ZN AnnualReport 2015 Eng PDF

Mobile Telecommunication Company
His Royal Highness Deputy Crown Prince His Royal Highness Crown Prince
MOhammad bin SALMAN MOhammad bin Nayef
Second Deputy Prime Minister and the Deputy Prime Minister and the Minister of
Minister of Defence of Saudi Arabia Interior of Saudi Arabia
Custodian of the Two Holy Mosques King
SalMAN Bin Abdulaziz
CONTENTS
01 02 03 04
Zain Overview 9 Our Strategy 37 Our Business in Our People 55
2015 43
Vision & Mission 10
Commercial
Our Brand Values 11 Overview 44
A Few Words from Network Overview 46

our Chairman 13
IT Overview 48
A Greeting from
our CEO 14 Regulatory Overview 50
Board of Directors 17
Executive
Management 23
Ownership Structure 28
From the Industry’s

Perspective 30
Measuring Success 32
Road to Success 32
05 06 07
Corporate Social Corporate Auditor’s Report
Responsibility and Governance 69 and Financial
Sustainability 61 Statements 75
Executive Committee 70
Audit Committee 71
Nomination and
Remuneration
Committee71
01
Zain Overview
Annual Report 2015
OUR VISION
To be the customer-centric Saudi telecom operator, providing reliable services through a caring approach.
OUR MISSION
To provide a To create a To build a long- To deliver on our To proudly
superior customer fulfilling work lasting prosperous promises of value contribute to
experience, and to environment relationship with creation to our the economic
be known as the our business shareholders in a and social
video-streaming partners. transparent way. development of
mobile operator- the Kingdom of
of-choice. Saudi Arabia.
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Annual Report 2015
SIMPLE
We are transparent, convenient, and
straightforward.
SAUDI
We are proud to be Saudi,
SMART
We want to become customers’
contributing to the economic and preferred choice.
social development of KSA.
Our Brand Values
RELIABLE TRENDY
We deliver superior customer experience. We are the trendsetters: modern, dynamic,
and enthusiastic.
CARING
We are happy to serve our customers and
cherish the relationship.
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Annual Report 2015
A Few Words from

our Chairman
Dear Shareholders,
May the peace and blessings of Allah be upon you.
In line with the resolute vision of our nation’s leadership, we continue to stand tall amidst a challenging
market economy and invest relentless efforts to help develop the private sector. I would like to begin by
thanking the Custodian of the Two Holy Mosques, King Salman Bin Abdulaziz, His Royal Highness Crown
Prince Mohammad Bin Nayef, and His Royal Highness Deputy Crown Prince Mohammad Bin Salman for
reinforcing our commitment to hard work and transformation.
On behalf of the Board of Directors, it is my task to provide you with an update of Zain Saudi Arabia’s
performance highlights and audited financial results for 2015.
Your Board is pleased with the significant improvements in performance at the Company but is still
concerned that after 8 years of operation the Company continues to report net losses, mainly due to
the high amortization charges associated with the 23 billion Saudi Riyals paid for our license in 2007 and
the cost of financing the Company’s debt. Operationally, through the effective implementation of the
Company’s transformation plan, Zain Saudi Arabia reported a 23% reduction in net loss at 971 million
Saudi Riyals for 2015, compared with 1,269 million Saudi Riyals during 2014. These improvements are due
to operational improvements, an expansion of our network, and the size of our customer base.
Your Board is fully engaged in helping the Company and management to achieve their plans and objectives.
My fellow Board members and I have spared no effort in our endeavors to improve the environment in
which the Company operates. Telecommunications is core to every economy around the globe, in fact it
is often referred to as a ‘lifeblood’ industry. As the third mobile operator we have a crucial role to play in
the economic transformation of the Kingdom, our role is to benefit all citizens of the Kingdom through
bringing innovation and change to our industry. Only through effective competition will this occur. To play
our role effectively, the Kingdom needs us to be strong. By implementing changes within our control we
have become stronger, however these changes alone are not enough nor fast enough to enable us to
effectively play the role of the third operator that the Kingdom deserves.
I would like to thank the previous Chairman and all the Board Members for their contributions in 2015. I
would also like to congratulate our previous Board Members on their new roles: Dr. Abdulaziz Al-Ruwais
as the new CITC Governor, and Georges Schorderet as the new CEO of Almarai. Our path towards
optimal achievement in the telecom sector is only possible with the constant support of MCIT and CITC;
whose continuous efforts to create a more competitive telecom industry we highly appreciate. It is of
no doubt that the strategic direction of Zain Group and loyalty of everyone within our sphere of service
and collaboration, including our executive management, employees, shareholders, customers, bankers,
financiers, business partners, and suppliers, is what fuels our ongoing will to achieve. With their help, I look
forward to great achievements in 2016 and beyond.
Naif bin Sultan bin Mohammad bin Saud Al Kabeer
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Annual Report 2015
A Greeting
from our CEO
Fellow Investors,
Two years ago, I promised that “you will see positive changes” at Zain Saudi Arabia.
I trust that you have already seen the major operational and financial improvements reported by your
Company. These improvements are a direct result of thr successful execution of our “Winning through
Caring” strategy. I personally invite you to review this year’s Annual Report and gain an insight into your
Company and the activities that we are conducting on your behalf.
Undoubtedly, 2015 was a good year for Zain Saudi Arabia. Your Company reported record revenues of
6.7 billion Saudi Riyals, an increase of 9%. Our gross margin increased from 52% to 59%, while EBITDA
increased by 48%, reaching 1.6 billion Saudi Riyals. For the first time since its launch, Zain Saudi Arabia
broke even at an operating level (EBIT) in two quarters. By the end of 2015, our operating losses have
decreased by 73%, from 534 million Saudi Riyals down to 141 million Saudi Riyals. We finished the year
with over 12 million active customers. The Company’s improvement in gross margin is the most significant
12
Annual Report 2015
achievement from my perspective, as it signals the strong underlying consumer demand for our products
and services.
As you review this report, you will notice quantum leaps of improvement in Zain Saudi Arabia’s performance
across the entire Company. Improvements are evident in our network, our customer experience and our
digital achievements. With the completion of the first phase of Project Reload, our advanced 4G LTE data
network became more accessible Kingdom-wide. We opened and refreshed an additional 91 points of
sale to bring us closer to our targeted consumers. We extended the reach of our youth offer “Shabab”
by introducing “Shabab Nitro”. This raised the effectiveness of our diversification strategy, making our
varying range of digital services appealing to the Kingdom’s youth as well as expatriate communities.
As you may remember from last year’s Annual Report, we reported that Mobile Termination Rates (MTR)
have been too high for far too long, which has resulted in an anti-competitive market environment. I am
delighted to report that MTRs reduced from 25H to 15H effective May 2015; a further reduction to 10H
has recently been announced, which we expect to come into effect during the first half of 2016.
As a result of the 40% reduction in MTRs, the Company took the opportunity to introduce a new tariff plan,
“Khateer”, with a rate of 19H to call any mobile or fixed number within the Kingdom. This tariff is both
attractive to new customers and more profitable for the Company because the rate is the same for on-net
and off-net calls.
Over the coming year, we will continue to implement our customer-centric and caring strategy. We are
positioned as a progressive, dynamic, Saudi brand; this combined with the ever-increasing demand for
data services, we always strive to be the mobile-video streaming operator of choice. Our upgraded network
capabilities, through Project Reload, will enable us to offer the best mobile video streaming in Saudi Arabia.
For attaining wider reach, our 2016 expanded distribution plan involves new touch points that bring us
closer to targeted customers. To offer greater value for money, we will provide value-seeking individuals
and businesses with a new range of smart products and services that match their communication needs.
We have already embarked on a journey of ongoing digital transformation, including the launch of the
second phase of Project Reload, we aim to sustain our competitive advantage to become the preferred
digital operator.
It is only with Zain Saudi Arabia’s intrinsic caring culture that we were able to reach our current status and
achieve record financial and non-financial performance. Our fully committed team is our true source of
pride. I would like to thank Zain Saudi Arabia shareholders, Zain Group, and the Board of Directors for
constantly supporting our efforts and endorsing our potential. To our partners and customers, I thank
you for bringing about our 2015 quantum leap as we continue to focus on more value, better results, and
further growth.
Hassan Kabbani
Chief Executive Officer
13
Board
of Directors
Annual Report 2015
Board of Directors
HH Prince Naif bin Sultan bin Mohammed bin Saud

Al Kabeer
Chairman
A highly established Saudi businessman with vast experience in multiple
industries, HH Prince Naif bin Sultan bin Mohammed bin Saud Al Kabeer is also
a Board Member in Almarai Company, Yamama Cement Company, Farabi Gulf
Petrochemicals Company, Projects and Technical Contracting Establishment,
and Ashbal Al Arab Contracting Establishment. He had also previously served
as Director of The Savola Group.
HH Prince Nayef graduated from King Saud University in 1997 with a Bachelor’s
degree in Business Administration (Marketing).
Joining date: 21/10/2015
Bader bin Nasser Al-Kharafi

