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

Hello, and welcome, everyone, to Zain Group Third Quarter 2024 Earnings Conference Call. I am Madhvendra Singh, Head of SME and LATAM TMT Research at HSBC. It is my pleasure to host the senior management team of Zain Group today. Aram Dehyan, Director of Investor Relations, will shortly fill the introduction of the team presenting today. [Operator Instructions] Without much delay, I'm now handing over the call to Aram. Thank you.

Thank you, Madi. Thank you, HSBC for hosting the call today, and welcome, everyone, to Zain Group's Q3 2024 earnings conference call. I'm joined today with Mohammed Shereef, our Group Head of Finance; and Mr. Skander Naanaa, Zain Kuwait, CFO. In a moment, we will take you through the IR presentation, which was posted earlier today on the website and after that, we're happy to answer any questions you may have. During this call, we will be making forward-looking statements, which are predictions, projections or other statements or other future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Please refer to our detailed cautionary statement found in Slide #2. With that, I will now turn the call over to Mohammed Shereef.

Thank you, Aram, and good afternoon, ladies and gentlemen. Thank you for joining us today. I am pleased to report that Zain Group's Q3 '24 results reflect our solid growth trajectory as we continue to create value across our footprint. These results highlight the resilience of our business and the strength of our strategic focus across operations. We continue to see strong revenue growth in key markets despite the ongoing crisis and currency headwinds in Sudan. Nevertheless, our disciplined approach to operational efficiency and adaptability allows us to stay on track for a sustainable earnings growth. We remain dedicated to supporting our communities and ensuring operational continuity, particularly in region facing socio-political challenges. In Sudan, our proactive measures are focused to recover our network operations and providing services to our customers, both voice and data. We are pleased to announce that Zain Group's Q3 '24 consolidated revenue crossed the KWD 500 million, which is USD 1.64 billion marked for the first time in 15 years with an increase of 4% year-over-year. This is an exceptional achievement more so as it comes amidst a war and currency crisis in Sudan. We are extremely proud of this landmark achievements and will continue to push forward on our growth projection. EBITDA for the quarter remained stable at KWD 180 million, USD 589 million, reflecting an EBITDA margin of 36%. Net income increased 1% to reach KWD 54 million, USD 177 million, reflecting an earnings per share of KWD 0.13, which is USD 0.04. In line with our commitment to shareholders, we distributed an interim dividend of KWD 0.10 per share on October 6, amounting to KWD 43.3 million, USD 141.5 million, as a part of our 3-year minimum dividend policy of KWD 0.35 per share, reflecting our solid results and strong balance sheet. We go to debt profile. The group continued to maintain healthy operating cash flows Total debt stands at USD 4.6 billion and net debt-to-EBITDA currently stands at around 2.2x, which falls within industry average. ZainTECH. With several acquisitions already completed and a strong pipeline of high-value deals underway, ZainTECH is positioned for continued rapid growth in the coming quarters. For the first 9 months of 2024, ZainTECH revenue grew an impressive 92% year-over-year, primarily driven by the synergies and the consolidation of STS effective from 1st March 2024. Given the very strong pipeline, we expect ZainTECH to be EBITDA positive by end of 2025 [Foreign Language]. Furthermore, ZainTECH and local B2B teams are collaborating closely to secure strategic deals across key markets, continuously setting higher standards. This focused approach created synergies and led to a solid growth in enterprise revenue, reinforcing our leadership in the digital transformation of enterprise and governments across the region. Let's go to FinTech. The FinTech, the impressive growth of Tamam and Zain Cash has seen FinTech revenue increasing by 13% to reach USD 125 million for 9 months 2024. The total transaction volume increases by 42% year-over-year. With the recent launch of Bede Bahrain, Zain's microfinance arm, and in pending launch of Bede Remittances, we expect significant growth in 2025. Digital operators. Our digital operators, Yaqoot in KSA and oodi in Iraq witnessed significant momentum. Yaqoot achieved strong revenue growth of 21%, serving nearly 1 million customers, and oodi progressing significantly and meeting the targets for the first 9 months of 2024. On ZOI, which is Zain Omantel International, our premier wholesale provider in the Middle East continues to lead in connectivity and innovation. Following IP consolidation, ZOI has achieved the highest network ranking in the region and is now among the world's top 100 networks out of more than 70,000 active networks. Though the investment of several strategic subsea cables, ZOI enables Zain operation to operate with the full independence and provides a critical foundation for advancing a digital transformation initiatives in cloud and IoT services across the region. Year-to-date, Zain has generated impressive results with revenue reaching USD 114 million, EBITDA of USD 19 million and net income of $8.2 million. Important, the corporate sustainability updates. As part of our commitment to sustainability and transparency, Zain has officially submitted its climate change disclosure to the CDP, addressing key areas such as water, plastic and biodiversity. This submission underscores our proactive approach to environmental stewardship and responsible resource management. Additionally, we have completed our second consecutive disclosure to the UN Global Compact, affirming Zain's alignment with the UNGC's principle on human rights, labor and environment sustainability and