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7030

Governance: C

ZAIN KSA

Mobile Telecommunication Company Saudi Arabia

10.86 SAR / Share

As of: May 28, 2026

15.1x P/E Ratio Trailing 12 Months

0.9x P/B Ratio Price to Book Value

9.2% Dividend Yield Annual Dividend / Share

9.76B SAR Market Cap Total Valuation

1.29 Beta Systematic Risk Index

6.1% Net Margin Net Profit / Revenue

The Story

ZAIN KSA is a major Saudi telecommunications provider demonstrating consistent top-line growth and strategic diversification into fintech and digital services, though its historical return on invested capital remains below its cost of capital due to high leverage and ongoing infrastructure investment demands.

Source: Q2 2025 (2025-08-31)

Value Creation -2.8% Excess Return on Capital (Spread between ROIC/ROE and Cost of Capital)

Cash Flow Payback — Estimated years of operating cash flows required to cover Enterprise Value

Performance & Distributions

Dividend Yield Trailing annual dividends paid relative to share price

9.2%

Sustainable Growth Rate Rate at which company can grow internally using reinvested profits

-1.0%

Payout Ratio Percent of net profits distributed as dividends

139.4%

Net Margin Net profit margin generated from total operational revenue

6.1%

ROIC Return on Invested Capital

5.8%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

15.1x

P/B Ratio Market capitalization compared to corporate book value

0.9x

EV / EBITDA Operating multiple reflecting core operational leverage

5.6x

EV / SALES Asset pricing multiple relative to total topline revenue

1.8x

Growth Story

Revenue has shown consistent upward momentum, rising from 9.08 billion SAR in fiscal 2022 to 10.37 billion SAR in fiscal 2024, reaching 10.62 billion SAR on a trailing twelve months (TTM) basis. This growth is supported by strong performance across core segments, including Consumer, Business, and Wholesale revenue streams. The strategic push into adjacent digital services is evident, with the fintech subsidiary, Tamam Finance, contributing to the overall Consumer revenue segment. This expansion requires continuous capital deployment, highlighted by the acquisition of new spectrum (600MHz) in 2025 and ongoing capital expenditure (TTM Capex of 702.55 million SAR) necessary to maintain and upgrade the network infrastructure.

Profitability Dynamics

While the company is profitable, generating a TTM Net Income of 644.8 million SAR, the core challenge lies in capital efficiency within this highly capital-intensive sector. The 5-year average Return on Invested Capital (ROIC) stands at 5.84%, which is significantly below the estimated Weighted Average Cost of Capital (WACC) of 9.09%. This 3.25% gap indicates that, historically, the capital deployed has not generated sufficient returns to cover its cost, resulting in economic value destruction. Operating margins remain modest at 12.11% (TTM), reflecting the high operational costs and substantial depreciation and amortization inherent in maintaining a national telecom network.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.29

Cost of Equity Minimum required rate of return demanded by shareholders

10.0%

WACC Weighted average cost of total debt and equity funding

8.6%

Debt-to-Equity Ratio Proportion of corporate funding financed by debt creditors

101.8%

Risk Factors

The primary financial risk factor is the highly leveraged capital structure, with total debt amounting to approximately 9.94 billion SAR. Furthermore, the Group operates with a structural working capital deficit, where current liabilities exceeded current assets by 4.6 billion SAR as of June 30, 2025. While management has secured long-term financing, including a new Murabaha facility maturing in 2030, the high debt load increases financial sensitivity to interest rate fluctuations. The company also faces significant future capital demands, evidenced by capital commitments of 2.18 billion SAR, which must be funded either through operating cash flow or further financing, maintaining pressure on the balance sheet.

Governance Disclosures

Rating: C

We track 4 key governance and oversight matters for this company in our database.

Significance: 8/10 Asset Risk

Parent Guarantee and Share Pledge Securing Syndicated Debt Facility

The Group's Syndicated Murabaha facility (SAR 4.687 billion outstanding) is partially secured by a guarantee from the Parent Company (Mobile Telecommunications Company K.S.C.P) and a pledge of shares of the Group owned by some of the founding shareholders.

Mitigating Factors: The guarantee provided by the Parent Company is a form of financial support for the Group's debt obligations.

Significance: 7/10 Propping

Conditional Repayment of Interest-Free Accrued Liabilities to Parent and Shareholders

The Group owes SAR 254.997 million in accrued management fees to the Parent Company and SAR 60.409 million in accrued finance charges to Founding Shareholders. These amounts are unsecured, interest-free, and their repayment is restricted until certain conditions are met in the Syndicated Murabaha facility (Note 8-1).

Mitigating Factors: The interest-free nature of the accrued liabilities provides financial flexibility to the Group.

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In-Depth Analysis