultsZain recorded Consolidated Revenues of USD 5.9 billion (KD 1.677 billion) as of December 31, 2007, an increase of 32% compared to 2006. Consolidated EBITDA increased by 25% to USD 2.5 billion (KD 725 million) resulting in an EBITDA margin of 43%. The company’s Net Income reached USD 1.1 billion (KD 0.32 billion), an 11% increase compared to 2006. Earnings per share (EPS) increased by 11% from USD 0.55 in 2006 to USD 0.61 in 2007. Zain’s performance was driven by organic growth in almost every operation and acquisitions made during the year. The growth is part of Zain’s strategy to become a global operator in 2011 serving at least 110 million customers and achieving an EBITDA of USD 6 billion. Zain’s strong financial performance was supported primarily by its more mature Middle Eastern operations. In addition, a 54% increase in revenues was recorded from the group’s African operations which exceeded USD 3 billion for the first time in 2007.

Table 2: Financial Highlights

Consolidated Results 2007 2006 Annual Growth

Currency USD KD USD KD

Revenues (millions) 5,912 1,677 4,466 1,297 32%

EBITDA (millions) 2,557 725 2,044 594 25%

EBITDA Margin (%) 43 46 -

Net Profit (millions) 1,130 320 1,015 295 11%

EPS 0.61 0.172 0.55 0.159 11%

Zain Group Revenues

Sudan - 13%

Tanzania - 5%

Others - 9%

Bahrain - 3%

Jordan - 8%

Lebanon - 1%

Gabon - 4%Kenya - 3%

Nigeria - 20%

Kuwait - 21%

Congo B - 4%

D.R.C. - 5%

Zambia - 4%


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Table 3: Income Statement Summary

Consolidated Results 2007 2006 Annual Growth

USD m KD m USD m KD m

Revenues 5,912 1,677 4,466 1,297 32%

Cost of Sales 1,275 362 946 275 35%

Gross Profit 4,637 1,316 3,520 1,023 32%

Operating, General and Administrative Expenses 2,213 628 1,568 455 41%

EBITDA 2,557 725 2,044 594 25%

EBITDA Margin 43% 46% -

Interest Income 92.7 26.3 62.8 18.3 47%

Gain from Currency Evaluation 46.3 13.1 11.7 3.4 296%

Net Profit 1,130 320 1,015 295 11%

Table 4: Balance Sheet - Summary

Consolidated Results 2007 2006


Current Assets 2,021 553 2,390 692

Non-Current Assets 13,952 3,814 9,664 2,799

Total Assets 15,973 4,367 12,054 3,491

Current Liabilities 3,756 1,027 3,603 1,043

Non-Current Liabilities 5,822 1,592 3,271 947

Shareholders’ Equity 5,786 1,582 4,676 1,354

Minority Interest 609 166 504 145

Total Liabilities and Equity 15,973 4,367 12,054 3,491


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Table 5: Cash Flows - Summary

Consolidated Results

2007 2006


Net Cash from Operating Activities 2,459 672 2,760 802

Net Cash from Investing Activities (3,761) (1,056) (3,414) (992)

Net Cash from Financing Activities 674 183 1,244 360

Net Increase in Cash and Equivalents (628) (200) 590 170

Cash and Cash Equivalents at end of Year 956 261 1,638 474

One of the main drivers of growth in 2007 was a continued focus on investing in expanding network coverage and improving the quality of service. These investments are critical to support customer growth in the African operations where the Group experiences its fastest growth but also where the network infrastructure still requires significant investment. In Nigeria alone, the Group invested more than USD 570 million in 2007. Consolidated revenues were distributed more or less evenly between the Middle East and Africa. In the former, Kuwait was the main contributor (21%) whereas of the African operations, Nigeria’s contribution of 20% underscores the importance of this operation to the Group’s results.Although revenues from Iraq operation were not consolidated in the Group’s results, revenues increased by 60% to USD 561 million compared to 2006. In line with the Group’s aim to return superior returns to its shareholders and on the back of the Group’s strong growth, earnings per share increased to USD 0.61 in 2007, up from USD 0.55 in 2006.

