Mobile Telecommunications Company K.S.C.P. (ZAIN) Earnings Call Transcript & Summary

Good morning and good afternoon, everyone. This is Omar Maher from EFG Hermes. I'd like to welcome everyone to Zain Group's 4Q 2021 Results Call. As usual, the call will begin with a discussion of the key highlights of the period, and this will be followed by a Q&A session. I'd just like to draw your attention to the detailed financials and the IR presentation on Zain Group's website. And I will now hand the call over to Mohammad Abdal, Group Chief Communications Officer. Thank you very much.

Thank you, Omar, and welcome, everyone, to Zain's Q4 and Full Year 2021 Earnings Conference Call. I'm joined today with Ossama Matta, our Group CFO; and Mohammed Shereef, Head of Finance. In a moment, we'll take you through the IR presentation, which has been posted earlier today with our corporate website. And after that, we're happy to answer your questions that you may have. During this call, we'll be making forward-looking statements which are predictions, projections and other statements about future events. These statements are based on the current expectations and assumptions that are subject to risks and uncertainties. Please refer to our detailed cautionary statements found on Slide #2. With that, I will turn the call over to Ossama.

Thank you, Mohammad. Good afternoon, and thank you all for joining us today in this afternoon. We announced our Q4 and full year 2021 results, I think, like 1 hour ago. And I hope everyone here had the chance to go through the earnings release and see the presentation. Q1 -- a successful year on multiple fronts. Due to the meticulous execution of our foresight strategy, and the Board and executive management are pleased with the overall results. The solid financial performance was due to the success of many operational and monetization initiatives management implemented across all markets. Our continued focus on digital strategy saw significant growth across several key markets, with data revenue reaching $2.1 billion, which represent 42% of consolidated revenue and would have been much higher if not for the currency devaluation impact that happened in Sudan as well as Iraq at the beginning of the year. Moreover, B2B solutions witnessed a 17% year-on-year growth. Let me start off by noting several significant accomplishments and transactions that occurred recently. We go to Page 5 in the presentation. As I mentioned in our previous call in October 2021, the ordinary general assembly approved the first semiannual cash dividend of 10 fils per share for H1 2021, distributing $143 million. Today, the board also recommended a cash dividend of 23 fils per share for the second half of 2021. This is, of course, subject to the AGM and the statutory approvals. This will total 33 fils share for the year, in line with the 3-year commitment we made in 2019. This will be the third year. The total distribution for the year will be $473 million, representing a 77% payout ratio. We believe this ratio is one of the highest in the region and reflects the strengths of our financial solvency. In December 2021, Zain Jordan successfully completed the sale and leaseback of 2,607 towers for $88 million, providing more flexibility for the operator to invest in network upgrade ICT technologies. Zain KSA also received $807 million as a nonbinding offer from the Kingdom's public investment fund, PIF, which is currently undergoing due diligence and expected to close the deal during first half of 2022. Similar to our company transactions are in progress with the remaining opcos, and we will be providing more details in future calls. In December 2021, the group received a nonbinding purchase offer to acquire 100% of Zain stake in Zain Sudan and the Kuwaiti Sudanese Holding Company for $1.3 billion. Discussions are ongoing, and Zain Group will do what's best for all the stakeholders. We are very pleased that for the first time since 2007, the Zain Sudan Board decided to distribute 15 billion SDG, which is equivalent to $30 million of dividends to Zain Group. This represents approximately 45% payout ratio. And this is the first, as I said, since 2007. Also in October 2021, we launched ZainTech, a one-stop shop servicing enterprises and governments across the region. ZainTech is the group's center of excellence, providing managed solutions for cloud, cybersecurity, big data, IoT and