Vice Chairman
Appointed Vice Chairman of Zain Group Board of Directors in February 2014,
Mr. Al-Kharafi is also the Managing Director of Al-Khatem Telecommunications
Company, Zain’s JSC in Iraq, since September 2013. In October 2015, he was
appointed Vice-Chairman of the board of Zain KSA. Mr. Al-Kharafi holds office
as Chairman, VP, MD and Board Member in several businesses that form part
of the Kharafi conglomerate, one of the largest privately owned, diversified
groups based in Kuwait and operating across the GCC and MENA with more
than 135 registered companies in more than 28 countries. He is also the
Chairman and Managing Director of Kuwait-based Gulf Cables & Electrical
Industries KSC, General Manager of Al-Khair National for Stocks and Real Estate
Co, and Board Member of Refreshment Trading Co., Gulf Bank, and Foulath
Holding B.S.C. (Bahrain Steel BSCC). In 2014, Mr. Al-Kharafi was appointed to
the Middle East Advisory Board of Coutts, the wealth division of the Royal Bank
of Scotland Group. He is also a fervent supporter of, and active member on,
the Board of INJAZ, Kuwait, and a member of the Industrial Advisory Board for
the Mechanical Engineering Department at Kuwait University.
Mr. Al-Kharafi holds an Executive MBA from London Business School and a
Bachelor’s degree in Mechanical Engineering from Kuwait University.
Joining date: 21/10/2015
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Annual Report 2015
Fahd bin Ibrahim Al-Dughaither

Board Member
Mr. Al-Dughaither served as Chairman of the Zain KSA Board until March
10th, 2014. Currently, in addition to his Zain KSA board membership, he is the
General Director of The United Trading Co. Ltd. Mr. Al-Dughaither previously
held several important positions such as Vice President and Director of retail
sales and real estate development at The Savola Group from 1996 to 2006.
Mr. Al-Dughaither studied English at Linn Benton Community College in

Oregon, USA in 1974 and Mathematics at Lane Community College in Oregon,
USA between 1975 and 1977.
Abdulaziz bin Yaqub Al-Nafisi

Board Member
Mr. Al-Nafisi represents Mobile Telecommunications Company K.S.C (Zain
Group) which owns 37.05% of Zain KSA and is one of the leading mobile
telecommunications companies in the Middle East and Africa. He has been a
member of the Board of Zain Group since March 2005 and served as Deputy
Chairman from March 2010 till February 2014. Having vast experience in the
fields of finance and investment, he began his career with Burgan Bank in 1978,
was a member of the Board and CEO of International Project Investment Group
from 1992 to 1996, and Chairman of Al-Madar Islamic Finance from 1998 to
2003. He has been a member of the Board of the Arab Telecom Co. since
2000 and Chairman since 2003, in addition to being CEO of Al-Nafisi National
Group since 1986. In March 2014, he was appointed Deputy Chairman of
Kuwait Finance House.
Mr. Al-Nafisi earned his Bachelor’s degree in Business Administration from

Whittier College, California in 1977.
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Annual Report 2015
Mark Scott Gegenheimer

Board Member
Mr. Gegenheimer represents Communication and Information Consultancy
Group K.S.C., which was established in 1985. With a capital of KWD 250,000, the
company is 99% owned by Zain Group and specializes in Telecommunication
and Information Technology consultancy. Mr. Gegenheimer was appointed
CEO of Zain Group effective December 2nd, 2012, where he’s in charge of
overseeing all eight commercial operations across the region and setting the
strategy for the company’s future direction.
A telecom veteran with over 25 years of experience, Mr. Gegenheimer has a

track record of impressive results. Prior to joining Zain Group, he had spent the
last decade in various senior management and leadership positions at regional
operators. He also worked for technology heavyweights including Cisco
Systems and Motorola, and enjoyed a stint in the financial services industry in
the US.
He holds a Bachelor’s of Science degree in Finance and Management from

Northern Illinois University and an MBA from DePaul University in Chicago.
Ossama Michael Matta

Board Member
Mr. Matta represents Itisalat Plus Company K.S.C. Founded in July 2001, the
company is specialized in importing, exporting, and installing mobile phones,
in addition to phone line businesses. 99% owned by Zain Group and with a
capital of KWD 250,000, the company’s main objective is to utilize financial
surplus by investing in financial and real estate portfolios managed by
specialized companies. Notably, Mr. Matta is the Zain Group CFO – playing a
key role in determining the Group’s strategy, and is responsible for all financial,
investment, and investor relations’ issues.
Carrying more than a 15-year track record of solid financial and managerial
experience in the Middle East, Mr. Matta is a results-oriented leader and
an advocate of firm corporate governance and transparency. Through his
strong corporate finance background and expertise, he has established solid
relationships with investment and commercial banking communities across
the region. Mr. Matta graduated with an Executive MBA from the American
University of Beirut and is a Certified Public Accountant.
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Annual Report 2015
Thamer Ahmed Obeidat

Board Member
Mr. Obeidat represents Al-Nahar Economic Consultancy Company Ltd.,
founded in Kuwait in 2006. The company provides management and economic
consulting services for private and public sector institutions to tackle some of
the greatest challenges they face – organizational restructuring and financial
and operational re-organizing. It also specializes in buying and selling stocks
and real estate, in addition to providing integrated customized services for
companies in the region.
An attorney at law and Managing Partner at Obeidat & Freihat law firm in
Amman, Jordan, he is considered one of most prominent lawyers in the Arab
world in the field of telecom, given his 20-year experience in the sector.
Mr. Obeidat studied law at the University of Jordan, LL.B., First Class Honors in
1987, and at Harvard Law School, LL.M. in 1988 and is admitted to practice in
Jordan and the State of New York.
Raied bin Ali Al Saif

Board Member
Mr. Al Saif is the Director of the investment and business development
department at the private office of Prince Sultan bin Mohammed bin Saud
Al-Kabeer Al Saud since 2008. His department is responsible for supervising
investments, providing counseling services for listed and private companies,
and overseeing all business activities and joint ventures with local and foreign
companies, in addition to developing real estate projects.
Mr. Al Saif earned his Bachelor’s degree in Accounting from King Saud
University in 1996.
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Annual Report 2015
Eng. Farhan Bin Naif Al-Faisal Al-Jarba

Chairman
Prior to being Zain KSA’s BOD Chairman, Eng. Farhan successfully relaunched
Mobile Systems International group of companies (MSI) in 2006, where he
serves as Chairman of the Board of the group and CEO. Eng. Farhan founded
Modern Technology Co. ltd. (MOTECO) in 2001, which branched out into the
medical field by acquiring Beauty Med in 2013, where he also serves as the
Chairman and CEO. He played a key role in the Kingdom’s telecom industry
revolution, transforming the family business (Farhan Commercial Establishment)
into Farhan Commercial Company ltd. (1982) and High Capabilities Telecom
Company ltd. - HICAP (1983), and currently serves as the Vice President of
both companies.
With over 34 years of experience in the telecommunication industry, Eng.

Farhan is one of Saudi Arabia’s leading figures in the telecom industry. He
graduated with a Bachelor of Science degree in Civil Engineering from King
Fahd University of Petroleum and Minerals (KFUPM) in the summer of 1979.
Leaving date: 21/10/2015
Dr. Abdulaziz Salem Al Ruwais

Board Member
Dr. Al Ruwais is a Saudi citizen and holds a Ph.D. from Ohio State University,
M.Sc. from the University of Colorado and a B.Sc. from King Saud University
(KSU); all in Electrical Engineering (Telecommunications). He has vast experience
in fixed and mobile communication networks and services. Currently, he is a
professor of telecommunications and the senior vice rector of KSU.
Georges P. Schorderet
Board Member
Mr. Schorderet is the Chief Operating Officer at Almarai Company, the largest
vertically integrated dairy foods company in the world. Established in 1976 and
headquartered in Riyadh, Almarai’s network extends throughout the Arabian
Peninsula, leading and influencing the agricultural, dairy processing, and food
distribution industries. Mr. Schorderet was Almarai’s Chief Financial Officer
from 2004 to 2011, after which he became the company’s Chief Operating
Officer.
Mr. Schorderet is a Certified Accountant with an MBA from International

Management Development (IMD), Lausanne, Switzerland.
20
Executive
Management
Annual Report 2015
Executive Management
Hassan Kabbani
Chief Executive Officer
Hassan Kabbani has accumulated 24 years of senior executive
telecommunications experience in the Middle East and Africa. He successfully
led five telecommunications operations as CEO. From September 2008 till
September 2011, he was the CEO and Board Member of Mobinil in Egypt, a
joint venture between France Telecom and Orascom Telecom. Despite the very
challenging operating environment, under his leadership, Mobinil increased its
customer base by 50% reaching 30 million subscribers in 2011 and revenue
reached $2 billion with an EBITDA margin of 42% in a business employing
6,200 people. From October 2003 till September 2008, he was the CEO of
Orascom Telecom Algeria –“Djezzy”. During that period, the subscriber base
reached 14.5 million, securing the number one position in Algeria with a 63%
market share and an EBITDA margin exceeding 60% on a revenue of $1.8
billion. Between 2002 and 2003, he was appointed CEO of Telecel
International Holding. Among his achievements was the financial and operational
restructuring of twelve GSM operations across the African continent.
Mr. Kabbani holds a Bachelor’s degree in Business Marketing from the