anticorruption. Full year guidance, we are pleased to confirm that we are on track to meet our full year guidance to approximately 80% to 85% of our full year 2023 net income. This is despite the ongoing war and the currency devaluation in Sudan, coupled with the significant windfall gains on tower sale and number range claim in 2023. Our significant investment in expanding and upgrading 5G networks across Kuwait, Saudi Arabia, Jordan and Bahrain are aimed at meeting the growing demand for high-speed and reliable connectivity. We are strategically focused on monetizing these networks across all segments, particularly to cater the strong demand from government and corporate clients. Some highlights on key operations. In Kuwait. Zain Kuwait has a strategic focus on advancing its position from a digital first service provider to a premier digital scaler in the region with a newly established digital factory at the forefront of this transformation. This dedicated hub is driving Zain towards a digital evolution and leading initiatives that are already yielding impressive results. Year-to-date, we have achieved nearly a 50% increase in prepaid to postpaid migration driven by a surge in digital channel engagement and enhanced CVM targeting approach effectively doubling customers ARPU. During Q3 2024, new ICT and connectivity projects have been secured, underscoring our commitments to offering innovative solutions through our leading 5G network. For Q3 '24, revenue grew 4% to reach KWD 94 million, USD 308 million; EBITDA grew 9% to reach KWD 36 million, USD 119 million, reflecting an EBITDA margin of 39%. Net income grew 9% to reach nearly KWD 23 million, USD 76 million. Moreover, Zain Kuwait continues to champion sustainability with the launch of solar car park project at our headquarter, making another step towards eco-friendly operations. The first phase of the solar solution has been successfully deployed reducing CO2 emissions by an average of 22.1 tons per month. Together, these advancements solidify Zain Kuwait's leadership in digital and sustainable transformation. In KSA. Zain KSA continues to build momentum in the digital and enterprise space, showcasing significant achievements in 9 months 2024. B2B revenue experienced 17% year-over-year growth fueled by high demand for connectivity, cloud services and MBB solutions, complemented by a number of strategic deals closed this quarter. Revenue for the quarter grew 2% year-over-year to reach USD 689 million while EBITDA for the period increased 2% to reach USD 228 million, reflecting an EBITDA margin of 33%. Net income for the quarter saw 116% to reach USD 40 million. The operator's 5G network covering 67 cities over 66% of the country saw data revenue grew 4%, representing 40% of the total revenue of 9 month '24 while customers served stood at 9 million. This impressive growth was bolstered by the strong performance across B2B, wholesale, Yaqoot and Tamam. Zain KSA is playing a dynamic role in driving a digital transformation and reinforcing its position in the Saudi market. In Iraq. Zain Iraq continues to deliver outstanding results as key cost optimization efforts yielded impressive outcomes strengthening operational performance across the board. The recent launch of KAFOO targeting high-value customers has been particularly successful, reflecting Zain Iraq's commitment to enhancing customer experience and its value proposition. This quarter also marked a record breaking religious ziyara season with a remarkable 20% increase in activation revenue compared to 2023. Zain Iraq achieved substantial network -- sorry, Zain Iraq achieved a substantial growth in Q3 '24 with mobile B2B and B2G revenue rising by 16% and the customer base expanding by 14% year-over-year. Revenue for the quarter jumped 10% year-over-year to reach USD 285 million. EBITDA grew 19% to reach USD 121 million, reflecting an EBITDA margin of 42% with net profit soaring 82% to reach USD 39 million. Customer base jumped 8% to reach 19.5 million customers, maintaining its market-leading position. It is worth mentioning that excluding the one-off TowerCo gains in 9 month '23, normalized net income growth is 141%. In Jordan. Zain Jordan is achieving strong growth with ongoing expansion of its 5G network, which includes new prepaid and postpaid 5G package as coverage expands both the 5G customer base and revenue are gaining momentum. Additionally, the continued growth of FTTH services is contributing positively to the revenue. Q3 '24 revenue grew 6% to reach USD 42 million. EBITDA grew 1% to reach USD 56 million, reflecting an EBITDA margin of 40%. Net income for the period grew 6% to reach USD 21 million. Zain Jordan served 4.3 million customers, up 7%, maintaining its market leadership position. Sudan. In presenting Zain Sudan's Q3 '24 performance, we have chosen Q2 '24 as the comparative period to provide a clearer view of the recent growth trends and results of our mitigation efforts amid a rapidly changing environment. The challenging landscape marked by currency volatility, economic instability and severe devaluation has significantly impacted financial KPIs. Fiber cuts in several regions led to a decline compounded by the effects of recent floods and displacement crisis. However, despite these obstacles, Zain Sudan price adjustments and the network recovery initiatives have driven a revenue rebound towards the end of Q3 '24. Given the currency devaluation, revenue for Q3 '24 decreased 18% to reach USD 58 million when compared to Q2 '24. With the EBITDA declining 34% when compared to same period, reaching USD 23 million, reflecting an EBITDA margin of 39%. Net income for the quarter grew 1% when compared to Q2 '24, reaching USD 34 million, USD 34 million. Customer base reached 8.7 million. Notably, currency devaluation in Sudan from SDG 638 per dollar at the end of September 2023 to SDG 1,982 per dollar at end of September '24, negatively impacted Q3 key financial KPIs. With that, I will hand over to Aram for the Q&A.

