Leadership

A Thriving Telecommunications Sector

In 2023, Saudi Arabia continued to build a prosperous and sustainable future by embracing digitalization and diversification. The non-oil sector showed resilience amid global inflation, interest rate hikes and OPEC+ production cuts that affected the oil revenue and GDP growth. The sector grew by 5%, supported by government spending, domestic demand and diversification efforts. The International Monetary Fund expects this trend to continue in 2024, with the economy expanding by 1.2% to 4%. The Kingdom also revised its Green Initiative targets, reflecting its commitment to sustainability and Vision 2030.

Saudi Arabia achieved remarkable milestones in digital transformation, ranking second in the G20 digital index and reaching a 99% internet penetration rate and a high mobile broadband connection rate. The Government continues to position Saudi Arabia as an attractive destination for global technology firms, encouraging investment and innovation within the digital sector. This year, the Communications and Information Technology Commission established multiple initiatives, regulations and partnerships to promote the growth of digital services and infrastructure and foster a safe and innovative competitive environment.

Elevating Our Strategy

Following the successful execution of the GAIN strategy in 2022, Mobily began to implement a new strategy this year focused on “leadership in enriching your digital world.” The vision is to transform our business into the new reality as a telecommunications, media and technology (TMT) company. In order to achieve this, we will continue to increase our capabilities across game-changing technologies such as cloud computing, cybersecurity, Big Data and artificial intelligence (AI).

The Mobily 2023-27 Strategy aims is to capture the largest share of consumer revenue growth through exceptional customer experience and innovative offerings. We will be solidifying our leadership in the business-to-business (B2B) market, repositioning Mobily as a leader in new trends through service excellence and end-to-end digitalization. We will also achieve total experience leadership, diversifying into digital and adjacent markets through partnerships and investments. Finally, we will continue to partner with the Government on strategic projects and initiatives under Vision 2030

A Year of Accelerated Performance

Our dynamic and talented team has proven its ability to execute strategic change, while overcoming challenges and ensuring operational excellence. Mobily set 10-year growth records in 2023 for revenues, EBITDA and net profit. We also increased our brand value, raised customer satisfaction and improved our performance in terms of service levels and internet speed.

10-YEAR

GROWTH RECORDS ACHIEVED IN 2023

We have positioned the Company for long-term accelerated growth through market-leading customer experience, digital transformation and infrastructure. Our network now boasts international submarine cables, state-of-the-art data centers, vast fiber network and cutting-edge 5G sites, offering ultra-fast speeds and ensuring reliable connectivity for our growing customer base. We have also formed a joint venture with industry peers to develop large-scale, big data solutions for government projects.

Aligning with the Kingdom’s Vision

In 2023, Mobily was a key enabler of the Kingdom’s economic transformation journey. We marked our presence in several giga projects that are instrumental to the nation’s development, such as NEOM, where we became the first operator to ensure fixed connectivity. Mobily has established itself as the preferred information communications technology (ICT) partner, delivering cutting-edge solutions and services that support the nation’s drive for technological advancement.

Building on the successful execution of GAIN, Mobily’s new strategy prioritizes core services and system integration, contributing to Vision 2030’s goal of transforming the Kingdom into a digital hub. We have evolved into an integrated one-stop-shop for business-to-business solutions, offering a comprehensive portfolio of ICT products and services that advance the business environment.

Mobily’s commitment to sustainability and long-term investments aligns with Vision 2030’s broader objectives, emphasizing responsible business practices and economic viability. By serving as a preferred partner, we are actively contributing to the overarching goals of economic diversification, job creation and technological advancement. This year, we also focused on digital health and biotechnology to improve the quality and efficiency of healthcare in the Kingdom.

Partnering for Growth

In 2023, Mobily forged new strategic partnerships and initiatives to enhance its services and offerings. We continued to collaborate with hyper- scalers, such as Microsoft and Amazon, to expand our footprint in the digital space. This included establishing a center to provide AWS services, asserting Mobily as a leading provider for cloud computing services in the Kingdom.

We continued to partner with established vendors such as Ericsson, Nokia and Huawei to develop solutions for 5G. We also partnered with Huawei to provide integrated IoT solutions as well as intelligent customer experience management, which resulted in award-winning performance by our Customer Experience.

Delivering Increasing Impact

Mobily’s approach to business is based on sustainability and building trust among customers, employees, partners and shareholders. We strive to create value for all Stakeholders and to positively influence the environment and society at large. The Company continues to execute its environmental, social and governance (ESG) performance across 5 strategic pillars: Accountable Enterprise, Marketplace and Customers, Responsible Employer, Positive Community Impacts and Safeguarding the Planet.