Lebanese American University (LAU) followed by several postgraduate
executive programs from INSEAD and ESA (Ecole Supérieur des Affaires).
Saud Al-Bawardi
Chief Operation Officer
Mr. Bawardi rejoined Zain KSA in July 2011. He has over 15 years of experience
in the telecommunications and banking sectors within Saudi Arabia.
Prior to joining Zain KSA, Mr. Bawardi was part of the Mobily launch team,
where he managed the creation and implementation of the successful Mobily
flagship store concept, including the paperless registration process. Originally,
he worked for Zain KSA in 2008 where he was responsible for the public
communication of the IPO. As manager for the central region, he led a 350%
increase in the consumer loan book at Bank Al-Jazira. Key to this success was
the reduction of loan approval time from 3 weeks to 48 hours.
Mr. Bawardi holds a Bachelor’s degree in Media and Public Relations from
King Saud University. He has also attended several training courses in strategic
management, investment and telecommunications at reputed institutes in
USA, UK, and Switzerland.
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Annual Report 2015
Wissam Farhat
Chief Financial Officer
Wissam Farhat joined Zain KSA in January 2013, carrying 15 years of financial
and risk management experience – including 3 years as the VP Finance and
Administration for Mobile Systems International Consultancy Limited, an
international telecom consultancy company. His experience also spans senior
management roles at a number of internationally sound financial advisory houses
including Deloitte & Touche, PwC, and Anderson & Co.
Mr. Farhat graduated with a Bachelor’s degree in Business Studies, Banking and
Finance, from the Lebanese American University in 1999 and has been certified
in IFRS by ACCA London in 2004. Also, he has enrolled in many courses on
leadership essentials at Harvard Business School.
Andrew White
Chief Strategy Officer
Andrew White joined Zain KSA in January 2013 following over 20 years of
experience in the telecommunications industry. Prior to joining Zain KSA, he was
Managing Partner of Piran Partners, a boutique strategy consultancy serving the
mobile telecommunications industry. His career in telecommunications started at
RACAL Electronics plc – the parent company of Vodafone – in 1989. Throughout
his career path, Mr. White helped create businesses, partnerships, and product
lines in various companies including Motorola, Vodafone, Yahoo!, France
Telecom, T-Mobile, Lebara, Walmart, Sainsbury’s, Mizuho, China Telecom and
Huawei.
Mr. White holds a Master’s degree in Business Administration, awarded with

distinction, from the London Business School in 1996 and a Master of Electronic
Engineering from the University of Surrey in 1990. He was elected a fellow of the
Institution of Engineering and Technology (IET) London in 2012 and is a fellow
of the Chartered Institute of Marketing.
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Annual Report 2015
Abdulmajid Alrashoudi
Chief Customer Service Officer
Abdulmajid Alrashoudi joined Zain KSA in February 2008 as a part of the
initial management team. He holds 17 years of experience in a variety of areas
and industries, all centered on providing services. Mr. Alrashoudi started his
career working for Alrashoudi Hajj and Omrah Company before establishing
Alrashoudi International Omrah Company in 2000. A year later, he joined
Al-Rajhi Bank, where he helped re-establish the phone banking services. In
2007, he joined Al-Oula Real Estate Development Company – one of the
leading companies in its field. During that time, he was the General Director
of Information and Customer Service. He also assisted the CEO in establishing
Edar, a real-estate marketing company.
Mr. Alrashoudi holds a Bachelor’s degree in Business Administration from King

Saud University.
Eng. Sultan Abdulaziz Al-Deghaither

Senior Director of Network Engineering (Chief Technical Officer
effective Feb.1, 2016)
Eng. Sultan Al-Deghaither first joined Zain KSA as Radio Planning &
Optimization Manager in 2009, helping establish the engineering department
through insourcing planning and optimization solutions that improved quality,
raised efficiency, and minimized costs. He also played a main role in the first
4G/LTE Network in 2011, and led one of the largest projects in Zain’s history:
“Project Reload”.
Eng. Al-Deghaither holds a Bachelor’s of Science in Communication and

Electronics Engineering from King Saud University.
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Annual Report 2015
Sherif Tahoun
Chief Sales & Distribution Officer
Having accumulated more than twenty years of experience in achieving
business growth and transformation for large organizations in Telecom, FMCG,
and Oil & Gas industries, Sherif Tahoun joined Zain KSA to lead sales and
distribution towards new levels. He had recently worked with Zain Group as a
commercial consultant with a special focus on the Saudi market. Prior to joining
Zain, Mr. Tahoun significantly contributed to the restructuring and turnaround
of Etisalat’s sales department in Egypt. His earlier achievements include
leading the revamp of Easy HBC’s commercial and operational performance,
in addition to three years of various leadership roles at Vodafone – the latest
of which was Head of Department for Consumer Sales & Channel Marketing
in Egypt. With BP, he assumed a number of key roles including leading BP’s
joint venture for managing gas assets in the Nile Delta and Managing Director
of Natural Gas Vehicles Company. He had also worked at Procter & Gamble
in Saudi Arabia and Egypt, holding key positions in the Customer Business
Development Division.
Mr. Tahoun holds a Bachelor’s of Science degree in Civil Engineering from

Cairo University.
Sultan Al-Shahrani
Chief Human Resources Officer
Sultan Al-Shahrani joined Zain KSA in October 2015 as Chief Human Resources
Officer to lead the development and implementation of the organization’s
human resources strategy. He carries more than 16 years of experience in the
telecommunications and retail sectors, having assumed leadership roles in a
number of companies across Saudi and the GCC including STC Group, Kuwait
Telecommunications Company (VIVA), Intigral in Dubai, and AlFaisaliah Group.
Mr. Al-Shahrani holds a Bachelor’s degree in Management Sciences from King

Fahd University of Petroleum and Minerals, and has enrolled in advanced
human resources training courses throughout his career.
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Annual Report 2015
Matthieu Galvani
Chief Commercial Officer
Mr. Galvani joined Zain KSA in February 2014. With 15 years as an experienced
executive, he holds a strong track record in international telecom groups
such as Vivendi Telecom International, Orascom Telecom, and Emirates
International Telecommunication Ltd. He has acquired vast experience in
marketing, communication, and commercial strategies for mobile, fixed, DSL,
and mobile broadband lines of business. Matthieu has built and developed
different brands as well as sales, distribution, and customer-care activities for
both consumer and enterprise markets. He has led business transformations
and set up results-oriented commercial organizations.
Matthieu holds a Master’s degree in Econometrics and a Post Graduate

Diploma in Energy Economics and Politics from the French Atomic Energy
Agency (CEA) and University of Paris X.
Frederick Vermeulen
Chief Technical Officer
Mr. Vermeulen joined Zain KSA during July 2014. As Chief Technical Officer,
he is responsible for running Zain KSA’s network and technical operations,
asserting network and operational efficiency, and leading relevant planning,
development and upgrades.
Frederick has 25 years of experience in the telecommunication industry and has

held a wide variety of positions in telecommunications with major operators
such as Vodacom South Africa (a Vodafone subsidiary), Vodacom International,
Bharti Airtel Nigeria and Cell C. Prior to joining Zain KSA, he was the COO at
Cell C.
Frederick holds a Bachelor’s degree in Electronic Engineering as well as a

Master’s degree in Business Administration with a major in Finance.
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Annual Report 2015
Ownership Structure
We are proud to be a Saudi owned company. Approximately 60% of our equity is owned by Saudi
shareholders, while 42% of our equity is owned by members of the public. Close to 21% is held by the
founding Saudi shareholders. Finally, the Zain Group owns 37%.
The Structure
Founding Shareholders Stake (%)
Around
400,000 Overall Faden Trading & Contracting Est. 5.97%
Shareholders
Saudi Plastic Factory Est. 5.85%
Abu Dhabi Investment House (ADIH) 2.14%
Almarai Co. 2.13%
HH Prince Sultan Bin Mohammed Bin Saud Al Kabeer Al

2.13%
Saud (Ashbal Al-Arab Contracting Est.)
Al Jeraisy Development Co. Ltd. 1.06%
Architectural Elite Est. for Engineering & Contracting 0.56%
Al Sale Al Sharkiyah Co. Ltd. 0.53%
Rakisa Holding Co. 0.44%
30
32
100%
UAE 96%
DEVICE
MOBILE
ACCESS
ACCESS
THROUGH
THROUGH
UK 92%
CANADA
LAPTOP / DESKTOP
91%
BRAZIL 3.9 BRAZIL 5.2 JAPAN 91%
PHILIPPINES 3.2 PHILIPPINES 5.2 SOUTH KOREA 90%
SOUTH AFRICA 3.0 SOUTH AFRICA 4.9 GERMANY 89%
THAILAND 3.9 THAILAND 4.7 AUSTRALIA 88%
ARGENTINA 3.5 ARGENTINA 4.7 USA 87%
FRANCE 86%
Annual Report 2015
INDONESIA 3.5 INDONESIA 4.7

National internet penetration figures
Source: GlobalWebIndex, Q4 2015. Based on a survey of internet users aged 16-64.