Thank you, Mohammed. Now you can have your water, sir. [Operator Instructions] Madi, could you please repeat the instructions?

[Operator Instructions] The question is from Rajat Bakhshi. He's asking, can you explain the current dividend policy? Is it driven by payout ratio or linked to free cash flow generation?

Our dividend policy is already fixed itself, like I said. Per year, for 3 years.

Excuse me, Madi, I believe you have a background noise. Could you please mute yourself until we answer the question. Thanks.

Our dividend policy is already fixed. It's KWD 0.35 per year. It's a minimum KWD 0.35 fils per year. That's what already fixed.

So John, I will unmute you now. You can proceed with your question.

Can you hear us?

We hear you, sir. Proceed with your question.

Yes. The reason what, is the question is basically we have two questions. One question is why there is a substantial increase in the device revenue by almost 33%, whereas the service revenue is dropping by almost 4% year-on-year when we compare 9 months '23 versus 9 months '24? There is a increase in the device revenue, whereas the service revenue is dropping, okay. That is the first question. And second thing is when the service revenue is dropping by almost KWD 7.7 million year-on-year, whereas the EBITDA is increasing by KWD 4.9 million. I mean, we just need to have the clarification on these two aspects.

These things are mainly coming from Kuwait. We have Kuwait CFO. He will explain to you about the service revenue versus the trading revenue with the Apple and the deals and stuff like that.