AI, smart cities and emerging technologies, incorporating NXN and Zain Data Park that we both own. Zain Ventures invested in n ZoodPay. Zain Ventures is also a branch of Zain Group. Buy now and pay later Super App series B for $38 million, following earlier investments in Pipe and swvl. We've also made additional investments in leading VC funds such as MEVP, BECO Capital, and [indiscernible] Capital. Zain Group API platform continues to grow and recorded a 38% increase in revenues, and 41% increase in API traffic, partnering with 16 global OTT and solution providers, offering 36 different digital innovations and processing 130 million payment transactions since launch in 2008 -- 2018, we didn't have API in 2008. During 2021, we mentioned our ambitions of creating the first telco-led challenger bank in the region, and our competence is boosted by the huge success in FinTech side Zain KSA, Tamam, Zain Cash in Iraq and in Jordan. M-Gurush in South Sudan collectively attracting 1.5 million customers and recording over 25 million transactions with a value of approximately $2.3 billion in 2021. We will continue to foster FinTech innovations and have plans to launch FinTech services in Kuwait, Bahrain and in Sudan in 2022. Regarding awards and achievements and if we go to Page 6, we are very proud that Zain got upgraded to A-, hoping to get an A+. In the latest CDP score report Climate Change 2021, ranking it first in the region and among leaders globally. Zain also -- was also awarded the best telecom brand for 2021 title by telecom review. Now I would like to briefly touch upon the group's operational highlights for the year. We ended the year serving 48.9 million customers, which increased by 2%, reflecting an additional 1.2 million customers, mainly supported by the 14% healthy customer growth in Zain KSA, which is about 1 million customers. We reported full year revenue of over $5 billion and EBITDA of $2.1 billion, reflecting an EBITDA margin of 41%. For the full year 2021, currency devaluation in Sudan, SDG to the dollars, increased from 55 SDG to 436 SDG in December 2021. In South Sudan, the SSP to the dollar increased from 175 to 426 end of December '21 and also the devaluation in Iraq at the beginning of the year, at the end of 2022 was 19% from 1,190 to 1,470 Iraqi dinar to the dollar. All of this has resulted in an impact on the foreign currency translation when we consolidate the revenues of $962 million in revenues and $479 million in EBITDA. And if we exclude the above, there will be a $6 billion company in terms of revenues, and $2.6 billion of EBITDA. The group implemented significant price revamps and data monetization initiatives across operations and also carry out various cost optimization initiatives as well as loan restructuring for major operations, resulting in substantial savings in finance cost. This upside was partially offset by a conclusion of CITC deferred waiver agreement during 2020 in KSA, and we have been highlighting on this during the year. The group achieved an increase of 2% in net profit to reach $616 million, reflecting an earnings per share of 43 fils to equivalent to 14 cents to the dollar, successfully mitigating major currency devaluation from Sudan, Iraq and South Sudan, as I mentioned earlier. If we go to Slide 15, which is the CapEx slide. The group continued to invest at healthy levels across operations. We invested $1.1 billion, representing 21% -- we marked it up here. Representing 21% of revenues on 5G, coupled with FTTH 4G expansion and spectrum license fees in key markets. If we look only at the tangible CapEx, it represents 13%. But when we add the licenses, it represents 21% of the revenues. As you will see in the slide, majority of the intangible CapEx is due to the grant of 4G and the renewal of 2G and 3G licenses in Iraq and the renewal of the L900 megahertz license in Jordan. Our debt profile, which is Slide 16. The group continues to maintain healthy cash flows with total debt increasing by 9% year-on-year in KD terms and net debt-to-EBITDA currently stands at 2.5x. It is worth mentioning that the finance cost decreased by 21% compared to the prior year. Even though we have an increase in gross debt due to the reduction in interest rates and better negotiations with lenders. And with that, I will now hand over to Mohammed Shereef to discuss the results in more details and look forward to the Q&A after that.