Key Financial Events of the Period


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December 2, 2007 – ZAIN set to increase company’s capital by 75%ZAIN’s Board of Directors recommends an increase of the company’s capital by 75% drawing from its existing shareholder base.

October 22, 2007 – ZAIN’s worldwide footprint now stands at 22 countriesCeltel International, ZAIN’s African subsidiary, agrees to acquire 75% of Western Telesystems Ltd (Westel) from the government of Ghana for US$ 120 million. The Group intends to launch services in Q2-2008.

December 1, 2007 – ZAIN in Iraq serving more than 7 million customersZAIN concludes a binding agreement for the purchase of 100% of the share capital of Iraqna Company, a subsidiary of Orascom Telecom Holding, for US$ 1.2 billion.

2007 Stock Performance

Table 6: Stock Summary

Stock Summary USD KD

Closing Price (31/12/2007) 13.97 3.820

Paid-Up Capital (millions) 692.75 189.398

Share Par Value 0.36 0.100

EPS 0.61 0.172

Market Capitalization (Billions) 26.49 7.241

Year-on-Year Stock Price Growth 24%

P/E multiples 19x


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Zain’s Presence in the Middle East and Africa


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Chad

Niger

Burkina Faso

Sirerra Leone

Ghana

Nigeria

Gabon

Congo

Zambia

DemocraticRepublicof Congo

Lebanon

Jordan

Iraq

Kuwait

Bahrain

Sudan

Kenya

Uganda

Madagascar

Tanzania

Malawi

K.S.A.

* Kingdom of Saudi Arabia: Commercial services to be launched by Q3 2008.

*

**

** Ghana: Commercial services to be launched no later than Q3 2008.

Country Insights


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Zain in Kuwait, the group’s first operation, was established in 1983. Currently there is only one peer in Kuwait - Qtel (Wataniya) - however, a third mobile operator is expected to enter the highly penetrated market no later than Q3-2008.

Zain in Kuwait had a total of 1.576 million active customers by year end 2007, representing an 8% increase in active customers compared to 2006. The operation’s customers accounted for 4% of Zain total customer base. Zain in Kuwait’s 2007 revenues reached a record USD 1,266.8 million, an increase of 16% compared to 2006. The operation’s revenues accounted for 21% of Zain’s total – the largest single source of revenues. EBITDA increased by 27% compared to 2006. Zain in Kuwait had a high ARPU of $70 in 2007.

In September 2007, MTC rebranded its Kuwaiti operation to Zain. Surveys show that the new brand is perceived as fresh and dynamic underscoring the operation’s customer loyalty and success in Kuwait. The smooth brand transition was reflected in an excellent performance for the fourth quarter of Zain in Kuwait with a record Net Income.

Kuwait

2006 2007

592.3447.5

684.5539.9

1,226.81,093.7 RevenuesEBITDANet Income Zain

57%

Wataniya43%

Financials (USD m)

Market Overview 2007 2006

Population (000s) 3,400 3,200

GDP/Capita (USD; PPP) 34,200 33,601.5

Mobile Penetration 106% 103%Number of Peers 1 1

Market Positioning 1 1

Ownership 100% 100%

Customers (000s) 1,576 1,461

Postpaid 437 382

Prepaid 1,139 1,079

Market Share 57% 59%

ARPU ($) 70 65

Financial Performance 2007 2006 Annual Growth

Revenues (USD m) 1,266.8 1,093.7 16%

EBITDA (USD m) 684.5 539.9 27%


CAPEX (USD m) 132 92 43%

Net Income (USD m) 592.3 447.5 32%

Market Share


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Population (000s) 38,500 37,700