RUSSIA 1.4 RUSSIA 4.7 SINGAPORE 82%
VIETNAM 2.4 VIETNAM 4.6 ARGENTINA 80%
MALAYSIA 3.6 MALAYSIA 4.6 HONG KONG 79%

INTERNET USE BY COUNTRY
MEXICO 3.4 MEXICO 4.6 SPAIN 77%
UAE 3.6 UAE 4.4 RUSSIA 72%
TIME SPENT ON THE INTERNET

TIME SPENT ON THE INTERNET
POLAND 1.3 POLAND 4.4 MALAYSIA 68%
Sources: ITU, InternetWorldStats, CIA, national government ministries and industry bodies; UN, US Census Bureau for population data.
INDIA 3.1 INDIA 4.4 POLAND 67%
US 1.9 US 4.3 SAUDI ARABIA 64%
SINGAPORE 2.1 SINGAPORE 4.2 ITALY 63%
TURKEY 2.6 TURKEY 4.2 TURKEY 58%
SAUDI ARABIA 3.8 SAUDI ARABIA 4.1 BRAZIL 58%
ITALY 2.2 ITALY 4.1 THAILAND 56%
CANADA 1.3 CANADA 3.9 NIGERIA 53%
UK 1.6 UK 3.8 EGYPT 52%

Saudi Telecom Overview
SPAIN 1.9 SPAIN 3.8 VIETNAM 50%
AUSTRALIA 1.1 AUSTRALIA 3.6 CHINA 49%
FRANCE 1.0 FRANCE 3.6 SOUTH AFRICA 49%
Average number of hours spent using the internet per day, split by pc use and mobile phone use
Average number of hours spent using the internet per day, split by PC use and mobile phone use
CHINA 2.5 CHINA 3.4 MEXICO 47%
GERMANY 1.3 GERMANY 3.3 PHILIPPINES 46%
HONG KONG 2.2 HONG KONG 3.3 GLOBAL AVERAGE 46%
SOUTH KOREA 1.9 SOUTH KOREA 3.1 INDONESIA 34%
JAPAN 0.6 JAPAN 2.9 INDIA 28%

200%
UAE 187% NIGERIA 82%
UK 181% SOUTH AFRICA 75%
CANADA 178% INDONESIA 70%
JAPAN 172% PHILIPPINES 3.7 INDIA 66%
SOUTH KOREA 156% BRAZIL 3.3 SAUDI ARABIA 55%
GERMANY 152% MEXICO 3.2 POLAND 51%
AUSTRALIA 152% ARGENTINA 3.2 UAE 49%
USA 145% UAE 3.0 MALAYSIA 47%
Sources: GSMA Intelligence; UN, US Census Bureau for population data.

FRANCE 142% MALAYSIA 3.0 TURKEY 46%


SINGAPORE 141% SAUDI ARABIA 2.9 THAILAND 45%
ARGENTINA 137% THAILAND 2.9 SINGAPORE 41%
HONG KONG 134% INDONESIA 2.9 CHINA 40%

SPAIN 133% SOUTH AFRICA 2.7 GLOBAL AVERAGE 39%
RUSSIA 128% TURKEY 2.5 JAPAN 36%
MALAYSIA 127% VIETNAM 2.3 MEXICO 34%
POLAND 126% INDIA 2.3 SPAIN 32%
SAUDI ARABIA 122% ITALY 2.0 ARGENTINA 31%
MOBILE CONNECTIONS BY COUNTRY

Mobile connections by country, compared to national populations
ITALY 117% RUSSIA 1.9 HONG KONG 29%
TURKEY 115% USA 1.7 PHILIPPINES 29%
BRAZIL 113% SINGAPORE 1.6 UK 28%
THAILAND 107% SPAIN 1.6 USA 27%
NIGERIA 106% HONG KONG 1.5 AUSTRALIA 27%
EGYPT 102% UK 1.5 SOUTH KOREA 26%

Saudi Telecom Overview
VIETNAM 100% CHINA 1.5 BRAZIL 26%
CHINA 99% CANADA 1.4 VIETNAM 24%
SOUTH AFRICA 95% POLAND 1.3 GERMANY 22%
MEXICO 90% FRANCE 1.3 EGYPT 22%
PHILIPPINES 84% AUSTRALIA 1.2 ITALY 21%
GLOBAL AVERAGE 84% GERMANY 1.1 FRANCE 19%
INDONESIA 81% SOUTH KOREA 1.1 CANADA 19%
INDIA 77% JAPAN 0.3 RUSSIA 12%
33
Annual Report 2015
Annual Report 2015
DIGITAL IN SAUDI ARABIA

A snapshot of the country’s key digital statistics indicators
20.29M 11.00M
PENETRATION: 35%
10.00M
PENETRATION: 31%
PENETRATION: 64%
Active Active social Active mobile
Internet users Media accounts Social users
Source: Wikipedia; Internet Live Stats, Internet World Stats; Facebook;, Tencent, VKontakte, Live Internet; GSMA Intelligence.
SMARTPHONE OWNERSHIP
86% Smartphones
Handheld gaming console
Source: Google Consumer Barometer 2015. Figures based on responses to a questionnaire.
TIME SPENT WITH MEDIA

Survey-based data: figures represent users’ own claimed / reported activity
3H 46M Average daily use of the internet

Via a mobile phone
Source: GlobalWebIndex, Q4 2015. Based on a survey of internet users aged 16-64. Averages also factor non-users.
MOBILE ACTIVITIES
Survey-based data: figures represent users’ own claimed/ reported activity
34%
Percentage of the
28%
Percentage of the
Population watching Population playing
Videos on mobile Games on mobile
Source: GlobalWebIndex, Q4 2015. Based on a survey of internet users aged 16-64. Note: Data has been re-based to show national penetration
34
Annual Report 2015
35
Annual Report 2015
Zain KSA at a Glance

Key Facts
Annual Revenues SAR 6,741 million
EBITDA SAR 1,629 million

Subscribers 12.4 million
Number of Employees 1,503
Saudization Ratio 74%
Number of Zain KSA Shops 280
Number of Points of Sale 8,000
Coverage 94% of the population
Number of Cell Sites 7,000
Key Milestones
2008 2010
Reached SAR 5.7 biilllion in revenue.
Feb-08
Reached 8.3 million subscribers.
Successful IPO on the Saudi Stock Exchange.
Aug-08
Zain KSA’s commercial launch (GSM & 3G).
2007 2009 2011

Jul-07 Nov-09
Zain KSA awarded a technology EBITDA breakeven.
Sept-11
First operator to commercially launch
neutral license.
Dec-09 4G – LTE service in KSA.
Reached SAR 3 billion in revenue.
Dec-11
Reached SAR 6.4 billion in revenue.
36
Annual Report 2015
Key Performance Indicators 2011 to 2015

FY’11 FY’12 FY’13 FY’14 FY’15
Customers (mn) 8.1 7.9 8.7 9.7 12.4
Revenues (SAR mn) 6,699 6,171 6,523 6,244 6,741
EBITDA (SAR mn) 899 878 891 1,100 1,629
Net Loss (SAR mn) (1,925) (1,749) (1,651) (1,269) (971)
2012 2014
Completed a successful Jan-14
Rights Issue transaction Revamp of Zain KSA brand, significantly
of USD 1.6 billion. reinforcing the brand’s presence and
enhancing customer experience.
Dec-14
Zain KSA wins Best Customer Service
Provider Award.
2015
Jul-15
Operational breakeven during two consecutive quarters
for the first time.
2013
Jun-13 Oct-15
Entered into an agreement Highest Q3 revenues and gross profit since 2008.
with MoF to postpone the
government dues estimated at Nov-15
SAR 800 mn annually for the next Completion of Phase 1 of Project Reload, a SAR 4.5 billion
7 years. network upgrade and expansion plan, and introducing
Phase 2.
Jul-13
Successfully refinanced the MFA
loan of USD 2.3 billion for a Dec-15
5-year tenor. Reached 12.4 million subscribers.
EBITDA increased by 48%.
37
02
Our Strategy
(Winning through
Caring)
Annual Report 2015
Zain KSA’s Strategy

The core of our strategy is to become the customer-centric Saudi telecom operator, providing reliable
services through a caring approach. Our promise to our customers is to meet and exceed their expectations
of superior customer experience, in all interactions throughout their journey with us, thus being known as
“The Caring Operator”.
Our objective is to grow profitably and to increase our value market share to be a sustainable operation.
This will be achieved through following our “Winning through Caring” strategy:
Competitive Network
In 2015, we successfully completed phase one of Project Reload (a SAR 4.5 billion network infrastructure
development project), which gave us additional advantage in the 4G (Data) network. We are monetizing
this new capability to bring up data revenues to be 50% of our total revenue by 2020. The Saudi market
is exhibiting a huge growth in demand for data products, fueled by a young and digitally-connected
population, strong adoption of e-government services, and popularity of videos and HD content on social
media. Thus, we are positioning Zain KSA as the mobile-video operator-of-choice.
Superior Distribution
The distribution footprint is under expansion as part of a program that brings Zain KSA closer to where
our targeted customers are; especially in malls, airports, and megastores. Our shop concept has been
revamped to reflect a smarter customer experience, in line with our “Winning through Caring” strategy.
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Annual Report 2015
Smart, Compelling Products & Services