Thank you, Ossama, and good afternoon, everyone. Moving to the opcos, we will keep it very short as the IR presentation provides all the key financials. Let's move to Slide 21, Zain Kuwait. Great year for Zain Kuwait, delivered a healthy set of results where revenue, EBITDA and net income grew by 1%, 13% and 7%, respectively. It should be noted that excluding the TowerCo gain in 2020, the net income growth would have been an impressive 15%. This is due to the cost optimization initiatives as well as healthy acquisitions, which translated into better collections resulted in lower ECL. Data revenue grew by 6% year-over-year and represents 40% of the total revenue. The operator continues to grow it 5G mobile and broadband customers with resulting increase in revenue, capturing the largest 5G customer and revenue market share in the country. So operation invested USD 101 million, 10% of its revenue in CapEx during 2021. On the regulatory side, MVNO, we expect Virgin to launch services in Q1 '22. CITRA recommended that MNOs should consider shutting down the 2G technologies by Q4 2022. Saudi Arabia, which is on Slide 22. For the full year 2021, Zain KSA reported stable revenue with -- while EBITDA and net income dropped 9%, 17%, respectively, mainly due to the conclusion of the CITC deferred waiver agreement in 2020. If we exclude CITC waiver, the EBITDA growth would have been 10%. The year was highlighted by Zain KSA extinguishing all its accommodated losses and completely settled group shareholder loan. Strong performance of B2B revenue, Yaqoot, Zain KSA's digital operator and Tamam, the consumer micro finance bank. Zain KSA invested $271 million, 13% of revenue on CapEx during the year, mainly expanding 5G network coverage to new sites to reach 4,805 5G sites. Data revenue represents 48% of total revenue. Zain KSA is also preparing to launch MVNO on its network during 2022. Moving to Slide 23, which is Zain Iraq. As mentioned earlier, factors beyond our control continue to affect the operation with the huge impact of currency devaluation in Iraq, impacting the overall economy and the purchasing power in the country. But the management is taking concrete steps to mitigate the impact, including revamping prices and offering new digital services and packages to individual and B2B customers to capitalize on the comprehensive 4G rollout. Customer base increased by 2% and reached 16.4 million customers in such a challenging environment driven by the launch of 4G services that attracted over 1 million customers by the end of 2021. For the full year '21, revenue, EBITDA and net income decreased by 18%, 17% and 47%, respectively. The drop in net income is mainly due to increase in amortization of 4G license by USD 15 million in 2021. And the onetime currency devaluation gain of USD 20 million recognized in 2020. The operator invested $286 million in CapEx during 2021, out of which $148 million relates to the license fees. Zain Iraq launched a digital operator brand at oodi, offering a simple all-digital mobile experience that frees customers from the traditional retailing buying experience. The platform has had instant success attracting over approximately 20,000 customers since its launch in mid-2021. We previously communicated about the potential of fourth entrant in the market, but this has been delayed. However, it is not off on the table yet. Zain Jordan -- on Slide 24, Zain Jordan had a great year too. Remains the market leader with its customer base growing 3% year-over-year and now serving 3.6 million customers. Full year 2021 revenue grew 3% year-over-year, mainly due to an increase in broadband and FTTH revenue. EBITDA grew by 6% on account of the topline performance and improved collections, maintaining a healthy margin of 46%. Notably, net income for the year jumped by 66% and mainly due to the EBITDA performance and the gain on sale and leaseback of towers. CapEx for the year amounted to USD 276 million, which was mainly spent on renewal of the 900 megahertz technology-neutral license and the fiber expansion. The FTTH base witnessed over 47% increase and over 88% increase in revenue. Zain Sudan, which is on Slide 25. As mentioned earlier, on 21st February 2021, the Central Bank of Sudan revised its exchange rate policy from fixed rate to flexible managed floating rates. Accordingly, the SDG devalued from 55 SDG to 375 SDG per dollar. As of 31st December 2021, the rate is 436 SDG per dollar. For the full year, revenue dropped by 21%, mainly due to the currency devaluation impact. EBITDA decreased only 4%, while the net income jumped by 70%, mainly due to the decrease in depreciation and amortization and a decrease in currency varience loss. Zain Sudan invested USD 55 million in CapEx, 17% of its revenue, predominantly for its 4G rollout. Zian was able to secure a decision by the government to reduce the VAT from 40% to 35%. Finally, Zen Bahrain, which is on Page 26. Zain Bahrain is also among the best performers with revenue, EBITDA and net income increasing 5%, 2% and 3%, respectively. Data revenue grew by 4%, which represents 46% of the total revenue. Zain Bahrain is focused on the continued expansion of 4G and 5G infrastructure and to enhance its home brand -- home broadband services. Let me wrap it up stating that we are confident about 2022 as we take advantage of evolving opportunities within the core telecom business while diversifying into new profitable business verticals in ICT, digital infrastructure, FinTech and digital services arena. With that, I will hand over to Mohammad Abdal for Q&A.