GDP/Capita (USD; PPP) 2,930 2,580

Mobile Penetration 18% 11%

Number of Peers 3 2


Ownership 100% 100%

Customers (000s) 3,883 2,754

Postpaid 65 65

Prepaid 3,818 2,689


ARPU ($) 20 25

Financial Performance 2007 2006* Annual Growth

Revenues (USD m) 792.5 717.8 10%

EBITDA (USD m) 325.2 415.2 (22%)


CAPEX (USD m) 101 172 (41%)

Net Income (USD m) 263.2 362.5 (27%)

Financials (USD m)

Sudan

Market Share

Mobitel, Sudan’s first mobile operator was successfully re-branded to Zain in September 2007. The response to the brand by the public, media and authorities has exceeded all set expectations.

Zain in Sudan had over 3.8 million active customers by year end 2007, representing a 41% compared to last year. The operation’s customers accounted for 9% of Zain total customer base in the Middle East and Africa regions.

Zain in Sudan 2007 revenues reached USD 792.5 million, an increase of 10% compared to 2006. The operation’s revenues accounted for 13% of Zain total consolidated revenues. EBITDA decreased by 22% compared to 2006. Net Income in 2007 decreased by 27% compared to 2006.

Despite an overheated market in Khartoum caused by continuous promotions and discounted pricing by the competition, Zain Sudan still commands a 49% market share. Zain Sudan is focusing its efforts on customer loyalty, retention programs and rural coverage. Zain now covers around 300 cities and towns, well ahead of the competition. Population coverage has increased from 35% in Q1-2006 to over 65% today, with a target to reach 80% by Q1-2008.

Canar2%

Sudani24%

Zain49%

MTN25%2006 2007

263.2362.5 325.2

415.2

792.5717.8RevenuesEBITDANet Income

* Sudan 2006 numbers reflect full year figures for comparative purposes only.


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Population (000s) 5,900 5,600



Number of Peers 3 3


Ownership 96.52% 96.52%

Customers (000s) 1,858 1,961

Postpaid 258 221

Prepaid 1,600 1,740


ARPU ($) 19 17


Revenues (USD m) 477 485.4 (2%)

EBITDA (USD m) 220.6 253.7 (13%)


CAPEX (USD m) 23 62 (63%)

Net Income (USD m) 119.2 135.1 (12%)

Umniah3%

Express20%

Zain43%

Orange33%2006 2007

119.2135.1220.6253.7

477.0485.4 RevenuesEBITDANet Income

Financials (USD m)

Jordan

Market Share

Zain in Jordan is the Group’s first regional operation, and its current stake was acquired in January 2003 for USD 418.9 million. Currently there are three other mobile operators in Jordan. It is one of the most liberalized telecom markets in the Middle Eastern region.

Zain in Jordan operation had over 1.8 million active customers by year end 2007, representing a decrease of 5% in active customers compared to 2006. The operation’s customers accounted for 4% of Zain total customer base.

Zain in Jordan’s 2007 revenues reached USD 477 million, a decrease of 2% compared to 2006 and accounted for 8% of Zain’s total consolidated revenues. EBITDA decreased by 13% compared to 2006. Net Income in 2007 reached USD 119.2 mill ion, a decrease of 12% compared to last year. Zain in Jordan had an ARPU of $19 in 2007.

Despite competitive pressure from other operators, Zain in Jordan has maintained its no.1 market position despite a loss in market share. As the Jordanian market for mobile telecommunications becomes mature, Zain in Jordan has shifted its focus from customer acquisition to customer retention. The new brand was well received and got significant attention from customers and media despite the simultaneous re-branding of one of its competitors (Orange).