Mobily follows and implements global best practices related to governance, ensuring compliance, regularly reviewing and updating policies and procedures, and promoting ethical behavior. Our diligent monitoring and management of risks supported our growth and resilience in 2023. Risk management practices were integral and remain an important part of our new corporate strategy.

Mobily remained an important contributor to Saudi society, fueling local employment, developing our talent and participating in community events. We are especially proud of our partnership with the Diriyah E-Prix in cooperation with Formula E, which reflects Mobily’s commitment to and connection with our people and society.

COLLABORATED WITH
HYPERSCALERS

TO EXPAND FOOTPRINT
IN THE DIGITAL SPACE

AWARD-WINNING
PERFORMANCE

BY CUSTOMER
EXPERIENCE UNIT

2024 Outlook

Following impressive results in 2023, Mobily will accelerate its growth in the year ahead and cement its role as a leading TMT player in Saudi Arabia. We will continue to diversify and expand our offerings to meet the changing needs of our customers while maintaining our leadership in customer service. Mobily will create sustainable value for shareholders by seizing the opportunities in the booming Saudi market, monetizing our investments, and leading the way in new trends and innovations.

To realize our vision, it will be key to adapt to the new TMT landscape, by investing in constant innovation to stay ahead of the curve in this dynamic industry. Furthermore, we will introduce new digital solutions and product offerings, developing sustainable revenue lines and increasing our market share in connectivity. To fuel our growth, we will endeavor to activate new partnerships, especially in the B2B area with technological leaders such as AWS.

Mobily has laid the groundwork and strategy to increase its investments for 2024. We will actively pursue new growth opportunities in line with our strategy. Committed to supporting our country and the goals of Saudi Vision 2030, we will pursue greater participation in giga projects and the Kingdom’s development plans.

Acknowledgements

On behalf of the Board of Directors, a sincere thank you to our Executive management for their excellent performance and strategic execution, which delivered another year of prosperity.

I would also like to acknowledge the ongoing support of our strategic partners and shareholders as we reflect on our 2023 accomplishments and look forward to another outstanding year ahead.

Finally, I would like to express our deep gratitude and allegiance to The Custodian of the Two Holy Mosques and His Royal Highness, The Crown Prince, for their visionary leadership and remarkable achievements towards Saudi Vision 2030.

Mobily broke its own records again, achieving the highest revenues, EBITDA and net profit in the last decade. This was driven by substantial growth in the Business and Wholesale segments with increased demand from business-to-business (B2B) clients and giga projects, as well as steady growth in the highly competitive consumer market and the digital and connectivity spheres.

Our revenues of SAR 16.8 billion increased by 6.7% compared to SAR 15.7 billion in 2022. A 7.2% improvement in our EBITDA led to a record net profit of SAR 2.2 billion, which represented 34.7% growth compared to SAR 1.7 billion the previous year. Notably, our net debt to EBITDA ratio continued its impressive downtrend to reach its all-time lowest at 1.20 compared to 1.65x in 2022.

Service Excellence for Consumers

Mobily’s Consumer Unit overcame aggressive competition by offering new and attractive products across its core, digital and value-added services, while leveraging Mobily’s capabilities to push the sale of smart devices. It also reduced customer churn and won prestigious awards for its outstanding operations and customer experience.

The Consumer Unit benefited from Mobily’s continuous and ambitious rollout of 5G across the Kingdom, which provided highspeed internet access, enhanced customer experience and increased the customer lifecycle. In total, we expanded our 5G coverage to 52 cities with 5,900 sites, bringing our 5G coverage to more than 84% in 7 main cities. We also added 770 new 4G sites.

This year, the Unit focused on the postpaid portfolio, offering customers a more experiential communication service. It also accentuated its gaming offerings, partnering with D11 to create a Mobily platform for video games and e-sports.

The Unit also executed a successful Hajj season, with record numbers in data transfer traffic in the Holy Sites due to increased 5G coverage. The Unit employed AI and digital twin technology which led to dramatic improvements in network performance and customer satisfaction during the season.

84% OF 7
MAIN CITIES

HAVE ACCESS TO OUR 5G COVERAGE

Mobily Pay has quickly become a top-tier digital e-wallet, outperforming its rivals and boasting a 4.7/5 rating in app stores in 2023. The objective for Mobily Pay this year was to bolster its brand presence and market dominance, aligning with the Mobily’s goal of diversifying revenue sources and enhancing customer value. Numerous partnerships were established with various sectors to broaden Mobily Pay’s offerings and reach.