We will provide our customers – individuals and businesses – with innovative and value-for-money products
that cater to their evolving needs. Profitable growth in the business segment will result from the right
partnerships, such as Microsoft, to help complement our portfolio of solutions, provide the right support
per segment, and expand the distribution reach.
Becoming the Number-One Choice for the Youth

We re-launched Zain KSA as a refreshed brand to bring it closer to our targeted customers – Saudi nationals
and the youth. We are now positioned as a progressive, dynamic, and a modern brand.
Becoming the Digital Operator of Choice

We are embarking on a digital transformation journey that gives us the competitive advantage of operating
in a highly digitally-connected market and enables us to be where our targeted customers are. This digital
transformation will incrementally improve, on a day-to-day basis, processes and customer interaction
points, making their lives easier, simpler, and more enjoyable. Digitizing our core customers’ journey
will bring us the benefits of operational excellence and expand our digital footprint in the market. Our
strategy would only be successful when it is executed from within, by having a “Caring Culture” among
our employees, as part of a fulfilling work environment, emphasizing the need to be an agile and efficient
operator. Only then can we create value to our shareholders and contribute to the economic and social
development of the Kingdom.
41
03
Our Business in
2015
Annual Report 2015
Commercial Overview
During 2015, Zain KSA built upon the positive momentum generated in 2014 to achieve its commercial
success. In 2014, we created momentum through a refreshed brand, a renewed focus on data, a
repositioning on postpaid, and the expansion of the retail network. In 2015, our commercial strategy has
built upon this positive momentum to support the turnaround of the Company along the following axes:
Winning Customers Through Caring

Zain KSA was the first Saudi operator to embrace the welcomed changes to the regulatory environment,
which occurred in April 2015. Following the changes, Zain KSA was the first to introduce a new tariff, called
“Khateer” which targets Saudi nationals who make calls to all three networks. Although the regulatory
changes dropped the mobile termination rate by 40%, from 25H to 15H, “Khateer” package reduced our
off-net calling rate by 45% by introducing a simple all-net price of 19H/minute. Hence Zain KSA passed on
to consumers 100% of the decrease in interconnection prices; thus demonstrating its willingness to care.
Caring for Our Existing Customers

Zain KSA has been offering its customers promotions whereby they can make free calls on Zain KSA
network as a reward for their continuing loyalty and spend. Such campaigns are viral as the free minutes
on Zain KSA’s network encourage our customers to recommend new customers, building Zain KSA’s
own “club” of customers. We followed these promotions with the introduction of smart on-net bundles,
designed to build upon the momentum of the original free on-net promotion. This initiative maintained a
high on-net usage and importantly increased overall revenue per minute.
Diversification of our Customer Base

The regulatory changes and subsequent reduction in interconnection costs enabled Zain KSA to penetrate
the mid and high-end market even further. The communication of youth and data-centric packages such
as “Shabab” was reinforced, and the packages themselves were widely expanded, for example with the
introduction of “Shabab Nitro”, a new high-end offer.
Marketing of these packages was structured around a strong digital push to reach the channels that are
used by Saudi digital-centric customers. Our renewed focus on the mid and high-end Saudi segments
boosted our ARPU and significantly rebalanced the composition of our base, while maintaining our
stronghold thanks to our very appealing on-net offers for our expatriated communities.
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Annual Report 2015
Accelerating Data Monetization to Become a Data-centric Operator

We have continued to capitalize on the success of our data products with additional features, like
multi-SIM offers, shared data wallets, or new data bundles for voice users. In line with international
trends and benchmarks, the market experienced multiple rises in the per unit price (per MB) of
mobile data services. We experienced increasing demand for our mobile data services, even though
prices increased. We observe that post increasing prices per unit data prices in Saudi Arabia remain
very low by international benchmarks. In line with our “Winning Through Caring” strategy, we have
specific targets and objectives to increase the monetization of data services further over the coming
years.
Growing our Base of Business Customers

Zain KSA improved the productivity of its business sales (B2B) channel and grew the absolute size of the
sales channels recruiting a larger direct sales force. We also introduced new indirect channel partners to
sell our B2B offerings. The B2B product line was enhanced to cater for the small and medium businesses
data needs.
FREE
1000 10 GB
LOCAL MINUTES DATA
249
SAR MONTHLY
Pay Less...
And Per Second
62
starting from
SAR monthly
SIM+Device
45
Annual Report 2015
Network Overview
In 2015, Zain continued to build its voice and Mobile Broad Band (MBB) services, significantly expanding
its coverage and enhancing its network capacity.
Technology
Zain is participating in applying for digital dividend 800/700 MHz spectrum from CITC which is currently
occupied by analog television. It is also in the process of re-farming part of the 900MHZ band to have an MBB
layer in the lower band, which will enhance the indoor penetration and the data layer capacity. The network
also uses various frequency bands to provide backhaul and backbone transmission.
License 25 year, technology neutral, mobile services license

Spectrum 900 MHz, 1800 MHz and 2100 MHz
Technology GSM (2G), UMTS & HSPA+ (3G), and LTE (4G)
Backhaul Microwave and high capacity fiber links
During 2015, Zain KSA was allocated 5+5 MHz of additional spectrum, which will be used to increase
the capacity of our network in busy areas and increase the speed of the services that we offer. Also, the
designed capacity of the network has enabled it to accommodate the increasing numbers of subscribers,
which have reached more than 12 million with 3.2 million data subscribers.
46
Annual Report 2015
Expansion and Customer Experience

The first phase of project Reload was successfully completed, leading to a 400% increase in data traffic
and a 60% increase in voice traffic. Zain KSA also significantly expanded its transmission backhaul network
to accommodate the growth in data traffic. To ensure superior services during Hajj, a full modernization
has been applied to Hajj sites, with 90% expansion of 2G, 50% expansion of 3G, and 400% expansion of
LTE. Zain is the first operator in Hajj area to provide mobility LTE network. In addition, the second phase
of Reload was launched, focusing on expanding the coverage and capacity of 3G and 4G networks.
During the year, Zain won the Universal Service Fund (USF) bid, a CITC initiative to subsidize the provision
of services to certain rural areas, since it would be uneconomic for operators to provide services to these
areas without support. Zain KSA has won the bid for USF areas 12, 13, and 14 and awaits the formal award
of these projects by CITC. These USF areas cover approximately 400 localities with more than 800,000
people. This step serves to enhance the competitiveness of Zain’s network, generate more traffic and
revenue, and most importantly, provide a superior, cost-effective customer experience.
47
Annual Report 2015
The journey
of success
continues
Coverage
2014 2015
3G Cities covered 205 285
LTE Cities covered 30 131
3G HW covered 4 21
2G 98% of the population 98% ZAIN of the population
3G 86% of the population 88% ZAIN of the population
4G / LTE 57% of the population 81% ZAIN of the population
48
Annual Report 2015
IT Overview
Zain’s IT transformation in 2014 continued throughout 2015 to support its augmented business operations
and introduce new capabilities. This included revamping existing digital channels in line with the “Winning
Through Caring” strategy. Our digital transformation is ongoing and will require enhancements and
updates to our IT capabilities, processes, and systems.
In addition, we successfully introduced a new real-time charging and billing system, and a new recharger
voucher management system.
49
Annual Report 2015
Regulatory Overview
During 2015, the Board of Directors and Zain KSA’s management proactively sought to strengthen the
working relationship with the Communications and Information Technology Commission (CITC) across a
wide range of issues.
In February 2015, Zain welcomed CITC’s decision No. 329/1436 regarding the reduction of mobile
termination rates (MTR) on all mobile networks in the Kingdom of Saudi Arabia. This follows Zain KSA’s
response in November 2014 to CITC’s consultation regarding its proposal to decrease MTRs. Zain KSA
applauded CITC’s suggestion that MTRs should be reduced to 8H/minute. The company notes that,
contrary to international best practices where MTRs are typically reduced each year, MTRs in the Kingdom
of Saudi Arabia had not been reduced since 2008. We believe that high MTRs have contributed to
preventing Zain KSA from growing its value market share because of the emergence of a “Club Effect”,
whereby customers are discouraged from switching networks because of high off-net rates.
Therefore, Zain KSA welcomed CITC’s decision to decrease MTRs from 25H to 15H/minute. The company
champions this cause, and as the third telecom operator, it has confirmed its complete support for CITC’s
decision and called for further reductions. This is a step in the right direction, however, fundamentally we
agree with CITC’s original benchmarking published in their consultation paper that MTRs should be closer
to 8H/minute, perhaps even as low as 5H/minute. We believe that MTRs should be immediately reduced
to 8H/minute or below.
Government Affairs Overview