So the increase in devices is driven by what we call Zain Plus, which is a device-driven commitment. This is one. So we are pushing for this kind of commitments. It's more than 36-month commitments. This is one. Plus, today, the Apple devices on iPhone 15 and recently on iPhone 16, value per device is greater than the old devices. So this also improve the device revenues versus the services. So again, it's also an IFRS 15 allocation through the commitments between the SSP of services and the standalone price of the device. Sorry for the second question. You said the EBITDA?

Yes. My second question is specifically on the Kuwait operation. Service revenue declined by almost KWD 7.7 million year-on-year, and whereas EBITDA increased by KWD 4.9 million year-on-year.

Yes. The EBITDA increase is due mainly by the cost optimization and the initiatives that we made basically on the network contract management -- managed services contract review and improvement of other layers like HR, payroll, and other buckets of our OpEx. So it's nothing to do with the gross margin on itself. It's more driven by the OpEx improvement.

Nishit, you can go ahead.

Just two questions. First on the Sudan operations. I know it's a tough situation. Apparently, your head office was also damaged last quarter in this conflict. So how do we see Sudan going forward? I know it's not very -- it's very fluid; but your subscriber numbers have been lower quarter-on-quarter from 10 million to 8.7 million. Things are coming back in shape, you said, towards end of third quarter. So any more clarity as to what to expect, how the fourth quarter is going in Sudan? Are you seeing more recovery? Any color on that would be helpful from a Sudan operation perspective. And secondly, on Iraq, you've done very good, the operation. Both you and your competitor have done very well in Iraq this quarter. Just wanted to understand, are you able to upstream dividends in all from Iran? And how much have you done this year, if you can just quantify in terms of money from in form of dividends?

Okay. Related to Sudan, as you know that we are facing multiple challenges in Sudan like the ongoing war, displacement, currency devaluation, fiber cuts or recent floods, all these things negatively impacted. But we are working around to the flow to ensure continuity to our network operations in Sudan, which can be seen improved network coverage at the end of Q3 '24 and expect better results. If you see our customers, for example, it was -- in Q2, it was 10 million. But in Q3, it is 8.7 million. We came from 5.2 million to 10 million, and then it is 8.7 million. The network coverage so far is, in Q2, it was 40 on air active and then 60 not active, down. Now in Q4 -- sorry, in Q3 and 30th September, it was 1% increase, just 59 to 40, the network sites. And revenue also in the same way. It was -- in Q1, it was 50. In Q2, it was 71. And in Q3, it is 58. The reason for 58 because of the fiber cut and the devaluation of the currency. That's for the Sudan. What's the other question you asked? I think that's it, right?

For Sudan, I would like -- the question was more on -- so is the recovery continuing in fourth quarter? Are you happy with what you're seeing currently? And what to expect going forward, but the devaluation is also hurting? So one way we look at it is that Sudan, the overall contribution on the revenue side to the group is less, but the profit side is still pretty reasonably material for Zain Group. So how do we see this going forward? You think the profits and all are sustainable? Or it will improve going forward from Sudan side? Anything that you can share would be helpful. And my second question actually was on the dividend or anything. How much have you upstreamed from Iraq? If you can share something, that would be helpful.

Sure. I will answer the second one first. For the Iraq, we have streamed the total for this year until now $42 million. And for Sudan, as I told you, it was recovering, but it's not war. It's not anything else, or maybe you can say together. The flood, it's not in our hand and that's what happened. But now, it's recovering. We see very good improvement. It's coming. Our expectation is we will cover in Q4. I think [Foreign Language] this is what our expectation.

[Operator Instructions] There's another question online. It's from [ Shahrukh Sameer. ] He's asking for CapEx outlook for 4Q as well as next year? And a similar question is from an anonymous attendee, he is asking what is the expected CapEx for new 5G spectrum and ROI expected for Kuwait operations? So a couple of questions on CapEx.