[Operator Instructions]

[Operator Instructions] So the first question is from Nishit Lakhotia.

Always a pleasure to interact with the management. I have 2 questions. First, on the Kuwait market. It seems that all leasing developments have been the case, the legacy case that all the telecom operators had against the regulator on the new subscribers, which was imposed the charges. And it seems in 4Q Viva has reversed those charges and it was a sizable amount, and even Ooredoo have announced a sizable amount in terms of what they've won in the court [indiscernible]. What's the status at Zain on this similar case, whether Zain is also pursuing certain amount and any clarity on the management for this would be helpful. That's in the Kuwait operations. And the other one was on the Jordan. EBITDA looked weak in 4Q. So what exactly led to the weakness in the EBITDA. It came at $44 million versus around $65 million, $68 million run rate on a quarterly basis. And also that you've taken the amortization -- the license of $183 million. So there will be an amortization charge. How much of that would be coming on an annual basis from this license for Jordan going forward? So that's my second question.

Yes. Thank you for your question. Regarding Kuwait and the case on the number range, this is you're referring to the number range case that we have a dispute with the Ministry of Communication as well as CITRA. The amount which we estimate here and it is still subject to the experts because it's in the court is between KD 22 million to KD 25 million. And there will be hearing on February 14, the first hearing that we will have on this. And we expect the ruling to be on Zain's favor. Once we have this, you will receive a reflection of that in the financial statements of 2022, and we expect this to be positive. This is related to the first point. The second point is related to Jordan and the impact of the towers. I'll just give you a quick highlight on the tower impact. As for $88 million -- $89 million, sorry. And the gain from the transaction is $52 million before tax. After tax, it's $48 million. And what we have done because -- and I have to disclose this, but well, we took a provision of $8 million -- sorry, JD 8.4 million in EBITDA in Jordan. As we expect or we might expect some other tax elements to be there. So that's why we took that in the EBITDA. But this will be -- we don't expect to use this, and this will be used in 2022. If it's not -- if we were not charged for this. That's why you will have -- you will see a pressure on EBITDA because of this. And also you will have an impact from the leases because it happened in November, there's approximately JD 1 million impact from EBIT. Going forward, you will have on a yearly basis on EBITDA, approximately $80 million of impact negative from the tower deal. But from a net present value, it's a positive transaction. And on the net income, you will have an impact of $4 million negative. Okay?

Next question comes from Ziad Itani.

Just one question on the expected credit losses. It seems there's a massive reversal in Q4, specifically related to the Saudi operations, more than SAR 100 million. Can we get some color on this? What's the reason behind this reversal?

Yes. The ECL mainly it's a subject of the market conditions and the economic conditions. We -- in 2020, we took a lot of provisions related to the customers, which, in September of every year, we update the model. And according to the collection rates that we have, the better customers that we have, an ECL provision that extends in 2020 is not EBIT. So that's why you see a provision reversal in the Q4 of 2021.

But this is mainly related to B2B segment basically correct? Because for retail, it's mostly postpaid.

And yes, postpaid customers in B2B, yes, correct.

All right. And just a question, Ossama, on the cost structure. It seems that there is a bit of pressure on direct costs, they are up year-on-year, even though there is pressure on top line. Any specific clarity on this, what's causing the pressure and direct costs. So is it access charges? Is it 5G network related?

[indiscernible]

No, no, the group.

The group, in general, there are many factors impacting the cost of service or cost of sales. All of the operations in terms of cost of sales compared to last year were lower than last year of 2020, whether it's on the revenue share that we pay, for example, in Iraq or whether it's in the commission because we already acquired distributors in Kuwait as well as in Iraq. The only entity or the only operator, which the cost of sales has increased is Saudi. And this is mainly because of the waiver that we benefited from it in 2020. It was $166 million. It's overshadowed all the benefits that we have across all operations. So when you consolidate, you will see cost of sales increasing rather than decreasing. So -- and this is mainly because of the waiver we benefited in 2020, which is nothing in 2021.