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Population (000s) 146,200 144,000



Number of Peers 3 3


Ownership 65% 65%

Customers (000s) 11,098 6,396

Postpaid 56 32

Prepaid 11,042 6,364


ARPU ($) 12 14

Financial Performance 2007 2006* Annual Growth

Revenues (USD m) 1,171.9 972.9 20%

EBITDA (USD m) 393.5 373.3 5%


CAPEX (USD m) 575 548 5%

Net Income (USD m) 83.2 131.5 (37)%

Financials (USD m)

Nigeria

Market Share

In May 2006, Zain acquired a 65% majority stake in the Nigerian mobile operator V-mobile for USD 1.005 billion. Nigeria is Africa’s most populous nation and has become Zain’s main driver for growth throughout its 20 operations. Nigeria will soon overtake South Africa as the continent’s largest telecoms market.

Celtel Nigeria’s operation had over 11 million active customers by year end 2007, accounting for 26% of Zain total customer base.

Celtel Nigeria’s 2007 revenues reached USD 1,171.9 million, an increase of 20% compared to last year. The operation’s revenues accounted for 20% of Zain’s total revenues. EBITDA reached USD 393.5 million in 2007. Net Income in 2007 reached USD 83.2 million, a decrease of 37% compared to 2006. Celtel Nigeria had an ARPU of $12 in 2007.

Despite increased competition in the mobile market in Nigeria, Celtel Nigeria managed to capture the no. 2 position ahead of its competitor Globacom. This was achieved by significantly increasing its number of Points of Sale, managing churn and increasing coverage through a d isc ip l ined CAPEX program. Additionally, the introduction of new services such as the new Mobile Access Code (0708) and prepaid roaming services supported strong customer growth.

Others4%

MTN42%

Celtel29%

Globacom25%2006 2007

83.2131.5393.5373.3

1,171.9972.9

RevenuesEBITDANet Income

* Nigeria 2006 numbers reflect full year figures for comparative purposes only.


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Population (000s) 3,800 3,700



Number of Peers 1 1


Ownership 90% 90%

Customers (000s) 1,014 683

Postpaid 2 1

Prepaid 1,012 682


ARPU ($) 20 24


Revenues (USD m) 211.3 143.5 47%

EBITDA (USD m) 91.2 56.6 61%


CAPEX (USD m) 57 36 58%

Net Income (USD m) 66.1 41.7 58.5%

Financials (USD m)

Congo Brazzaville

Market Share

Celtel Congo Brazzaville was launched in December 1999 and is the premier operator in the country with a 76% market share. There is one competitor operating in the country.

Celtel Congo Brazzaville operation had a total of 1.014 million active customers by year end 2007, representing a 48% increase compared to 2006. The operation’s customers accounted for 2% of Zain total customer base. Celtel Congo Brazzavil le’s 2007 revenues reached USD 211.3 million, an increase of 47% compared to 2006. The operation’s revenues accounted for 4% of Zain’s total revenues. EBITDA increased by 61% compared to 2006 and reached USD 91.2 million. Net Income in 2007 reached USD 66.1 million, an increase of 58.5% compared to last year. Congo Brazzaville had an ARPU of $20 in 2007.

Celtel Congo Brazzaville performed very strongly in 2007 underpinned by solid customer growth and an increased market share due to successful promotions and loyalty programs. Throughout 2007, the operation spearheaded several initiatives to increase usage to offset ARPU decline. Increased network roll-out enabled the operation in Congo Brazaville to increase coverage to 83% of the population.

Celtel76%

Libertis24%

2006 2007

66.141.791.2

56.6

211.3143.5



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Population (000s) 11,900 11,700



Number of Peers 2 2


Ownership 88.88% 88.88%

Customers (000s) 1,966 1,325

Postpaid 8 5

Prepaid 1,958 1,320


ARPU ($) 12 16


Revenues (USD m) 252.1 190.2 32.5%

EBITDA (USD m) 123.4 84.6 46%


CAPEX (USD m) 97 105 (8%)

Net Income (USD m) 58 31.3 85%

Financials (USD m)

Zambia

Market Share

Celtel Zambia was launched in 1998 and continues to be one of the star performers of the Group. Despite two competitors in Zambia, Celtel is the market leader with a 79% market share.