I think the CapEx will be in the same way with the historical stuff like a percentage of revenues, believe in the range of 13% to 15%. This is what normally, we follow.

And what was the second question, Madi, regarding Kuwait CapEx. Could you repeat that again, please?

The expected CapEx for new 5G spectrum and ROI likely for Kuwait?

It's the same. At the end of the day, as an overall Group, will depend upon the range of 13 to 15 percentage.

Next question is from Rajat again. He is asking is there any update on implementation of corporate tax in Kuwait?

Yes. Yes. On tax, Pillar 2 is already in discussion with the MOF, Minister of Finance. Most likely, it will happen in 2025, but not yet announced it. We've been contacted by the Minister of Finance. We are discussing on the different ways of implementation. It's still -- some lines are debatable, like other parts of the region, Bahrain and so. But we don't have yet clarity on how to implement it yet, but in discussion with MOF.

Just to clarify on that, is the proposal to tax the entire profits of Zain Group or only the profits coming from Kuwait operations?

The way it's implemented, it's a stand-alone approach. This is how Pillar 2 is adopted. But until today, we need to have some clarification on how we're going to implement it in Kuwait.

Okay. The next question is on ZainTECH's last 12-month revenue EBITDA losses, if you could share that? And where do you see this business in 3 to 5 years if you can share any financial milestones?

In the transcript. Zain -- we -- today, what happened is this year, starting from 1st March, we consolidated the STS to the group. So you can see the revenue of ZainTECH is -- jumped to -- this quarter, 92% -- no, their revenue for this quarter for ZainTECH is -- jumped to 170%, yes. For the year-to-date, it's 92% is jumped. For the quarter, it's 170%. For the year to date, it is 92% jumped this one. EBITDA, we will be -- we expect EBITDA positive somewhere in 2025, maybe at the end then -- end of 2025. This is our expectations because of the synergies and these things, we will utilize the STS all these things, and [Foreign Language] will be getting EBITDA positive by end of year. That's what our target.

[Operator Instructions] The next question is from Kushal. He's asking is Iraq revenue growth sustainable in long term? If yes, how much is the [ room? ] And what are the drivers behind it?

It is. Iraq is one of the best operation. You can see the growth in revenue, not only in revenue. Revenue, EBITDA, net income, everything is growing. We have a new CEO now recently, Emre Gurkan, which doing a fantastic job. After -- all these things, it's -- the synergies and everything is incorporating everything. And then in [Foreign Language], we expect very good results from Iraq. You can see on the fourth quarter, very good results. Also, the cash, as I told you, $42 million we got already from Iraq.

And quite a few questions on combined OpEx of dividend and taxation in Kuwait. So basically, just as they're asking, are you expecting the new tax policy in Kuwait to impact your dividends, given that your dividend policy also expires soon, I think? So what is the risk that your dividend gets cut because of the taxes in Kuwait? One. Two, is there any risk of dividend cuts because of not being able to get any cash out of Sudan as well as you do have to pay the Ooredoo, $500 million for the towers? So if you could combine them and answer around that, yes.

As we said that tax is -- there is no official announcement came from the Ministry of Finance yet. There are a lot of ambiguity in that one, which one way, how -- if you ask me my personal opinion, I can tell. But officially, I don't have anything announced. We are working on it, how it will be and this thing so we'll settle all this thing. I don't think that this will impact our EBITDA, this -- sorry, the dividend policy. Dividend policy is already approved by the AGM as we are committed to give that one for 3 years. And then afterwards, who knows what the situation is coming. We are expecting very good things. This is our expectation. What we can see in Sudan, nobody expected that Sudan, we will get -- we were expecting worse than this. This is what we were telling last time. But, at least day by day, it's recovering gradually. Gradually, it's recovering. But unfortunately, the flood key, which is nobody's hand that one, this is what's happening. Sometimes -- and also currency devaluation is not in our hands. So as of now, it is, I think, SDG 1,982 or SDG 1,987 currently, I believe. That's what's happening. Our operations are stable. In fact, very good result from Kuwait, very good result from KSA, very good result from Iraq. [indiscernible].