Next question comes from Faisal Al Azmeh.

If I were to take you back to the announced deal in Sudan. My first question is the 1.3 deal size and equity value or an enterprise value? That's the first question. Second question is, what can we expect the $1.3 billion proceeds to be used for? Third question, regarding the FX reserve losses sitting on the balance sheet, the KD 1.5 billion, as per the financials, these amounts are mainly from Sudan and South Sudan. Should we expect this figure to hit the P&L once the deal closes. And thank you.

Yes. The first one is -- yes, we received -- okay, regarding Sudan, we received the offer -- the nonbinding offer from that group and we announced this to acquire Zain Sudan as well as the Sudanese, the greatest Holding company, which basically has all the assets, all the properties that we acquired during the years to mitigate the risk of devaluation of the SDG. It is for $1.3 billion. And this is including -- because Zain Sudan doesn't have debt. So this is basically including the cash in place also in the company. What we're going to do with the proceeds? Well, it depends on the Board as well as the shareholders. But for sure, there will be -- because we are expanding into different verticals. Part of it will be used to invest in these verticals whether it's on the FinTech side, whether it's on the ZainTech side or the wholesale side, and part of it will be used to deleverage the company. And the other part will be probably used to pay dividends. Regarding the FCTR, the foreign currency translation reserve that we have in the balance sheet. You're absolutely right. This is related to Sudan and related to South Sudan. There will be a plan to restructure this in for us to be able to proceed with oodi. So the proceeding on the deal, there is a prerequisite, which is a restructuring the shareholders equity. I cannot disclose more than this, but I hope this is enough to answer your question.

All right. So basically -- understood. But basically, you're saying that a prerequisite of the deal is to restructure the KD 1.5 billion? Or pass it on...

Because yes, we -- because it will not make any sense to go through the deal if you cannot restructure this.

Taking the hit on your retail.

Correct. That is part of retail -- and -- but in all cases, regarding the deal I just want to also talk about the deal, so that if there are any questions, we answer them now. We are currently now in the process. The Board approved looking at the deal and approved the management -- the executive management to enter into discussions with [indiscernible] Group. We have received other offers, by the way. We already appointed a financial adviser as well as legal advisers. We are populating currently the data room, the virtual data room. And we will go through a proper process and taking into consideration the restructuring, which will happen in Kuwait. If this works, then we go ahead and proceed with the deal. And if it maximizes value for the shareholders, we will definitely go ahead and proceed with the deals. Okay?

All right. And one last question regarding the deal. Will it be a cash transaction? And what is the expected -- if not, what is the expected payment structure?

It will be fresh dollars as we say, in Lebanon [indiscernible] fresh dollars.

All right. Any tax -- capital gain taxes that might be imposed?

It is still too early to -- on this because you also as you rightly highlighted, the KD 1.4 billion or KD 1.5 billion this can be taken into consideration as well. So it's too early to discuss this now.

Thank you. Next question is from Maddy Singh.

Thanks a lot. So as is the tradition continuing with the previous line of questions. So I apologize if you think those questions are repetitive. But just want to make sure that I understand the points correctly. On the accumulated FX losses in the shareholders' equity you have got, if the transition were to go through, would you have to book any of those again in the income statement by any means? Or that will be something which will be handled within the shareholders' equity, maybe like -- you get -- you set it off against the retained earnings, and that's about it. So I just want to understand the accounting possibilities there. So that's the clarification anywhere on the itself? And second question is on your Jordan tower transaction. I just want to make sure that I got the amount right, whether those amounts you mentioned was in JD or U.S. dollars or Kuwaiti dinars, please clarify that. And thirdly, dividends, obviously, the policy pretty much in line with the policy, but what would allow you to actually pay a higher dividend and the policy allows. And when should we expect details around new policy, if at all?