Celtel Zambia operation had over 1.9 million active customers by year end 2007, representing a 48% increase compared to 2006. The operation’s customers accounted for 5% of Zain total customer base. Celtel Zambia’s 2007 revenues reached USD 252.1 million, an increase of 32.5% compared to the same period in 2006. The operation’s revenues accounted for 4% of Zain’s total revenues. EBITDA increased by 46% compared to 2006 and reached USD 123.4 million. Net Income in 2007 reached USD 58 million, an increase of 85% compared to the previous year. Celtel Zambia had an ARPU of $12 in 2007.

Celtel Zambia excellent performance was driven by strong customer growth and brand loyalty resulting in a significantly higher EBITDA and net income, making Celtel Zambia the Group’s second best performer.

Zamtel11%

Celtel79% MTN

10%

2006 2007

58.031.3

123.484.6

252.1190.2 Revenues

EBITDANet Income


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Population (000s) 1,300 1,300



Number of Peers 2 2


Ownership 90% 84%

Customers (000s) 666 514

Postpaid 4 4

Prepaid 662 510


ARPU ($) 33 31


Revenues (USD m) 233.1 164.6 42%

EBITDA (USD m) 111.8 88.7 26%


CAPEX (USD m) 111 42 164%

Net Income (USD m) 52.8 47.6 11%

Financials (USD m)

Gabon

Market Share

Celtel Gabon was launched in June 2000 and is the undisputed leader in this prosperous African nation, holding a 63% market share. There are currently two competitors operating in Gabon.

Celtel Gabon operation had a total of 666,000 active customers by year end 2007, representing a 30% increase compared to 2006. The operation’s customers accounted for 2% of Zain total customer base. Celtel Gabon’s 2007 revenues reached USD 233.1 million, an increase of 42% compared to 2006. The operation’s revenues accounted for 4% of Zain’s total revenues. EBITDA increased by 26% compared to 2006 and reached USD 111.8 million. Net Income in 2007 reached USD 52.8 million, an increase of 11% compared to the previous year. Gabon had an ARPU of $33 in 2007.

Celtel Gabon continues to dominate the market in terms of market share despite the increased competition following the privatization of Gabon Telecom. Population coverage stood at 80% in 2007, an increase of 4% compared to the previous year. Additionally, new services were rolled out such as One Network and GPRS.

Telecel10%

Celtel63%

Libertis27%

2006 2007

52.847.6111.888.7

233.1164.6



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Population (000s) 39,700 39,000



Number of Peers 3 3


Ownership 60% 60%

Customers (000s) 2,507 1,517

Postpaid 8 6

Prepaid 2,499 1,511


ARPU ($) 11 12


Revenues (USD m) 265 169.6 56%

EBITDA (USD m) 97.3 62.9 55%


CAPEX (USD m) 135 80 69%


Financials (USD m)

Tanzania

Market Share

Celtel Tanzania was launched in November 2001. Zain currently owns 60% of the company, while the remaining stake is held by the Tanzanian Government. With a 39% market share, the operation is the second largest in a country boasting 4 mobile companies.

Celtel Tanzania operation had over 2.5 million active customers by year end 2007, representing a 65% increase compared to 2006. The operation’s customers accounted for 6% of Zain total customer base. Celtel Tanzania’s 2007 revenues reached USD 265 million, an increase of 56% compared to 2006. The operation’s revenues accounted for 5% of Zain’s total revenues. EBITDA increased by 55% compared to 2006 and reached USD 97.3 million. Net Income in 2007 reached USD 52.1 million, an increase of 96% compared to last year. Celtel Tanzania had an ARPU of $11 in 2007.

Celtel Tanzania strong performance is underpinned by the overall improved economic situation of the country. Add i t i ona l l y, Ce l te l Tanzan ia ’s cont inued effort to increase i ts population coverage throughout 2007 resulted in a strong growth of our customer base revenues and EBITDA.