Great. We have next question from [ Tanu ].

It's [ Tanu ] from UBS. So just wanted to ask around your Saudi Arabia operations. They have announced an acquisition of additional spectrum in the 600 frequency -- or 600 megahertz frequency. Just wanted to get your thoughts on if you could share some color here maybe around revenues, customer acquisition and then perhaps CapEx and what this means for the Saudi operation?

Today, the spectrum question is -- auction commenced on 10th of November and was concluded yesterday. We acquired two, 15 megawatts -- megahertz for SAR 624 million for a 15-year license in the 600 megahertz band. The payment starts from 1st July 2026. We pay 13 installments of 7.69% every year.

Thank you. So there is a question on Sudan again, which is given the current situation in Sudan, when do you expect the net profit cash flow generation to go back to 2023 levels? What is the new normal for annual net profit and free cash flow in Sudan? And my follow-up on that is, for third quarter, I saw that your net income actually is higher than EBITDA. So are there any one-offs again in third quarter, which we need to know about?

It depends upon the situation on FX. Now the second question you asked for Sudan, net profit is higher than EBITDA, what did you say?

Looks like, I mean EBITDA is $23 million. Net income is $34 million for the third quarter.

Yes, yes. But it is an FX impact.

So it's there FX gain?

Yes.

And what is the reason for that?

It is mainly due to the foreign currency receivables. They are dealing -- nobody deals in their SDG. It's all the foreign guys are dealing with U.S. dollar. So when you have a U.S. dollar receivable from -- whether from interconnect, whether from roaming, whether from any other stuff, it will be improving. So that will go to currency variance gain, and that's the reason.

Okay. Got it. There is one other question is, is there any management fee paid by Kuwait to the Group? If so, how much and where is it disclosed, OpEx or non-OpEx?

Kuwait is one entity, Kuwait and the Group, it's one entity. I mean, even within that, it will be -- any intercompany will be eliminated. There's nothing like that.

Okay. Great. Then there's another question on device revenue share has increased substantially from 27% in '23 to 34% in 2024. Is the business moving from high margin to low-margin business, which is Kuwait?

Madi, could you please repeat the first part of your question?

Basically, they're saying that device contribution in Kuwait seems to have been going up quite substantially from 27% to 34% in 2024. So is the Kuwaiti business moving to a low-margin business?

No. Just to comment on this, we have a higher margin when it comes to devices. And we are -- because we are going through a quadruple-play offering, so that includes devices and not only mobile devices. We have TVs. We have other kinds of devices. This improves the -- our gross margin on devices.

There's one question on the debt structure. How much of your debt is fixed versus variable? And when do you plan to renegotiate term loans?

Madi, do you mean the debts on the Group level fixed versus variables?

Yes.

We can check that one after the call, Madi, we can discuss with you that one. I don't have that information as of now yet.

Yes. I do not have the name of the person who asked us. So...

It is available in the financials. Yes.

Okay. There is one question on -- from Shahrukh asking, given improved profitability and cash flow, can we expect a more progressive dividend policy going forward?

The first question, what you asked the bank borrowings, if you go to Note #9, you will have the information on our consolidated financials. All the information is there related to the borrowing. The second question is ability to increase the dividend -- again, the increase or decrease in the dividend policy, it's all depending upon the Board decision and then subsequently the AGM approval. As of now, this is a 3-year commitment to what we had and we started, I think, last year, we started. And this will continue. But do you want to increase or anything, it's -- as far as we know, there is nothing so far. But it may, I don't know, it depends. And -- the commitment is, what, it's a minimum dividend. Maximum can be. It depends.

Sure. There is one follow-up from Nishit.