We will start with the last one regarding the dividend policy. This year will be the third year and the last year, as announced by the Board regarding the terrific commitment minimum of theoreticals commitment. Now going forward, definitely, we will, as a management, come back to you after discussion with the Board on the new dividend policy and the commitment. But also take into consideration that factors like divestment of Sudan, divestment of South Sudan because doesn't make any sense if we sell Sudan to [indiscernible] South Sudan, will have an impact on the earnings per share later on. So we cannot basically now say that the commitment will be another 3 years of therapies. We might end up paying more dividends this year or next year, if the transaction goes through. If you look at Sudan and South Sudan, they contribute, I believe, 13 fils or 14 fils to the bottom line. So -- and we did like 43 fils. So saying that we're going to pay 33 fils, it doesn't make any sense. So we have to wait and see what will happen on the Sudan and South Sudan. This is one. If the deal goes through, and then as we said, we will invest and pay dividends and deleverage the company. Definitely, we will be paying special dividends related to the deal. This is one. On your second question, which is related to the tower deal in Jordan, the numbers I mentioned are all in dollars, except in the provision that we have took in EBITDA is JD 8.4 million, but that is our holding dollars. What was your first question?

The FX accumulated losses you have in the...

I'm trying to avoid answering this question, but the thing is the following. The FCTR is KD 1.5 billion. It is a reducing the shareholders' equity by KD 1.5 billion. Normal accounting standards -- and this is related to a subsidiary. Normal accounting standards, if you sell any subsidiary, you have to route this through the P&L. And this will be a loss to the P&L taking. So -- but if you look at the shareholders' equity, you will see between the retained earnings that we have and the share premium that we have, there is KD 2 billion in the shareholders' equity. So 2 positive billion KDs versus KD 1.5 billion of FCTR. This is the restructuring that I'm talking about.

So I mean, that's what is slightly confusing that if you have these accumulated FX losses at some point, either you I mean the impact on shareholder equity, whatever you do on the income rate.

There is no impact on the other equity because it's already deducted the shareholder -- there's no impact -- that's basically just cleaning up the shareholder equity and allow the shareholders to receive dividends from the sale of the transaction. This is it. because if you have to go simply by the accounting standard, you have to book a negative FCTR to the P&L. And you will have a loss from the transaction rather than a gain. By restructuring, and this is what I was alluding to, you will avoid all of this you restructure the equity at the balance sheet. And the transaction will be the $1.3 billion or $1.5 billion will go through the P&L.

Next question comes from [indiscernible].

I have a quick question on the dividends from Sudan. Will you be able to repatriate these dividends?

Yes. We haven't been able to declare dividends -- and so then since 2007. The last time we paid dividends was 2006. And the -- we have been in discussion with the local authorities with the Central Bank and the regulator in Sudan. And they all welcomed and they have seen how much the Kuwait -- Zain Kuwait has been investing heavily in the country. Part of the appreciation and just service there will allow basically a payment of $30 million, which is approximately SDG 15 billion, and this will happen in the coming weeks.

Next question is from Mahmoud ElKouny.

This is Mahmoud ElKouny from EFG Hermes. So I just had a question on again, excuse me if this is a bit repetitive, but it's about the Sudan deal. I was just asking if where will the -- I mean if the deal goes through, where will the money be paid? Will be paid inside or outside Sudan? And if inside, how will you repatriate given the lack of hard currency and capital controls?

[Foreign Language] outside Sudan. Of course, for sure, it will be outside Sudan. I mean we will be receiving the funds outside Sudan. The way our Sudan entity is structured the ownership of it through an entity in the Netherlands. So most likely we end up selling that entity, not touching anything related to this the company incorporated in Sudan. And this has also to avoid any taxes in Sudan. So yes, it will be -- definitely, it will be outside Sudan, not in Sudan.

Thank you. I think we still have another question from Faisal Al Azmeh. I'm not sure if you forgot to unraised hand. Faisal?

Yes. Just one last question from my end regarding the current discussions between PIF and Zain Saudi regarding the towers. I know that you guys said that it's expected to be finalized during the first half. Can you give us a bit more details on that? That would be great.

Yes, sure. We -- as I mentioned before, we received an unbinding offer $807 million for the towers in Saudi. Now as you know, there are a lot of discussions going on, a lot of due diligence coming on. Due diligence is almost done. We expect to receive an unbinding offer -- sorry, a binding offer very soon. And the documentation, whether it's the SBA, MTSA, all of this is expected to be concluded also soon. I would say, if we if we were lucky and things go great, it will be first quarter of this year and second quarter. That's why we give ourselves till the first half.