Zantel5%

Mobitel15%Celtel

39%

Vodacom41%

2006 2007

52.126.697.3

62.9

265.0

169.6RevenuesEBITDANet Income


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Population (000s) 28,900 28,500



Number of Peers 2 2


Ownership 30% 30%

Customers (000s) 7,287 1 3,198

Postpaid 55 36

Prepaid 7,232 3,162


ARPU ($) 13 14

Financial Performance*(MTC-Atheer only) 2007 2006 Annual

Growth

Revenues (USD m) 561 350.8 60%

EBITDA (USD m) 177.6 104.1 71%


CAPEX (USD m) 198 240 (17.5%)

Net Income (USD m) 46.6 18.7 149%

Financials (USD m)

Iraq

Market Share

The 2 -year l i cense g ran ted in December 2003 initially covered the Southern region of Iraq only.MTC-Atheer expanded its coverage to the whole country. In August 2007, Zain Group acquired a nation-wide, 15 -year license for USD 1.2 billion.

MTC-Atheer had a total of 7.2871 million active customers by year end 2007, representing a 128% increase compared to 2006. The operation’s customers accounted for 17% of Zain total customer base. MTC-Atheer’s 2007 revenues reached USD 561 million, an increase of 60% compared to 2006. The operation’s revenues are not consolidated with Zain’s total revenues. Additionally, EBITDA increased by 71% compared to 2006. Net Income reached in 2007 USD 46.6 million, an increase of 149% compared to 2006. MTC-Atheer had an ARPU of $13 in 2007.

MTC-Atheer’s leading position in the I raq i marke t has been fu r the r strengthened by the acquisition of Iraqna, one of Iraq’s three mobile operators. The operation’s strong per formance was the resu l t o f significant increase in revenues and EBITDA of 60% and 71% respectively.

AsiaCell30%

Zain70%2006 2007

46.618.7177.6

104.1

561.0

350.8RevenuesEBITDANet Income

1. Total customer number and market share for Iraq include 3.1 million customers following the acquisition of Iraqna.


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Population (000s) 800 700



Number of Peers 1 1


Ownership 56.25% 60%


Postpaid 81 46

Prepaid 367 187


ARPU ($) 42 31


Revenues (USD m) 151.1 111.5 36%

EBITDA (USD m) 47.7 35.7 34%


CAPEX (USD m) 34 11 209%


Financials (USD m)

Bahrain

Market Share

Zain in Bahrain, launched its commercial services in December 2003. Currently there is only one competitor in Bahrain - Batelco. Bahrain has the highest mobile penetration in the region and is leading the way in offering triple play and Wi-Max services.

Zain in Bahrain operation had a total of 448,000 active customers by year end 2007, representing a 92% increase in active customers compared to 2006. The operation’s customers accounted for 1% of Zain total active customer base.

Zain in Bahrain 2007 revenues reached USD 151.1 million, an increase of 36% compared to 2006. The operation’s revenues accounted for 3% of Zain’s total consolidated revenues. EBITDA increased by 34% compared to 2006 and reached USD 47.7 million. Net Income reached in 2007 USD 29.3 million, an increase of 52% compared to 2006. Zain in Bahrain had an ARPU of $42 in 2007.

The launch of the Zain brand in Bahrain had a very positive impact on the operation’s results underscored by impressive customer growth and a 14% increase in market share. Zain in Bahrain hosted the re-branding launch for the Group as well as being the flagship operation underpinning the strength of the new Zain brand.