RECORD NET PROFIT OF

SAR 2.2
BILLION

Digital Transformation for Enterprises

In 2023, the Business Unit achieved its highest performance ever, and increased its market share in all segments, such as government, private sector and small- and mediumsized businesses. The Unit continued to grow its digital and core services, while strengthening its relationships with customers in these segments.

Mobily is a trusted partner for both public and private sectors, delivering high-quality services through its advanced data centers. This year, the Unit announced the construction of 2 new data centers in Riyadh and Jeddah, which will increase Mobily’s colocation capacity and exceed Tier III standards. It also solidified its partnerships with strategic government customers and initiatives, such as NEOM, the Ministry of Health, the Ministry of Municipal Rural Affairs and Housing and the Red Sea Project.

Enhanced Wholesale Partnerships Driving Growth

In 2023, the Wholesale Unit implemented a strategy that focused on expanding its international presence and connectivity, signing agreements with major content delivery network players, and forming partnerships with international leaders in internet exchange.

One of the key achievements of the Wholesale Unit was to sign a memorandum of understanding with Telecom Egypt for a Red Sea crossing. It also worked on 2 new international cables that will be ready in 2025 and will help Mobily to reach Europe and Asia with high-speed and low-latency connections.

Furthermore, the Wholesale Unit partnered with the international internet exchange provider Equinix to enhance Mobily’s position in the global internet market and improve its quality of service. This partnership will enable Mobily to access new markets and customers, as well as to optimize its network performance and cost.

Accelerating Technology and Innovation

Mobily demonstrated its leadership in innovation in 2023 by delivering cutting-edge solutions and services to its customers and partners. We established a center for providing AWS services, staffed by specialists with Amazon-accredited certificates. For the Internet of Things (IoT), we have partnered with Huawei to provide integrated solutions, collaborated with AppSpec to develop IoT security solutions, and began hosting IoT-NVO services on our network.

We created a horizontal native cloud with RedHat that supports 5G native cloud functions, enabling us to offer faster, smarter and more reliable 5G services. We also partnered with Huawei to co-develop our digital transformation towards intelligent customer experience management. Mobily has adopted AI-driven technologies to analyze 5G networks, diagnose issues and develop solutions with measurable results.

Mobily fostered the Kingdom’s position as a data hub by partnering with hyperscalers, hosting their networks, providing them with connectivity, and aiding in selling their services and products. We also partnered with the Ministry of Health to improve quality and efficiency in digital healthcare and biotechnology, launched digital educational projects with the Ministry of Education and collaborated with the Ministry of Hajj to develop digital services.

Customer Experience and Care

Mobily’s new strategy aims to enrich the digital world and provide an exceptional experience for all Stakeholders, including customers, employees and partners. Customer Experience and Care continued to develop the Total Experience Leadership pillar, which focuses on streamlining, digitalizing and measuring customer experience across all touchpoints and channels.

In 2023, Mobily stayed ahead of best practices, technologies and tools to serve as the Kingdom’s leading operator in the area of Customer Experience and Care. It maintained its lead by applying internationally recognized key performance indicators to measure Customer Experience, and constantly overseeing and monitoring progress. This year, Customer Care focused its efforts to effectively address customer concerns, improving service levels and significantly reducing customer complaints by 40%.

Supporting and Developing Our Workforce

Mobily places great emphasis on creating a world-class work environment. We actively seek exceptional talent and provide the necessary support for their growth, fostering lasting and meaningful careers. Key initiatives include Saudization, promoting gender balance and encouraging continuous learning and development. This year, our engagement satisfaction survey formed the basis of a strategic plan aimed at enhancing the employee experience.

REDUCED CUSTOMER COMPLAINTS BY

40%

Throughout 2023, Mobily organized in-house events and activities to create a winning work environment. We also accelerated our digital transformation to revolutionize human resource processes, driving integration within the technology, media and telecommunications (TMT) business.

Awards and Achievements

Mobily achieved remarkable results in 2023, reflecting our strong brand value, market share and growth in the Middle East telecommunications sector. Mobily was recognized as the fastest growing telecommunications brand in the region, with an 18% increase in brand evaluation and recognition compared to 2022. Mobily also ranked as the seventh most valuable brand in Saudi Arabia, with a staggering 113% growth in brand value since 2019. Overall, we saw an increase in our market share and number of subscriptions. These achievements were driven by our continuous efforts to innovate and enhance our products and services, as well as the customer experience.

