Despite the disruptive effects of COVID-19 in 2020, we began to realize the first rewards of our GAIN strategy, which supersedes the RISE strategy delivered in 2019 and was designed to propel the Company toward faster, more profitable and sustainable growth.

GAIN focuses on identifying growth opportunities and creating the capabilities to capitalize on them effectively. It is the success of this forward-looking strategy, combined with our carefully applied response to COVID-19, that has enabled us to resume, after six years, with a dividend distribution to shareholders for the fiscal year 2020.

Under this overarching strategic mandate, we have maintained our focus on accelerating digital revenue streams while improving customer services. In both of these critical areas, we achieved major advances in 2020, despite intense market competition and other prevailing challenges within the Saudi telecommunications environment.

Putting our people, customers and communities first

The precautionary measures taken locally and internationally to prevent the spread of COVID-19 had an impact on the telecommunications industry. However, by remaining proactive in these circumstances, we were able to ensure business continuity plans were in place to achieve our main objective of preserving the safety of our employees and customers, and the continuity of our services.

Furthermore, as part of our social responsibilities to the Kingdom and its people, Mobily has led a number of initiatives to benefit Saudi Arabia’s communities at a time when digital infrastructure has become vital both to doing business and to day-to-day personal interaction.

For all Mobily customers, we offered free browsing and usage of health and education e-platforms, such as the National Education Portal (iEN), the Unified Education System and the National Health (Sehha) application, in addition to other government services such as Absher. Meanwhile, to support home-learning arrangements, we distributed 40,000 free data SIMs to students to facilitate their remote education.

We also hosted the free and continuous daily broadcast of millions of awareness messages from government agencies to raise COVID-19 awareness, and supported the Ministry of Health by deploying a data control center of unprecedented scale to manage and coordinate the COVID-19 response.

Industry-leading performance

While COVID-19 has undermined aspects of our business – most notably physical sales of plans and handsets, and global roaming services – we have both preserved our growth trajectory and achieved excellent financial results in 2020.

After a six-year dividend payment suspension, it is a true pleasure to see our Board of Directors approve the resumption of dividend payments, with a recommendation to the AGM for a SAR 0.5 per share dividend for the year 2020 to our loyal and valuable investors. This recommendation is a testament to the success of our current strategic direction and deep commitment to creating significant and sustainable value for our shareholders.

Supporting the Kingdom’s socio-economic development

Mobily is dedicated to the goals of Saudi Vision 2030 and to driving forward Saudi Arabia’s ICT Sector Strategy 2023 – a five-year plan designed to build the digital foundations for a connected and innovative Saudi Arabia. We take pride in the role we play in supporting this Strategy and the plans of the Saudi Arabian Communications and Information Technology Commission (CITC) to bring about a new era of digitization in the Kingdom.

Furthermore, we remain committed to increasing the contribution of the IT industry to non-oil GDP, thereby diversifying the Kingdom’s economy in keeping with its economic vision. In 2020, we have increased fiber-to-the-home (FTTH) coverage in densely populated urban areas, expanded wireless broadband network coverage and extended speeds of more than 10 Mbps to remote areas, and facilitated an increase in the number of internet users in the Kingdom.

Mobily has also been chosen as a partner by Saudi Electricity Company (SEC) for their national project to install and commission 10 million smart meters for consumers across the Kingdom, thereby leveraging the latest Internet of Things (IOT) technology to advance the development of the consumer power industry in the Kingdom.

We were an enthusiastic participant in the launch of the Open Access Agreement for all Saudi telecommunications companies, which guarantees the provision of broadband services through any subscriber-selected service provider, independent of infrastructure ownership. It provides scope for the provision of Mobily Fiber broadband services to a market of 3.5 million homes.

Mobily in 2021 and beyond

Given the importance of the digital transformation to the Kingdom’s socio-economic goals, and the objectives of Vision 2030, we remain wholly confident that the major projects in the pipeline will offer exceptional opportunities for mobile operators, as envisaged by our GAIN strategy going forward.

Furthermore, we aim to continue to transform by integrating a greater share of digital services, whilst simplifying our internal structures and processes through cost optimization and automation, and expanding our external partnerships.

Acknowledgements

My colleagues on the Board, our executive management and our dedicated employees are to be highly commended for their astute responses to the unprecedented events of 2020. Through perceptive decision-making and the implementation of well-planned measures, we have succeeded not only in protecting our people and preserving our growth, but have also thrived as the successful results of our GAIN strategy have become apparent. None of this would have been possible without the combined efforts of all our people.

I would also like to thank our government, our strategic partners and our shareholders for the trust they place in us and the support they provide, as we begin to realize the benefits of a new period of growth and success for Mobily.