Zain44%

Batelco56%

2006 2007

29.319.347.735.7

151.1111.5



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Population (000s) 59,300 58,500

GDP/Capita (USD; PPP) 143 130


Number of Peers 4 4


Ownership 98.5% 98.5%

Customers (000s) 2,273 1,833

Postpaid 7 2

Prepaid 2,266 1,831


ARPU ($) 12 14


Revenues (USD m) 296.7 253.2 17%

EBITDA (USD m) 89.4 91 (2%)


CAPEX (USD m) 130 106 23%


Financials (USD m)

Democratic Republic of Congo

Market Share

Celtel DRC was launched in December 2000 and its current market share is 41%. There are four other competitors operating in the highly competitive market.

Celtel DRC operation had over 2.2 million active customers by year end 2007, representing a 24% increase compared to 2006. The operation’s customers accounted for 5% of Zain total customer base. Celtel DRC’s 2007 revenues reached USD 296.7 million, an increase of 17% compared to 2006. The operation’s revenues accounted for 5% of Zain’s total revenues. EBITDA decreased by 2% compared to 2006 and reached USD 89.4 million. Net Income in 2007 reached USD 25.9 million, an increase of 7% compared to last year. Celtel DRC had an ARPU of $12 in 2007.

Although, Celtel DRC’s market share is under pressure as a result of increased compet i t ion , the operat ion has performed well during 2007 with an increase in customers, revenues and net income. An aggressive roll-out plan brought the number of towns and cities under coverage to 271 ahead of Celtel DRC’s major competitor Vodacom. Also, new services were launched in 2007 such as One Network, per second billing and GPRS/edge.

Starcel7%

Supercell7%

Celtel41%

Vodacom45%2006 2007

25.924.189.491.0

296.7253.2



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Population (000s) 4,100 4,050



Number of Peers 1 1

Market Positioning - -

Ownership MC MC


Postpaid 140 132

Prepaid 490 428


ARPU ($) - -


Revenues (USD m) 60.9 58.1 5%

EBITDA (USD m) 10.7 9.9 8%


CAPEX (USD m) - 0.142 -


Financials (USD m)

Lebanon In June 2004, MTC won a 4-year management contract to operate one of Lebanon’s two GSM operations. Rebranded as MTC-Touch, MTC has developed the Lebanese operation to full potential in hope that it will be added to the Group’s portfolio as soon as the government undertakes the process of privatization.

MTC Lebanon’s operation had a total of 630,000 active customers by year end 2007, representing a 13% increase compared to 2006. The operation’s customers accounted for some 1% of Zain total customer base in the Middle East and Africa regions.

MTC-Touch Lebanon’s 2007 revenues reached USD 60.9 million, an increase of 5% compared to 2006 accounting for 1% of Zain’s total revenues. EBITDA increased by 8% compared to 2006 and reached USD 10.7 million. Net Income reached in 2007 USD 9.5 million, an increase of 9% compared to 2006. All the disclosed revenues are those from the management contract and not the total revenues of the operation which are collected by the Government of Lebanon.

2006 2007

9.58.7 10.79.9

60.958.1 RevenuesEBITDANet Income


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Population (000s) 37,500 36,500



Number of Peers 1 1


Ownership 80% 60%

Customers (000s) 2,104 1,939

Postpaid 42 37

Prepaid 2,062 1,902


ARPU ($) 7 7


Revenues (USD m) 194.3 174.3 11%

EBITDA (USD m) 31.9 51.1 (38%)


CAPEX (USD m) 63 38 66%

Net Income (USD m) (21.7) (11.2) (94%)

Financials (USD m)

Kenya

Market Share

Celtel Kenya was acquired in May 2004 K e n y a i s c o n s i d e r e d a h i g h l y competitive and aggressive market with relatively low ARPUs.

Celtel Kenya operation had over 2 million active customers by year end 2007, representing an 8% increase compared to 2006. The operation’s customers accounted for 5% of Zain total customer base.

Celtel Kenya’s 2007 revenues reached USD 194.3 million, an increase of 11% compared to 2006. The operation’s revenues accounted for 3% of Zain’s total revenues. EBITDA decreased by 38% to reach USD 31.9 mill ion compared to 2006. Net Income in 2007 was USD (21.7) million, a decrease of 94% compared to last year. Celtel Kenya also had an ARPU of $7 in 2007.