Mobily received numerous recognitions for its outstanding leadership, innovation and customer service. These included the ‘Best Middle East Carrier’ from the Global Carrier Awards, ‘Research Excellence Accolade’ by XEBO, the LEAD Award for ‘Customer Experience Excellence,’ and the ‘Best Customer Experience Award 2022’ from the Communications, Space and Technology Commission.

The Ministry of Human Resources awarded us for the ‘Best CEO in a Large Organization,’ which serves as a testament to the strength of our entire team. In addition, the Global Business Outlook Awards named us ‘Best Investor Relations Telecom Company.’ We also earned numerous certifications, including the ISO Certificate for Customer Service, the Quality Certificate for Beneficiary Service Centers and the Local Content Certificate for the fourth consecutive year.

113%

GROWTH IN BRAND VALUE SINCE 2019

2024 Outlook

Mobily is on a mission to become the TMT company of the future, transforming the lives of our customers and communities with our innovative products and services. In 2024, we have an ambitious agenda to capture the growth opportunities in the thriving Saudi market, where we aim to grow our customer base, increase our market share and continue our sustainable growth.

We will leverage our competitive advantages in trusted connectivity, valued services and solutions, and exceptional customer experiences to create value for our shareholders and Stakeholders. We will also participate in the strategic giga projects that will shape the future of the Kingdom, providing cutting-edge solutions for Saudi Arabia’s unrivalled Saudi Vision 2030 ambitions.

We will continue to invest in our infrastructure, especially in our 5G network, to enhance our service quality and coverage. We will also expand our data center capacity to meet the growing demand for cloud computing and data storage. Moreover, we will provide IoT solutions to enable digital transformation and efficiency. Finally, we will continue to upgrade our Mobily Pay user experience, offering convenient and secure payment options for our customers.

Acknowledgements

In closing, I would like to thank our Board of Directors for their visionary leadership in a year of recordbreaking growth and success. I would also like to extend my appreciation to our Executive management for their superb execution of Mobily’s strategy. Thank you to our employees for their professionalism, dedication and excellence, which have enabled us to achieve new milestones and face the future with great confidence. Your contributions are the key to our outstanding performance in 2023 and our ability to create value for all our Stakeholders.

Mobily achieved a phenomenal 34.7% increase in net income in 2023 to reach SAR 2.2 billion. This record-breaking growth, following our impressive net income of SAR 1.7 billion in 2022, marks Mobily’s highest performance in the last 10 years. The improvement stemmed from strong revenue and EBITDA, along with continued deleveraging efforts and disciplined cost management.

Revenues increased across all revenue streams for a total 6.7% growth year on year from SAR 15.7 billion in 2022 to SAR 16.7 billion in 2023. This was driven by strong growth in the Business Unit in line with the Kingdom’s digital transformation agenda. We also witnessed consistent growth in the Wholesale and Consumer segments, with healthy expansion of our overall subscriber base.

Our continued efforts to elevate operational efficiency led to a 7.2% growth in EBITDA, which stood at SAR 6.6 billion in 2023 compared to SAR 6.2 billion the previous year. Our market-leading EBITDA margin held strong at 39.5% compared to 39.3% in 2022. Procurement efficiency played a key role in cost savings, with Mobily meeting the highest international standards and becoming the first telecommunications company in the Kingdom to earn the Procurement Excellence Program certificate from Chartered Institute of Procurement and Supply.

Based on our strong financials, we increased dividends for shareholders by 26.1% to SAR 1.45 from SAR 1.15 the previous year. This boost in dividend distribution stems from Mobily’s strong cash position, with cash and cash equivalents up nearly 100% compared to 2022, and solid free cash flow, which grew by 5.4% YoY to reach SAR 4.3 billion. Earnings per share in 2023 were also significantly higher at SAR 2.90, a 34.7% increase compared to SAR 2.15 in 2022.

26.1%
INCREASE

IN DIVIDENDS FOR SHAREHOLDERS

The Dynamic Saudi Telecommunications Market

The strong overall economic growth in Saudi Arabia, driven by the Vision 2030 plan, created new opportunities for the telecommunications sector in the Kingdom. The market witnessed tough competition among existing players, as well as the entry of new competitors and multinationals moving their headquarters to Saudi Arabia.

The increase in the Saudi Arabian Interbank Offered Rate (SAIBOR) affected the cost of capital and financing for the telecommunication operators in 2023. Meanwhile, Mobily improved its credit rating, due to the interest of international and local banks in our business’s strong financial performance, operational efficiency improvements, successful debt reduction and strong corporate governance.

On the demand side, the market saw a remarkable increase in tourism which boosted the demand for telecommunication services. The Kingdom also fostered a dynamic and growing fintech landscape, which required reliable and secure telecommunications infrastructure and solutions. Overall, customers became more data-savvy and demanding, expecting high-quality and affordable services from the telecommunications providers.