The Board of Directors and executive management have been regularly meeting and working closely with
the Government to improve the benefits that citizens and residents of the Kingdom gain from mobile
telephony services, and to improve the overall health of the telecommunications sector and the value
that it delivers to the Kingdom. Zain KSA has expressed its concerns regarding what it considers as unfair
competitive practices, and where appropriate, it has provided the evidence as demonstrated by G20
country benchmarks. Zain KSA trusts that the great efforts expended in this regard will be of significant
benefit to all shareholders and stakeholders including employees in the near future.
50
Annual Report 2015
MTRs have not changed in KSA since 2008
42
36
28
30
MTRs: KSA vs European
25 25 25 25 25 25
average “Halala per minute”
23 15
(source: BEREC) 19
KSA MTRs 11
9
Europe (av) 5
2008 2009 2010 2011 2012 2013 2014 2015
THE ‘CLUB EFFECT’
47%
of Subs.
Market Free
STC - STC
Calls
15H
MTR
21% 15H
Mobile
Termination
of Subs. Rate
Market
Free
Zain - Zain
Calls
15H
30%
of Subs.
Market Free
Mobily - Mobily
Calls
51
04
Our People
Annual Report 2015
Our People
Human resources are the most important assets in every organization. At Zain KSA, they are the energy
that drives the transformation towards further growth, and their energy is driven by care.
In line with the endorsed “caring culture”, the team’s extensive efforts, exemplary collaboration, and
determination enable Zain KSA to overcome the most difficult challenges and achieve record results.
2015 Employment Highlights
1,503 285
Full-time New full-time
Employees Hires
Full-time employees by the end of 2015 In 2015 at all various levels
74% 7%
Saudization Femals
Highly qualiﬁed local talents are Zain We believe in equal opportunity for all
KSA’s primary focus. They are the future of talents. The number of Zain KSA’s female
the business and the country employees is increasing year after year
Talent Management & Development

At Zain KSA, learning and sharing information are ongoing processes. Employees in various departments
enroll in the company’s specialized training programs such as strategic thinking, skill development and
enhancement, and customer service. Zain KSA is always keen on investing the required resources to
identify exceptional talents, develop their skills, and sustain an environment that encourages innovation
and growth.
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Annual Report 2015
2015 Development Highlights
23%
78
On-boarded
Is our talent
Brand index
Employees
In shops across all regions within a period of Placing Zain KSA at No. 1
one month among its peers, as the
employer of choice
774
61Employee
Employees
Beneﬁtted
13,557
Training hours
Delivered during 2015
Promotions to encourage From training programs
development from within the during 2015
company
Employee Engagement
Employees’ loyalty and dedication are highly valued at Zain KSA.
The Company strives to provide an environment that is caring, positive, and stimulating. This is achieved
through engaging employees, encouraging them to voice their opinions and express their concerns.
This is why the Company launched “Together”, an internal campaign that highlights the importance of
collaborating as a cohesive unit, taking productive initiatives, and achieving tangible progress.
In 2015, Zain KSA conducted surveys and created open communication channels to gather employees’
feedback and hold open discussions. Several events followed to improve employees’ overall engagement
index
55
05
Corporate Social
Responsibility and
Sustainability
Annual Report 2015
Corporate Social Responsibility

and Sustainability
Zain KSA aims at becoming “The Caring Operator” in every aspect of its presence and operations.
Complementing our internal caring culture and “Winning Through Caring” strategy are real efforts
dedicated to the community at large. As a Saudi company, we are keen on bringing about positive change
throughout the Kingdom to the best of our abilities.
In 2015, Zain KSA continued to support awareness campaigns, charitable programs, community
development initiatives, and environmental sustainability programs. The highlights were as follows:
MIT Enterprise Forum of the Pan Arab region 2015

Organized in partnership with Abdullatif Jameel and Zain KSA, the MIT Enterprise Forum of the Pan
Arab Region is one of the 28 worldwide chapters of the MIT Enterprise Forum Global, an avid promoter
of entrepreneurship and innovation. With a proven record in promoting MIT-style entrepreneurship, the
Forum features an annual Pan Arab business startup competition (www.mitarabcompetition.com) targeting
21 Arab countries. The competition attracts more than 5,000 applications a year and provides a networking
and mentoring platform for entrepreneurs.
The KSA Team of Young Scientists

Zain KSA took the initiative of honoring and rewarding the KSA Team of young scientists by giving away
laptops and data subscriptions. Saudi students had achieved the 1st place in the field of botany and the
4th place in four different scientific categories in the Intel International Science and Engineering Fair (ISEF)
Awards, an event that includes more than 1700 students from 75 countries.
Hajj Awareness and Donations

For the sixth consecutive year, Zain KSA supports the Custodian of the Two Holy Mosques Hajj Program
by providing data services and products to pilgrims, enabling them to stay in touch with their families.
Zain KSA also provided them with basic giveaways that help keep them healthy and comfortable while
performing Hajj. Health awareness and Hajj safety tips were sent through SMS and posted on social media
pages.
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Annual Report 2015
Cancer Awareness Campaigns and Support

In partnership with Zahra Organization, Zain KSA participated in the Kingdom’s largest breast cancer
awareness campaign by promoting the cause on all social media channels, in flagship stores, as well as
among the Zain team.
Zain KSA has also supported Sanad Charity for children with cancer by heavily promoting the organization’s
fundraising efforts and donation code among Zain subscribers.
October is Breast Cancer Awareness Month
Mammogram screening can Mammogram is used

identify any lump or tumor in its for breast cancer
early stages, the x-ray is not screening in its early
harmful if done annually stages.
Mammogram screening Mammogram screening

takes about 15 minutes is recommended after
the age of 40
It is recommended to take a shower

before having your mammogram
screening, without using any
zahra_KSA @zahra_KSA zahra.KSA
antiperspirant or powders
Syrian Refugees Help SMS

Zain KSA supported the Kingdom’s fundraising initiative to help Syrian refugees in Syria and neighboring
countries. Zain dedicated special lines that enable subscribers to donate money by SMS.
The Saudi Military Offer

In appreciation of the Saudi military efforts to protect and defend the Kingdom, and out of respect and
gratitude, Zain KSA offered soldiers a 50% discount on the monthly subscription of Shabab postpaid
package – helping them stay in touch with their families and loved ones.
Zain KSA – A Green Workplace

To sustain a green internal environment, Zain KSA launched a number of awareness campaigns
for power and water saving at the workplace. In addition, the Company launched a new “Printer
Usage Policy” to reduce waste, and more recycling containers have been placed throughout
the premises for disposal of unneeded paper. With the dual purpose of encouraging employees
to embrace environmental practices and supporting the community, Zain KSA collaborates
with the Saudi Recycle Company and the resulting recycling funds are donated to Saut Down
Syndrome Charity.
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Annual Report 2015
Customers feedback
Wish you all the best
I think Zain is the best network
Thank you Zain for

your great service,
hope you get back
1SR/day internet
service
Good luck, please cover all

or the majority of areas with
Keep going, and 4G network
surprise us with good
offers
You did what you had to do,

please continue your
perseverance in providing the
best offers that we have known
you for, thank you Zain telecom
company
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Annual Report 2015
Continue offering special

services and keep going
forward
You are special
Keep it up
Best calling rate
Thank you, I wish you more

