Zain Group creates global wholesale services JV with Omantel

Kuwait’s Zain Group and Omantel have agreed to set up Zain Omantel International (ZOI), the Middle East’s premier international wholesale services provider that will serve more than 55 million customers.

Zain will hold 74 per cent of the venture’s share capital while Omantel will own the remainder 26 per cent, according to a Boursa Kuwait filing.

“This strategic value-enhancing partnership reflects the next stage of industry collaboration and advancement and represents another significant milestone of our ‘4Sight’ profitable growth strategy,” said Bader Al-Kharafi, Zain vice-chairman and group CEO.

The partnership will manage all international wholesale requirements of Zain and Omantel operations in eight countries. Zain said this arrangement is not expected to impact the ownership over the existing assets serving the international wholesale requirements of both entities.

ZOI will optimise the existing wholesale businesses of both companies by reducing operating costs and increasing competitiveness through access to state-of-the-art low-latency and high-capacity services over its extended footprint.

“زين – عمانتل الدولية” (ZOI) قطب دولي جديد سيحدث ثورة في أعمال الجملة بقطاع الاتصالات.https://t.co/oWW6O2cAkJ pic.twitter.com/zkJ6N0m8Yp

— Zain Group (@Zain) May 14, 2023

Projects that the venture will implement, along with its consortium partners, include the development of Blue-Raman; Africa-1; Jeddah to Marseille (J2M) subsea systems and an extensive terrestrial network connecting most of the regional countries to the landing stations and data centres.

“ZOI is ideally positioned to evolve into a significant international player on the wholesale telecommunications scene that will benefit both Zain and Omantel on financial, commercial and operational levels,” added Al-Kharafi.

The company will cater to the end-to-end telecommunications needs of operators in the Middle East as well as international carriers, data centres, hyper scalers, content and cloud providers seeking services within the region and beyond.

Sohail Qadir has been appointed as the CEO of ZOI. Qadir said the partnership between Zain and Omantel is well-timed to capitalise on global trends.

Zain’s growth in Q1 2023

Meanwhile, Zain’s first-quarter profit rose 15 per cent year-on-year (YoY) to reach $177m (KWD54m) as the company’s flagship Kuwait operations witnessed a 4 per cent growth in customer base to serve 2.6 million and a net income of KWD19m. The increase in the company’s net profit reflects earnings per share of 13 fils.

The telecommunications firm said its consolidated Q1 2023 revenues surged 15 per cent YoY to KWD468m while its earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 8 per cent to KWD165m.

Zain KSA, the company’s Saudi Arabia unit, reported a six-fold increase in Q1 2023 net income to $151m, revenues jumped by 11 per cent to $644m and EBITDA reached $189m, reflecting a margin of 29 per cent.

Kuwait-based company is leveraging a global increase in investor appetite for tower portfolios to derive more value from its assets. Zain KSA, which is 37 per cent by Zain Group, completed the sale of 8,069 towers for $807m to the Public Investment Fund with at least 3,600 towers transferred in the first quarter of the year. The ownership of the remaining towers will be transferred in batches in the coming quarters.

Zain also entered into a definite 15-year leaseback agreement for its 4,968 tower portfolio in Iraq with TASC Towers Iraq for $180m earlier in the year.

Read: Kuwait’s Zain Group posts $640m full-year profit