With the onset of COVID-19, we immediately moved to establish a crisis response team to develop full contingency plans in order to minimize the impacts on our people and our business and ensure our readiness on multiple fronts. Having developed full guidelines for employees to ensure their health, safety and wellbeing, we circulated daily updates and implemented working from home arrangements in mid-March.

Thanks to our swift actions, we were able to build Mobily’s resilience throughout 2020, keeping cases below the national corporate average before pushing the incidence to zero by year-end. Therefore, we were able to successfully preserve the health and wellbeing of our people while also maintaining our growth trajectory, even amid the lockdown period.

As well as our responsibilities toward our people and customers, we contributed to the wider efforts of the Saudi telecommunication sector to ensure stable, unhindered digital access for government, businesses and consumers despite a 40% increase in digital traffic during 2020. By committing to zero outages during this period, we were able to ensure the seamless flow of communication during COVID-19 lockdowns, supported by internet speeds that placed the Kingdom in the top 10 worldwide during the crisis.

Standing by our strategy

Despite the challenging environment, we remained wholly committed to deliver our GAIN strategy, to Grow core revenues; Accelerate digital revenue streams; Implement and optimize efficient delivery of services; and Nurture a positive experience for all.

In 2020, this has involved executing our cost-optimization program while continuing to pursue the digital transformation and automation of our services. We also optimized our organizational structure to promote business growth in line with our efficiency program.

Mobily’s 5G program saw the roll-out of services to the majority of target cities during 2020, bringing our coverage to 50 in total. Served by more than 3,700 separate sites, the 5G network is a key enabler of the Internet of Things (IoT) that is driving automation and transforming every aspect of our personal and professional lives.

In February, Mobily conducted the first successful five-hour voice call over 5G New Radio (VoNR) in the Middle East using a 5G standalone (SA) network and, in September, Mobily partnered with Ericsson to trial 5G on the 800/1800 MHz band using Ericsson Spectrum Sharing technology.

We remain confident that our investment in 5G, as an evolutionary technology, will result in significant long-term returns for our business, as companies across the Kingdom continue to implement their strategies to leverage 5G for the growth of their businesses. We will therefore continue to take strategic steps to expand our 5G coverage in line with our GAIN strategy to ensure Saudi Arabia is positioned firmly at the forefront of this technological leap forward.

Other key aspects of our strategy delivered in 2020 include the completion of upgrading our 4G network and continuation of our expansion targets, the launch of our new Enterprise Business Intelligence (BI) tool and the revamp of our online portal.

Outstanding performance in critical times

The high quality and reliability of our services during 2020 have served to propel our financial performance and growth. Mobily achieved an overall growth in revenue of 4.4% to reach SAR 14 billion by year-end, representing a rise of SAR 596 million over that achieved in 2019.

Despite the negative effects of COVID-19 on our physical stores, handset sales, roaming revenues, and Hajj and Umrah usage, Mobily recorded a rise in profitability to SAR 783 million in 2020, compared to SAR 31 million in 2019, and achieved the highest EBITDA in seven years at SAR 5,350 million. These strong results were primarily driven by revenue expansion and cost efficiencies secured throughout the year.

Given the sudden transition to remote working and schooling, data consumption rose significantly. Mobily sought to meet this demand not only by providing the necessary capacity to manage increased traffic, but also by delivering even faster service speeds. Over the course of 2020, Mobily’s mobile internet average download speed increased by 73% to reach 78.10 Mbps, while our fixed internet average download speed improved by 79% to reach 76.25 Mbps, in line with the average speed of fixed internet services in Saudi Arabia. In April, we also became the first to roll-out an eSIM service in the Kingdom, removing the requirement to obtain a physical SIM.

In its Q4 report on internet and digital content access speeds, the Saudi Arabian Communications and Information Technology Commission (CITC) ranked Mobily as providing the fastest access (lowest latency) of all operators for 3 of the Kingdom’s 4 most popular social networking platforms. An important consideration during remote working, Mobily also provided the fastest access (lowest latency) to Zoom, Microsoft Teams, Cisco WebEx and Google Meet in the Kingdom, according to the report.

As a result of this focus on service quality and capacity, customer satisfaction reached an all-time high, with Mobily recording the lowest number of complaints among the 3 mobile operators in 2020, while we also saw customer increases across the board – including in our B2B and B2C clients, service subscribers and Mobily App users. Parallel increases in e-sales and improvements in Business Continuity plans were also notable.

Our greatest assets

The past year has seen an unparalleled threat to the health and wellbeing of our people. Our instinctive response – to place the safety of our employees and customers first – speaks to the value we place on our human resources and the broader communities of which we are also a part.

Likewise, our enduring commitment to attracting, developing and empowering our people is felt across our organization, as is our dedication to the goals and objectives of Saudization and female empowerment in the Kingdom.

