Zain KSA posted a sharp rise in first-quarter profit for 2026, helped by stronger margins, lower finance costs and a one-off income gain, even as revenue softened on weaker handset sales.
Mobile Telecommunication Company Saudi Arabia, known commercially as Zain KSA, reported net profit attributable to shareholders of SAR 201 million for the three months ended 31 March 2026, compared with SAR 93 million a year earlier. The 116 per cent headline increase was boosted by SAR 98 million in income from the Universal Service Fund. Excluding that item, the company said underlying net profit growth stood at 11 per cent, offering a clearer measure of operational performance.
Revenue slipped 1.3 per cent to SAR 2.66 billion from SAR 2.69 billion in the same quarter of 2025. The company said growth in the consumer segment was outweighed mainly by a decline in handset sales, a pattern that underlines the uneven contribution of device-led revenue in the telecoms sector. Compared with the fourth quarter of 2025, revenue fell 8 per cent from SAR 2.89 billion, reflecting seasonality, particularly in devices.
Gross profit rose to SAR 1.66 billion from SAR 1.59 billion a year earlier, as cost of revenue declined by SAR 108 million, or 9.8 per cent. That improvement was supported by lower device costs and a better revenue mix, helping the company protect profitability despite the softer top line. Operating profit, however, declined to SAR 260 million from SAR 274 million, as network expansion and maintenance costs lifted operating expenses.
Finance costs fell by SAR 26.3 million, or 15 per cent, following debt-profile optimisation and repayment of certain facilities. The reduction provided support below the operating line, although part of the benefit was offset by a SAR 26.7 million increase in expected credit losses and SAR 57 million in higher operating expenses linked mainly to network activity.
The figures extend the momentum established in 2025, when Zain KSA delivered its highest annual revenue, reaching SAR 10.98 billion against SAR 10.36 billion in 2024. Full-year net profit stood at SAR 604 million, compared with SAR 596 million a year earlier. On an organic basis, excluding non-recurring benefits recorded in 2024, the improvement was stronger, reflecting the effect of core revenue growth, cost controls and lower finance charges.
The company’s 2025 performance was driven by consumer demand, 5G services, wholesale revenue and growth in Tamam, its digital financial services business. Those areas remain central to the company’s strategy as Saudi Arabia’s telecoms market shifts from basic connectivity growth to higher-value digital services, enterprise solutions, fintech-linked platforms and network-capacity expansion.
Capital expenditure for the first quarter amounted to SAR 79 million, directed at customer experience and service quality. The spending follows heavier investment during 2025, when total capital expenditure reached SAR 1.3 billion, including spectrum-related capitalisation. Zain KSA’s investment cycle reflects intensifying competition among major operators as demand rises for high-speed mobile data, enterprise connectivity and 5G-enabled services.
Saudi Arabia remains one of the region’s most advanced telecoms markets, with strong mobile penetration, wide 5G availability in major urban centres and rising demand for data-heavy consumer and business services. Operators are increasingly competing on speed, coverage quality, digital platforms and enterprise offerings rather than voice or conventional mobile subscriptions alone.
Zain KSA operates in a market led by stc, with Mobily also holding a strong position. The competitive landscape places pressure on pricing, customer acquisition costs and service quality, while also creating opportunities in cloud connectivity, private networks, digital payments, gaming, streaming and internet-of-things applications. The company’s ability to improve gross margin while revenue declined suggests it is seeking to manage that balance through revenue mix rather than volume alone.
The Universal Service Fund income gave the quarter a substantial accounting boost, making the headline profit growth stronger than the underlying figure. That distinction will be important for investors assessing whether the first-quarter performance can be sustained through the rest of 2026. The decline in operating profit and rise in network-related expenses also show that profitability gains are being achieved alongside higher investment requirements.
Mobile Telecommunication Company Saudi Arabia, known commercially as Zain KSA, reported net profit attributable to shareholders of SAR 201 million for the three months ended 31 March 2026, compared with SAR 93 million a year earlier. The 116 per cent headline increase was boosted by SAR 98 million in income from the Universal Service Fund. Excluding that item, the company said underlying net profit growth stood at 11 per cent, offering a clearer measure of operational performance.
Revenue slipped 1.3 per cent to SAR 2.66 billion from SAR 2.69 billion in the same quarter of 2025. The company said growth in the consumer segment was outweighed mainly by a decline in handset sales, a pattern that underlines the uneven contribution of device-led revenue in the telecoms sector. Compared with the fourth quarter of 2025, revenue fell 8 per cent from SAR 2.89 billion, reflecting seasonality, particularly in devices.
Gross profit rose to SAR 1.66 billion from SAR 1.59 billion a year earlier, as cost of revenue declined by SAR 108 million, or 9.8 per cent. That improvement was supported by lower device costs and a better revenue mix, helping the company protect profitability despite the softer top line. Operating profit, however, declined to SAR 260 million from SAR 274 million, as network expansion and maintenance costs lifted operating expenses.
Finance costs fell by SAR 26.3 million, or 15 per cent, following debt-profile optimisation and repayment of certain facilities. The reduction provided support below the operating line, although part of the benefit was offset by a SAR 26.7 million increase in expected credit losses and SAR 57 million in higher operating expenses linked mainly to network activity.
The figures extend the momentum established in 2025, when Zain KSA delivered its highest annual revenue, reaching SAR 10.98 billion against SAR 10.36 billion in 2024. Full-year net profit stood at SAR 604 million, compared with SAR 596 million a year earlier. On an organic basis, excluding non-recurring benefits recorded in 2024, the improvement was stronger, reflecting the effect of core revenue growth, cost controls and lower finance charges.
The company’s 2025 performance was driven by consumer demand, 5G services, wholesale revenue and growth in Tamam, its digital financial services business. Those areas remain central to the company’s strategy as Saudi Arabia’s telecoms market shifts from basic connectivity growth to higher-value digital services, enterprise solutions, fintech-linked platforms and network-capacity expansion.
Capital expenditure for the first quarter amounted to SAR 79 million, directed at customer experience and service quality. The spending follows heavier investment during 2025, when total capital expenditure reached SAR 1.3 billion, including spectrum-related capitalisation. Zain KSA’s investment cycle reflects intensifying competition among major operators as demand rises for high-speed mobile data, enterprise connectivity and 5G-enabled services.
Saudi Arabia remains one of the region’s most advanced telecoms markets, with strong mobile penetration, wide 5G availability in major urban centres and rising demand for data-heavy consumer and business services. Operators are increasingly competing on speed, coverage quality, digital platforms and enterprise offerings rather than voice or conventional mobile subscriptions alone.
Zain KSA operates in a market led by stc, with Mobily also holding a strong position. The competitive landscape places pressure on pricing, customer acquisition costs and service quality, while also creating opportunities in cloud connectivity, private networks, digital payments, gaming, streaming and internet-of-things applications. The company’s ability to improve gross margin while revenue declined suggests it is seeking to manage that balance through revenue mix rather than volume alone.
The Universal Service Fund income gave the quarter a substantial accounting boost, making the headline profit growth stronger than the underlying figure. That distinction will be important for investors assessing whether the first-quarter performance can be sustained through the rest of 2026. The decline in operating profit and rise in network-related expenses also show that profitability gains are being achieved alongside higher investment requirements.
Topics
Saudi Arabia