And then I think we had a question from Faisal Al Azmeh. I'm not sure if you still would like to ask few question, Faisal.

No. All of my questions have been answered. But maybe just one final question on Zain Saudi. Just if you can talk a bit about the trends and the performance there relative to peers just how to think about market dynamics this year and how to improve growth -- or to get more growth in 2022?

Yes. In Saudi, the direction was from the beginning of the year is to in 2021, I'm saying wants to differentiate ourselves or basically change the perception in the Saudi market. We looked at the 5G and we invested heavily in 5G and the focus was on 5G. That's why all the products, everything, all the media or the communication was on 5G. And [Foreign Language] we did excellent in terms of 5G, covering many cities, major cities. First, in terms of network in the market -- in the , sorry, in Saudi and whether in the speed, getting all these awards from third parties in the tender third parties that we haven't paid for. So this is specifically, the thing is that we on the 4G side, on the data 4G, we have seen a reduction in the revenues, mainly because, as I mentioned, the only focus -- not the only focus, the main focus was from the management on the 5G. On the second half of 2021, more direction happened towards 4G and more emphasis on the investment on 4G because of the congestion and the network experience that we had in 4G as compared to the other wants. This we have seen now a reversal of the trend towards November, December of 2021. I'm hoping that this will continue. On the prepaid side, the prepaid and I mentioned this before that we have some issues, whether it's on the MBB or on the voice. And this 2 things: one, because of the a lot of expats left the Kingdom, whether it's because of COVID or other things whether Saudization or what have you in the market, and Hajj and Umrah was not as expected. And the other one, and Zain [Foreign Language] as the third operator was impacted more than Mobily or STC. And the other thing that we also looked at and fixed is the distribution channel. There was an engine of the distribution channel was not working as efficiently as possible as we want. And that's why from the group as well as other operations whether it's Jordan, we went and sat with the team. And now we shifted gears. We also restructured the sales in Zain KSA. And we have seen stopping in the Q4 of 2021. And hopefully, in 2022, when we see things better in Hajj and Umrah and the country will also open after the COVID, things will be paid for Zain KSA. On the B2B side, we are doing exceptionally well growth compared to last year is 33%. And it's not only connectivity, it's also solutions that has been provided to the enterprise customers. And also, we have Yaqoot, which is the prepaid digital service platform. We've seen exceptional growth in Yaqoot. So when you add actually Yaqoot to the prepaid, it balances the figures. There is a shift from the traditional prepaid to the digital prepaid. The other thing, which is good and moving greatly in Saudi is Tamam. When you look at the figures of Tamam comparing the first half of the year versus the second half of the year, you see tremendous growth in terms of loans dispersed volumes as well as customers. Tamam is the micro financing entity that we have in Zain KSA and it is fully licensed by SAMA. So I would say these prospects are looking good for Zain KSA. Yes, we compared to last year, we are lower in terms of bottom line. But hopefully, this year, we will have a growth as compared to 2021. I hope it was a quick summary.

Very comprehensive. And maybe just if you can just shed some color on Jordan, that would be helpful as well.

Jordan is the best operator we have in 2021 whether on the MBB, FTTH, postpaid as well as prepaid all the figures, all the numbers, all the sales are all green whether there's a week -- last year, 2020 or versus the target that we have put to them. Even if I eliminate the tower deal in Jordan, you will see growth, whether in the revenue weave had revenue, it has no impact. But on the EBITDA, you will have growth and as well as on the bottom line 5%. The other thing in Jordan, which is interesting is Zain Cash. We looked at the volume of Zain Cash in Jordan. In 2021, it was $1.5 billion of transactions happening. And this will definitely create a lot of value to the entity itself as well as the group. And from a Fiber-to-the-Home, we are very aggressive. We are now, if you consider also [indiscernible], which we own. In Jordan. We are #2 in the market. From an MBB point of view, we are aiming to be #1. We were #3, believe it or not, like I think, 2 years ago. So -- but I think now we are very close to the #1. I think that's it.