success in the future…
Thank you Allah, I’m grateful for

Zain, May Allah reward them
61
06
Corporate
Governance
Annual Report 2015
Zain KSA has established its Corporate Governance Framework with the view of providing its Board,
management and stakeholders with a structure along with clear policies and guidelines to ensure that the
Company’s objectives are realized, its stakeholders’ expectations are managed and the requirements of
the Corporate Governance Regulations issued by the CMA are met. This framework, together with the
Company’s Articles of Association, Company’s bylaws, and the Charters of the Board Committees listed in
this document and Companies Act provide the authority and practices for governance of Zain KSA.
In 2015, Committees of the Board of Directors were as following:
1.Executive Committee
Members: Eng. Farhan bin Naif Al Faisal Al Jarbaa (Chairperson)1 , Dr. Abdulaziz bin Yaqub Al Nafisi, Scott
Marc Gegenheimer, and Fahd bin Ibrahim Al-Dughaither
Duties and responsibilities of the Executive Committee include recommending objectives and strategies
for the Company in the development of its business, having regard to the interests of its shareholders,
customers, employees and other stakeholders; agreeing to policy guidelines for business divisions
based on the strategy approved by the Board; monitoring the successful execution of the Company’s
business plan (as approved by the Board); and monitoring the business division objectives and budgets to
ensure that they fall within the Company’s targets (as approved by the Board). In addition, the Executive
Committee reviews the organizational structure of the Company, makes recommendations for change,
ensures the control, co-ordination and monitoring within the Company of risk and internal controls,
ensures the Company’s compliance with relevant legislations and regulations, and safeguards the
integrity of management information and financial reporting systems. The Committee is also responsible
for identifying and executing new business opportunities outside the current core activities, including
geographic diversification, examining all trade investments, divestments and major capital expenditure
proposals, recommending to the Board those which are material either by nature or cost, optimizing the
allocation and adequacy of the Company’s resources, and reviewing and ensuring the implementation of
the Company’s policies. The committee didn’t have any meetings in 2015.
(1) Eng. Farhan bin Naif Al Jarbaa’s resigned on the 21st of October 2015
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Annual Report 2015
2. Audit Committee
Members: Raied bin Ali Al-Saif (Chairperson)2 , Ossama Michael Matta, Dr. Abdulaziz Salem Al Ruwais3 ,
and Georges P. Schorderet4 .
Duties and responsibilities of the Audit Committee include supervising the Company’s internal audit
division in order to verify its efficiency in performing the functions assigned to it by the Board of Directors;
reviewing the internal audit system and preparing a written report with its opinion and recommendations
on the same; submitting recommendations to the Board of Directors in respect of the appointment or
renewal of the external auditors (who will be independent) and determining their fees. In addition, the
Audit Committee reviews the audit plan with the external auditor and gives remarks on the same; reviews
the remarks of the external auditor on the financial statements, follows up on the actions taken in respect
of the same; reviews the interim and annual financial statements before submission of the same to the
Board of Directors, gives their opinion and recommendations on the same, and reviews the accounting
policies used by the Company and gives opinions and recommendations on the same. The committee has
met four times in 2015 and passed on six ordinary resolutions.
3. Nomination and
Remuneration Committee
Members: Scott Marc Gegenheimer (Chairperson), Thamer Ahmed Obeidat, and Raied bin Ali Al Saif.
Duties and responsibilities of the Nomination and Remuneration Committee include recommending
individuals for membership of the Board of Directors; conducting an annual review of the skills required for
membership of the Board of Directors; identifying the strengths and weaknesses of the Board of Directors;
and establishing clear policies in respect of the remuneration of members of the Board of Directors and
senior executives of the Company. The committee has met once during year 2015.
(2) Mr. Raied Al-Saif was appointed in the audit committee on the 31st of May 2015, and head of the committee on the 5th of October 2015.
(3) Dr. Abdulaziz Salem Al Ruwais resigned on the 13th of December 2015 to become the Governor of CITC.
(4) Mr. Georges Schorderet resigned on the 22nd of March 2015 to become the CEO of Almarai Company.
65
07
Mobile Telecommunications Company
Saudi Arabia (A Saudi Joint Stock Company)
Financial
Statements And
Auditors’ Report
For The Year Ended
31 DECEMBER 2015
Annual Report 2015
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Notes to the Financial Statements

for the year ended 31 December 2014
1. ORGANIZATION AND ACTIVITIES

1.1 Mobile Telecommunications Company Saudi Arabia (the «Company» or «Zain KSA»), provides mobile
telecommunication services in the Kingdom of Saudi Arabia in which it operates, purchases, delivers,
installs, manages and maintains mobile telephone services.
The Company is a «Saudi Joint Stock Company» established pursuant to the Ministerial Resolutions
No. 176 dated 25 Jumada I 1428H (corresponding to 11 June 2007) and No. 357 dated 28 Dhu
AlHijjah 1428H (corresponding to 7 January 2008), Royal Decree No. 48/M dated 26 Jumada I 1428H
(corresponding to 12 June 2007) and Commercial Registration No. 1010246192 issued in Riyadh,
Kingdom of Saudi Arabia on 4 Rabi Awwal 1429H (corresponding to 12 March 2008) to operate as
the 3rd GSM public mobile cellular and technology neutral license in the Kingdom of Saudi Arabia for
twenty five (25) years.
The registered address of the Company is P.O. Box 295814, Riyadh 11351, Kingdom of Saudi Arabia.
1.2 The Company incurred losses for the period from 1 January 2015 to 31 December 2015 amounting to
SR 971.95 million and has accumulated deficit amounting to SR 1,278.41 million as of 31 December
2015. As of the third quarter 2014, the Company’s results were below its previous approved business
plan and also fell below one of the loan covenants which is not considered as an event of default per
the Murabaha Financing Agreement. During the third quarter of 2015, the Company has obtained
an extended waiver in this respect till the first quarter of 2016. Moreover, the management of the
Company is still in negotiation with the bank to reset the new covenant based on the new business
plan that was approved by the Company’s Board of Directors on 20 January 2015.
The Company’s management believes that the Company will be successful in meeting its obligations
in normal course of operations. The directors of the Company have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the foreseeable future.
1.3 Reduction of Share capital to absorb accumulated deficit

After obtaining the required approvals from the regulatory bodies, an Extraordinary General Assembly
was held on 25 February 2015 and the following resolutions were approved:
• Approval of the Board of director’s resolution to reduce the Company›s share capital from SR
10,801,000,000 to SR 5,837,291,750 and accordingly to decrease the number of shares from
1,080,100,000 shares to 583,729,175 shares to offset the Company’s accumulated deficit till 30
September 2014.
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Annual Report 2015
1. ORGANISATION AND ACTIVITIES (Continued)

Reduction of Share Capital to absorb accumulated deficit (Continued)
Approval of the modification of clauses 7 and 8 of the by-laws of the Company to reflect the effect of the
capital reduction. The modifications sought were as follows:
Clause (7) after modification: The Company’s share capital is SR 5,837,291,750 divided into 583,729,175
ordinary equal shares with a nominal value of SR 10 per share.
Clause (8) after modification: The shareholders have subscribed in 583,729,175 shares, at a par value SR
10 per share, for a total value of SR 5,837,291,750.
Accordingly, the Company reduced its share capital from SR 10,801,000,000 to SR 5,837,291,750 and
the total number of shares decreased from 1,080,100,000 shares to 583,729,175 shares. The principal
reason for the proposed capital reduction is to write-off all of the Company`s accumulated losses up to 30
September 2014 representing approximately 45.96% of the capital, as part of instituting its turnaround
plan and pursuant to a recommendation by the Executive Management of the Company and its external
advisers. (Refer note 16).
Refinancing Arrangements
On 31 July 2013 the Company has signed an amended and restated “Murabaha financing Agreement”
which also includes some of the Existing Murabaha Facility Investors. As per the terms of the new agreement
the Company has settled a portion of the existing facility amounting to SR 369 million from its internal cash
resources to reduce the outstanding principle from SR 9 billion to SR 8.63 billion. With the signing of the
new agreement the Company has successfully extended the maturity date of its Existing Murabaha facility
for 5 years ending 30 June 2018 which was due on 31 July 2013.
In the second quarter of 2015, the Company made a prepayment for the amount of SR 121.3 million as a
mandatory settlement due to its excess free cash flow.
On 5 June 2013 the Company has also signed a new long-term borrowing facility amounting to SR 2.25
billion with three years maturity ending 5 June 2016 to refinance the existing facility obtained from local
commercial banks due on 3 April 2013.
(Also refer to Note 9).
Agreement with the Ministry of Finance, Saudi Arabia

During 2013, the Company has signed an agreement with the Ministry of Finance, Saudi Arabia to defer
payments of its dues to the government for the next seven years, estimated at SAR 5.6 billion. These
deferred payments under this agreement will be bearing commercial commission payable annually, while
the amount due will be repayable in equal installments starting June 2021. The amount deferred by the
Company as of 31 December 2015 amounted to SR 1,356 million (2014: SR 801 million) included in other
non-current liabilities.
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Annual Report 2015
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all periods presented, unless otherwise stated.
Basis of preparation
The accompanying financial statements have been prepared under the historical cost convention on
the accrual basis of accounting and in compliance with accounting standards promulgated by the Saudi
Organization for Certified Public Accountants (“SOCPA”). These financial statements should be read in
conjunction with the annual audited financial statements for the year ended 31 December 2014.
Critical accounting estimates and judgments

The preparation of financial statements in conformity with generally accepted accounting standards in
the Kingdom of Saudi Arabia requires the use of certain critical estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting
date and the reported amounts of revenues and expenses during the reporting period. Estimates and
judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The Company
makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results.
The estimates and assumptions that have a significant risk of causing material adjustments to the carrying
amounts of assets and liabilities within the next financial year are discussed below.
(a) Intangible assets

Intangible assets include license acquired from the Ministry of Telecommunication and licenses related to
computer software.
The relative size of the Company›s intangible assets being 65.5 % (2014: 67.5%) of the Company’s total
assets makes the judgments surrounding the estimated useful lives critical to the Company›s financial
position and performance.
Estimate of useful life

The useful life used to amortize intangible assets relates to the future performance of the assets acquired
and management›s judgment of the period over which economic benefit will be derived from the asset.
The basis for determining the useful life for the most significant categories of intangible assets is as follows:
(i) Mobile telecommunication license

The estimated useful life is the term of the license using the license term reflects the period over which the
Company will receive economic benefit.
(ii) Computer software licenses

The useful life is determined by management at the time the software is acquired and brought into use
and is regularly reviewed for appropriateness. The useful life represents management›s view of expected
useful life over which the Company will receive benefits from the software, but not exceeding the license
term.
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Annual Report 2015

(Continued)
(b) Property and equipment
Property and equipment also represent a significant proportion of the asset base of the Company, being
19.2% (2014: 16.6%) of the Company’s total assets. Therefore, the estimates and assumptions made to
determine their carrying value and related depreciation are critical to the Company›s financial position
and performance.
Estimate of useful life