Yes. On the Sudan CapEx, there's been around $70 million of CapEx that's been done in the last 2 quarters in Sudan. So this is a hard currency going from the Group to Sudan? Or you're also turning some money that's generated in Sudan, but that would be in SDG? So can you just give some clarity as to if this cash flow going from the Group to Sudan currently?

There is no cash flow going to Sudan from the Group. All the cash requirement for the CapEx and everything, they were managing through Central Bank with the Central Bank official rate. This is what they used to do. And even the vendors are partners. They know the situation in the country, how it is going on. So they will wait. And then when they are okay, working with the group, the entire group. So we are not paying anything there. They, themselves start paying. By the way, I need to tell you that this year, I think we made an upstream from Sudan. I think this quarter, we made [ $10 million ], I believe? Yes. And last quarter, it was the previous quarter, Q1, it was [ $6 million ]. Q2, we couldn't upstream anything. You will see in Q4 also, upstream is coming.

And this upstream is happening at the rates that you're disclosing right SDG 2,000 per USD? Or is it there is a bit charge on it?

This is -- they are -- when they book their revenue and everything, they book the revenue based on that month currency reach. And, for example, if it is -- we are saying that SDG 1,982, when they will book their revenue, they will book at SDG 1,982. And if they will -- if the rate went up, okay, the U.S. dollar, then in SDG terms, it will be higher. But U.S. dollar terms, it's the same thing. So there is no impact in U.S. dollar foreign currency that.

Okay. Good to know that you are able to upstream from Sudan. That's the good news.

[ $10 million ] this quarter, yes.

There is another question from Shahrukh. He's asking in Iraq, fourth operator is launching its operation from next year. How is that going to impact you? And I think probably a related follow-up would be, is there any update regarding Korek operation? Are you still continuing with that disconnection of interconnection with them? Or is there any change in the situation with regard to Korek?

Iraq is an open market, and we expect the regulator to apply fair practices and open market principles, 5G and -- to all operators to ensure completion of fair pricing. The second question, what's your second question related to the Korek?

Yes. I mean I remember there was like some issue -- interconnection issues, yes, with Korek.

Yes. This is still -- we are approaching to the regulator and the process negotiations are going on. And definitely, they have to pay this money.

But you have disband the calls to Korek, right?

Disband the core as of -- we'll come on to -- I think it is disbarred the call, but I will get back on that after the call.

[Operator Instructions] There is one question about your FinTech business. They're asking, what is the reason for Zain Group getting into FinTech, which is not a telecom-related business? So if you could explain your business case for the FinTech.

This is one of our 4Sight strategy pillar, the diversity of the business sense. This is one of the pillars. That's it. What we are expecting is you can see now, for example, the FinTech like Tamam or Zain Cash. All these things are growing. It's an impressive growth that you can see quarter-on-quarter. And that's it.

I think John has another question.

Yes. See, regarding the related party transaction note, Note #16, we are seeing a very significant increase in the cost of sales from parent company from [ KWD 9 million to KWD 16 million ] comparing year-on-year. So what is the reason for such a significant increase?

Because the ZOI, effectively the ZOI entity started in 2024. Before, we had here all these IRUs and stuff together. Now there is an entity who's dealing with all these things called Zain Omantel with the Omantel, which is 76% owned by us and the 24% owned by them. So that's why the increase is saying because of that, the ZOI consolidation started in 2024, effective from January. That's why they increased.

Great. I think that's probably brings us close to the call. And I want to thank everyone who attended the call for their time. I want to thank management, especially for taking their time and presenting today. Thank you very much. You can now close.

Thank you. Thank you, Madi. Thanks for hosting the call. And please refer to the Investor Relations website for additional updates, and feel free to contact the IR team to further information at ir zain.com. We noticed a couple of questions that were not being covered in the chat box. We will make sure to address all this and drop it to Madi. And we look forward to your future participation in our full year 2024 update. Thank you all for joining the call. Have a great day.

Thank you.