In line with Celtel Kenya’s ambition to build a mobile network with the country’s highest population coverage, population coverage increased to 86% in 2007 and on target to meet its 95% goal in 2008. Celtel Kenya did not perform well in 2007 as a result of intense competition from Safaricom. The so-called clubbing effect of on-net calls on Safaricom’s network as the country’s dominant operator has put pressure on Celtel’s profitability.

Telcom Kenya1%

Celtel33% Safaricom

66%

2006 2007-21.7-11.2

31.951.1

194.3174.3RevenuesEBITDANet Income


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Population (000s) 105,930 102,790

Lowest GDP/Capita $843 (Malawi) $818 (Malawi)

Highest GDP/Capita $2,100 (Chad) $2,140 (Chad)

Customers (000s) 5,191 2,664

Postpaid 31 24

Prepaid 5,160 2,640

Highest Market Share 74% (Niger) 65% (Chad)

Lowest Market Share 32% (Uganda) 20% (Uganda)

ARPU ($) 12.3 14


Revenues (USD m) 539.6 350.1 54%

EBITDA (USD m) 190.8 125.9 51.5%


CAPEX (USD m) 278 172 62%


Celtel International (Others) Celtel remaining operations are grouped as others and they comprise: • Burkina Faso• Chad• Madagascar• Malawi• Niger• Sierra Leone• Uganda

All operations grouped as “Others” contributed to Zain’s Net Income and EBITDA.

In line with customer growth in Zain’s other operations in Africa, Burkina Faso, Chad, Madagascar, Malawi, N iger, S ier ra Leone and Chad experienced significant growth. Uganda deserves special mention where customer numbers increased from 470,000 to over 1.4 million. As a result, Celtel Uganda was selected for the Group’s Operation of the Year Award for an outstanding achievement in 2007. With increased coverage in every market, the operations in the “Others” group are an integral part of Zain’s pan-African coverage and service offering to more than 5 million customers in these countries.

Uganda28%Sierra Leone

7%

Niger13%

Malawi12%

Madagascar11%

Chad11%

Burkina Faso18%

Zain Group Others Customers

Zain Group87%

Others13%

Zain Group Total Customers

Table 7: Celtel International Market Shares and Peers

Operations

Active Customers

(000s) 2007

Market Share 2007

Market Share 2006

Number of Operators Operators’ Brand Names

Burkina Faso 918 57% 57% 2 Telemob (Onatel), Telecel;

Chad 595 60% 67% 1 Millicom;

Madagascar 574 32% 41% 2 Orange, Telma;

Malawi 654 68% 61% 1 TNM;

Niger 666 74% 74% 2 Sahelcom, Telecel;

Sierra Leone 349 45% 56% 3 Millicom; Comium; Africell;

Uganda 1,435 32% 20% 2 MTN, UTL;

Table 8: Celtel International Financial Breakdown (2007)

Operations Revenues (USD m)

Revenues Growth

2007-2006

EBITDA (USD m)

Net Profit (USD m)

ARPU (USD)

Burkina Faso 100.5 64% 46.2 21.1 12

Chad 91.5 40% 34.1 6.2 17.1

Madagascar 49.3 39% 11.5 3.7 9.2

Malawi 71.1 68% 31.7 11.4 10.9

Niger 92.5 51% 45.6 31.4 15.1

Sierra Leone 43.3 (3%) 7.1 (4.1) 12.9

Uganda 91.4 130% 14.6 (12.3) 9.1

Total 539.6 54% 190.8 57.4 -


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For further information visit www.zain.com: Or Contact our Investor Relations Team:

Martin de Koning: +31 6 558 22409; [email protected]

Mohammad Abdal +965 464 4965; [email protected]

Eline Hilal+973 360 [email protected]


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