Thank you. We have a follow-up from Nishit Lakhotia.

Yes. Just one last question on the gross margins in fourth quarter overall has been pretty tight. If you don't at 67%, one of the lowest that I have seen for Zain in any quarter. So if you wouldn't have got this $15 million from the tower sale, the overall results would have looked pretty weak. So any color as to what went into these cost of sales? Because there is no notes in the financials. Something that you would want to shed light on.

2021 was very challenging for us. As I mentioned in the beginning, we lost approximately $1 billion of revenues because of the devaluation in Sudan, devaluation in Iraq in currency, as well as in South Sudan. A lot of cleanup happened to support the bottom line target on the balance sheet as well as on the cost optimization. Some of this cost optimization we can benefit from it in the coming years. Others will not. It's just a cleanup. Whether it's on the repair and maintenance, whether on the managed services whether it's on the lease lines, consultancy, salaries, for example, in Iraq. But what we have done is to give the management at the opcos breathing room to prepare themselves for 2022 because of the severe devaluation in the currency that happened. The impact of the tower deal on the bottom line is approximately $48 million. And this is at the group level you take 96% of this, because we own 96% of the company. On the margins -- the gross margin, I also mentioned that all the gross margins across all operations from -- were better than last year. We are, as a gross margin percentage lower than last year, mainly because of the -- sorry, the CITC waiver that we benefit from in 2020. This was $166 million, reducing the cost shop sales or cost of service in Saudi. This 2021, you don't have it. So when you consolidate, you definitely your margin will not be as good as last year. But now we are in a position where the company -- I mean this is the lowest devaluation ever happened. We did a lot of price ups in Iraq as well as in Sudan. We will definitely see a growth in revenues in dollars in Sudan and in Iraq next year, as well as in South Sudan, which is 2022. So the figures will be much better operationally.

And our last question is from Maddy Singh.

Very quick two follow-ups. Firstly, on the holding structure of Sudanese business, you said it is owned via Netherlands. So I presume that the concerns around capital gains taxes would be taken care of. But is there any other potential tax implications we need to be aware of? So that's the first question. And the second one, in Saudi market, if you could share the level of 5G traffic, which you are seeing now, given such huge investments you have done on the 5G network, I'm wondering whether you are getting any real traffic yet on the network or not...

I'm sorry to disturb, please, could you repeat the second question for us again?

Yes. Sure. So second question is on the Saudi market. Given such huge investments you have done on the 5G network in Saudi I'm just wondering what kind of traffic levels are you seeing in the market, especially if you could share any like what kind of capacity utilization is happening on the 5G network right now?

On the first question, yes, I mean, the structure of the company, the subsidiaries is basically to avoid any capital gain taxes. Would there be any tax we work on basically to avoid to avoid any unpleasant capital in taxes. Of course, that's why we structured the ownership this way. Would there be any taxes, for example, in Kuwait? We have an NLST, National Labor Support Tax, as well as Zakat and this is might be applicable to the gain that we will recognize. But as I mentioned before, there is also the KD 1.5 billion or KD 1.4 billion, which is losses of resulting from the devaluation of the currency. This should be taken into consideration when we talk to the tax authorities here in Kuwait. So hopefully, we will not have taxes. But in all cases, it is 2.5% and 1%, 2.5% and NLST 1% Zakat on the profits. This is related to question number one. Question number two, which is on the 5G. From a capacity point of view, I think we're fine. We don't have any issue. From an investment point of view, we have done a lot of investments in 2021 and [ 2022 ]. And currently, currently, 5G represents approximately 7% of our consumer revenues in terms of. Once we hit the 10%, it will be autopilot, I would say, Zain KSA, it will be fine. There will not be any issue.

Thank you, gentlemen. That is all the questions we have today. So back to you, if you like to make any concluding remarks?

Thank you, Omar, and thank you, everyone. This reflect to our Investor Relations website for additional updates. Feel free to contact the IR team at IR zain.com for further information. We look forward for your future participation in our Q1 2022 update. Thank you again for joining the call, and have a great weekend.

Thank you, everyone. This concludes the call for today. Have a good day.