The business-to-business (B2B) segment experienced strong growth, which was driven by corporates and giga projects. This demand was bolstered by the Etimad platform, which made bidding easier and more transparent. Mobily capitalized on the Government’s digital transformation to reach and serve our customers.

The regulatory environment also improved in 2023, with the Communications, Space and Technology Commission focused on enhancing the coverage and quality of telecommunications services in rural areas through open access and national roaming.

Furthermore, investors shifted their priorities this year, focusing more on sustainable dividends and liquidity positions rather than merely on profitability. This trend benefited Mobily due to our outstanding performance over the past 5 years. The progressive upgrades of our environmental, social and governance (ESG) ratings across highly-regarded indices drew in investment from large funds which are increasingly focused on sustainability.

Executing Strategic Growth

In 2023, Mobily developed its financial strategy to scale capabilities in line with the Company’s larger Mobily 2023-2027 Strategy. This follows the successful execution of the GAIN strategy which concluded at the end of 2022 and surpassed expectations in terms of financial key performance indicators and set the Company up for long-term profitability.

The new strategy calls for the transformation of the Finance function to be a business partner to the Company. Our mission is to act as a Stakeholder-driven unit that creates optimum value and supports growth in line with best-practice standards and recent trends. The 4 strategic pillars, which align with the corporate strategy, are to accelerate growth and enhance operational efficiency, adopt a Stakeholder-driven approach, rethink processes for a seamless experience and boost talents’ capabilities and well-being.

In line with this strategy, Mobily expanded its infrastructure, targeted high-potential growth and market segments, and worked to support the objectives of Saudi Vision 2030. In 2023, we scaled our fixed and wireless connectivity, which included increasing our 5G coverage significantly in rural areas. We established 2 new data centers and launched a submarine cable. We invested in innovation and emerging technologies in areas such as artificial intelligence, cloud computing, Internet of Things, cybersecurity and digitalization. Finally, we focused on B2B growth across all segments, ranging from small and medium-sized enterprises to giga projects such as Qiddiya and Neom.

22.4%
DECREASE

IN NET DEBT FROM 2022

Investing for the Future

Mobily’s investments in strategic growth means we have one of the highest capital expenditure (CAPEX) rates in the market, while still offering strong returns for our shareholders. CAPEX was steady in 2023 compared to 2022, increasing by 10.8% to reach SAR 2.3 billion. The rationalization of expenditure remained consistent with our focus on network expansion, quality enhancements, digital transformation, emerging technologies and product and service innovation.

Our deleveraging activities led to solid declines in the Company’s debt balance. In 2023, net debt declined by 22.4% year on year to reach SAR 7.9 billion. Growth in earnings also supported a significant reduction in the net debt to EBITDA ratio to 1.20x, compared to 1.65x at the end of 2022. We ended the year in a strong cash position. Free cash flow was high in 2023 due largely to solid EBITDA growth, increasing by 5.4% year on year to reach SAR 4.3 billion.

100%
INCREASE

IN CASH AND CASH EQUIVALENTS

Looking Forward to 2024

In the year ahead, Mobily will continue to direct investment towards its growth. We will invest toward expanding our network, seizing market share and paving the way for long-term accelerated growth.

As Mobily embarks on this ambitious journey, we recognize the critical role of efficient resource allocation in achieving our goals. To this end, we are actively exploring opportunities to further optimize our financial structure and secure more favorable financing terms. Given our strong performance and the evolving market landscape, we are confident we will obtain competitive interest rates that align with our long-term financial objectives.

Mobily’s journey of digital transformation will bear fruits with enhanced operational efficiency, customer satisfaction and competitive edge. We will move forward in the face of dynamic market conditions and customer demands, employing strategic focus and change management to maintain our profitability and liquidity.

We aim to overcome tough competition, consolidating and growing our market share. We will target the B2B segment and elevate customer experience, working with hyperscalers, leveraging partnerships and participating in giga projects.

Furthermore, Mobily will invest in the community and improve our ESG rating by implementing initiatives that align with our corporate social responsibility and sustainability goals. We will continue to support our country and Saudi Vision 2030 by contributing to the economic diversification, digital transformation and social development of the Kingdom.

In order to achieve our objectives in 2024, Mobily will foster valuable strategic partnerships with local and global players to leverage their expertise, resources and networks. We will continue to create value by delivering trusted connectivity, innovative offerings, competitive services and solutions, as well as exceptional experiences to customers across all segments and sectors.