Award-winning services and global standards

Our 2020 performance was recognized by the industry in a variety of different segments. Brand Finance, a leading independent brand valuation and strategy consultancy, named Mobily the 9th most valuable brand in Saudi Arabia in its annual ranking, representing an increase in value of 31% to reach more than SAR 4 billion.

Mobily was also named “Saudi Arabian Data Center Services Provider Company of the Year” at the 2020 Frost & Sullivan Best Practices Virtual Awards and received the award for Best Annual Report (Digital Category) from the Middle East Investor Relations Association (MEIRA) for its 2019 report.

We also achieved ISO 22301:2019 certification for our Business Continuity Management System from the British Standards Institution (BSI) and became the first telecommunications company in the Kingdom to be recognized as an Authorized Training Employer of the Institute of Chartered Accountants in England and Wales (ICAEW).

Looking ahead to 2021

In what has been a difficult year for the world, our Kingdom and our people, Mobily has stood firm – protecting our employees, while supporting the country in its fight against COVID-19 and the consequent economic disruption.

We will remain at the forefront of efforts to maintain exceptional communication capacities to ensure continuity for businesses, educators and individuals in these unprecedented circumstances, and will continue to support our country in its responses and initiatives related to COVID-19.

The progress and performance achieved in 2020 will serve as a foundation for our plans to expand our market share in the coming year and secure further sustainable growth. As we enter 2021, we will build on the success of our GAIN strategy by implementing further steps in our progressive digitization and continue expanding our services and roll-out of 5G coverage across the Kingdom to support its people and businesses. The delivery of our efficiency program will move forward, too, touching every element of the Company to streamline our services and costs.

Acknowledgements

It is in times such as these that our faith in the abilities of our people is richly rewarded. I am humbled by the guidance of our Board, the steadfast leadership of our executive management, and the unwavering commitment of Mobily’s employees throughout the year.

Despite facing extraordinary circumstances, each one of our people has remained entirely focused on our strategic goals, delivering exceptional services and support to our customers across Saudi Arabia, and I thank them all for their efforts in powering our successful ongoing transformation.

I am pleased to report that through the dedication and diligence of Mobily’s team during this challenging year, building on the financial results and momentum established in 2019, the Company achieved its targets in terms of revenue growth and profitability.

This year, Mobily achieved net income amounting to SAR 783 million for 2020 based on 4.4% growth in revenues and lower financing costs. By executing our GAIN strategy, we remained committed to delivering sustainable growth while continuing our cost optimization, operational efficiency and process automation efforts. We also played a critical role in supporting our government and community, while ensuring the health and safety of our team and customers during this unprecedented year.

Top line results jumped 4.4% from SAR 13.45 billion in 2019 to reach SAR 14.05 billion this year. This was driven by solid performance across all revenue streams, driven by an improvement of subscriber mix, FTTH active base, wholesale, data centers, cloud, IoT, and other managed services revenues. Our Consumer Unit and Business Unit delivered revenue growth, despite the impact of precautionary measures taken to prevent the spread of COVID-19 on roaming, visitor and Hajj and Umrah related income, and the reduction of mobile termination rates.

EBITDA for 2020 increased by 8.2%, at a margin of 38% – the highest since 2014. This result was driven primarily by healthy top line performance and continuous improvements in operational efficiency and cost optimization. As a result of this and a reduction in financing charges, our net debt to EBITDA ratio continued its downward trajectory to reach 2.26x – its lowest level since 2016.

Investment in 5G infrastructure began in 2019 and continued in 2020, with CAPEX increasing by 1.2% to reach SAR 2,792 million versus SAR 2,760 million in 2019. Excluding the spectrum fees, CAPEX intensity reflects our commitment to improve our infrastructure, and the continuous deployment of the network modernization project to improve overall quality of service for our customers, including increasing capacity (data centers, cloud, etc.) to support our strategic growth across our revenue streams (business, consumer and wholesale).

Continuing the momentum established in 2019, this year saw a big jump in profitability, with full-year net profit of SAR 783 million and gross profit of SAR 8.15 billion, compared to last year’s net profit of SAR 31 million and gross profit of SAR 7.80 billion. This is equivalent to earnings per share of SAR 1.02 versus SAR 0.04 in 2019. This resilient outcome, the result of strong and healthy EBITDA and reduced financing charges for the year, highlights the effectiveness of our new GAIN strategy to deliver both financial and operational results.

Looking forward, we will continue to invest in modernization and digitization, transforming our business to better serve our country, our partners and our customers throughout the Kingdom. Our strong brand and financial performance for the year are a testament to our strategic direction and dedication of our entire workforce, who have pulled together in an unprecedented year to support the country socially and economically, and continue to grow the value of our company and seek sustainable profitability for our valued shareholders.