The charge in respect of periodic depreciation is derived after determining estimate of an asset›s expected
useful life and the expected residual value at the end of its life. Increasing an asset›s expected life or its
residual value would result in a reduced depreciation charge in the Income statement.
The useful lives of the Company’s assets are determined by management at the time the asset is acquired
and reviewed annually for appropriateness. The lives are based on historical experience with similar assets
as well as anticipation of future events which may impact their life, such as changes in technology. Unless
there is a reasonable expectation of renewal or an alternative future use for the asset, network infrastructure
is depreciated over a period that does not exceed the expiry of the associated license under which the
Company provides telecommunication services.
(c) Provision for doubtful receivables
A provision for impairment of accounts receivables is established when there is objective evidence that
the Company will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganization, and default or delinquency in payments (more than 60 days overdue) are considered
indicators that the accounts receivable are impaired. For significant individual amounts, assessment is
made at individual basis. Amounts which are not individually significant, but are overdue, are assessed
collectively and a provision is recognized considering the length of time and past recovery rates.
Segment reporting
(a) Business segment
A business segment is a group of assets, operations or entities:
i. Engaged in revenue producing activities;
ii. Results of its operations are continuously analysed by management in order to make decisions related
to resource allocation and performance assessment; and
iii. Financial information is separately available.
(b) Geographical segment
A geographical segment is a group of assets, operations or entities engaged in revenue producing
activities within a particular economic environment that are subject to risks and returns different from those
operating in other economic environments.
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Annual Report 2015

(Continued)
Foreign currency translations
(a) Reporting currency and functional currency
These financial statements are presented in Saudi Riyals (“SR”) which is the reporting currency and
functional currency of the Company.
(b) Transactions and balances

Foreign currency transactions are translated into Saudi Riyals using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at the period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the income statement.
Cash and cash equivalents

Cash and cash equivalents include cash in hand and with banks and other short-term highly liquid
investments, if any, with maturities of three months or less from the purchase date.
Accounts receivable
Accounts receivable are shown at their net realizable values, which represent billed and unbilled usage
revenues net of allowances for doubtful accounts. A provision against doubtful receivables is established
when there is objective evidence that the Company will not be able to collect all amounts due according
to the original terms of the receivables. Such provisions are charged to the income statement and reported
under “distribution and marketing expenses”. When an account receivable is uncollectible, it is written-off
against the provision for doubtful receivables. Any subsequent recoveries of amounts previously written-
off are credited against “distribution and marketing expenses” in the income statement.
Inventories
Inventories are carried at the lower of cost or net realizable value. Cost is determined using the weighted
average method. Net realizable value is the estimated selling price in the ordinary course of business, less
the costs of completion and selling expenses.
Inventories sold to distributors on which significant risk and reward remains with the Company are recorded
as inventory on consignment.
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Annual Report 2015

(Continued)
Property and equipment
Property and equipment are carried at cost less accumulated depreciation except for capital work in
progress which is carried at cost. Depreciation is charged to the income statement, using the straight-line
method, to allocate the costs of the related assets to their residual values over the following estimated
useful lives of the assets:
Years
Leasehold improvements Shorter of lease term or useful life
Telecommunication equipment 3 - 10
Civil works (telecommunications) 20
Information technology systems 3
Information technology servers 5
Furniture and fixtures 5
Office equipment 5
Vehicles and other transportation equipment 5
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are
included in the income statement.
Maintenance and normal repairs which do not materially extend the estimated useful life of an asset are
charged to the income statement as and when incurred. Major renewals and improvements, if any, are
capitalized and the assets so replaced are retired.
Intangible assets
License fee is stated at cost less accumulated amortization. The amortization period is 25 years and is
primarily determined by reference to the unexpired license period, the conditions for license renewal
and whether the license is dependent on specific technologies. Amortization is charged to the income
statement on a straight-line basis over the estimated useful life from the commencement of service of the
network.
Rights of use of various telecommunication services are recorded upon acquisition at cost and are
amortized starting from the date of service on a straight line basis over their useful lives or statutory
duration, whichever is shorter.
Computer software licenses are capitalized on the basis of the costs incurred to acquire and bring the
specific software into use. These costs are amortized over their estimated useful lives, being 2 to 5 years.
Costs that are directly associated with the production of identifiable and unique software products
controlled by the Company and that are expected to generate economic benefits exceeding one year are
recognized as intangible assets.
Costs associated with maintaining the software are recognized as an expense when they are incurred.
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Annual Report 2015

(Continued)
Impairment of non-current assets

Non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset’s fair value
less cost to sell and value in use. For the purpose of assessing impairment, assets are grouped at lowest
levels for which there are separately identifiable cash flows (cash-generating units). Non-current assets
other than intangible assets that suffered impairment are reviewed for possible reversal of impairment
at each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the
asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but the
increased carrying amount should not exceed the carrying amount that would have been determined,
had no impairment loss been recognized for the assets or cash-generating unit in prior years. A reversal
of an impairment loss is recognized as income immediately in the income statement. Impairment losses
recognized on intangible assets are not reversible.
Borrowings
Borrowings are recognized at the proceeds received, net of transaction costs incurred. Borrowing costs that
are directly attributable to the acquisition, construction or production of qualifying assets are capitalized
as part of those assets. Other borrowing costs are charged to the income statement.
Accounts payable and accruals

Liabilities are recognized for amounts to be paid for goods and services received, whether or not billed
to the Company.
Provisions
Provisions are recognized when; the Company has a present legal or constructive obligation as a result of
a past event; it is probable that an outflow of resources will be required to settle the obligation; and the
amount can be reliably estimated.
Zakat
The Company is subject to zakat in accordance with the regulations of the Department of Zakat and
income Tax (the “DZIT”). Provision for zakat, if any, is charged to the income statement. Additional
amounts payable, if any, at the finalization of final assessments are accounted for when such amounts are
determined.
The Company withholds taxes on certain transactions with non-resident parties in the Kingdom of Saudi
Arabia as required under Saudi Arabian income Tax Law.
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Annual Report 2015

(Continued)
Employees’ end-of-service benefits

Employee end-of-service benefits required by Saudi Labour and Workman Law are accrued by the
Company and charged to the income statement. The liability is calculated at the current value of the
vested benefits to which the employee is entitled, should the employee leave at the balance sheet date.
Termination payments are based on employees’ final salaries and allowances and their cumulative years
of service, as stated in the laws of Saudi Arabia.
Contingent liabilities
A contingent liability is a possible obligation which may arise from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not
wholly within the control of the Company, or a present obligation that arises from past events but is not
recognized because it is not probable that an outflow of resources embodying economic benefits will be
required to settle obligation, or the amount of the obligation cannot be measured with sufficient reliability.
Revenues
The Company’s revenue mainly comprises revenue from mobile telecommunications. Revenue from
mobile telecommunications comprises amounts charged to customers in respect of airtime usage, text
messaging, the provision of other mobile telecommunications services, including data services and
information provision, fees for connecting users of other fixed line and mobile networks to the Company’s
network.
Airtime used by customers is invoiced and recorded as part of a periodic billing cycle and recognized as
revenue over the related access period. Unbilled revenue resulting from services already provided from
the billing cycle date to the end of each accounting period is accrued and unearned revenue from services
to be provided in periods after each accounting period is deferred. Revenue from the sale of prepaid
credit is deferred until such time as the customer uses the airtime, or the credit expires.
Revenue from data services and information provision is recognized when the Company has performed
the related service and, depending on the nature of the service, is recognized either at the gross amount
billed to the customer or the amount receivable by the Company as discount for facilitating the service.
The income from provision of content services, which policy of recognition has been changed during this
year, is recognized on net basis to record the extent of its own share of income only. This change has no
impact on the current and prior period profit/loss; however, this has caused reduction in revenue and cost
of revenue by same amounts as follows:
Year 2008 2009 2010 2011 2012 2013 2014 2015

Amount 555 53,162 36,659 62,659 63,971 67,541 73,666 -
Incentives are provided to customers in various forms as part of a promotional offering. Where such
incentives are provided in the context of an arrangement that comprises other deliverables, revenue
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Annual Report 2015
representing the fair value of the incentive, relative to other deliverables provided to the customer as
part of the same arrangement, is deferred and recognized in line with the Company’s performance
of its obligations relating to the incentive. In arrangements including more than one deliverable, the
arrangement consideration is allocated to each deliverable based on the fair value of the individual
element. The Company generally determines the fair value of individual elements based on prices at which
the deliverable is regularly sold on a standalone basis.

(Continued)
Distribution, marketing, general and administrative expenses
Distribution, marketing and general and administrative expenses include direct and indirect costs not
specifically part of cost of revenue as required under generally accepted accounting standards. Allocations
between distribution, marketing and general and administrative expenses and cost of revenue, when
required, are made on a consistent basis.
Operating leases
Lease of property and equipment under which all the risks and benefits of ownership are effectively
retained by the lessor are classified as operating leases. Rental expenses under operating leases are
charged to the income statement on a straight-line basis over the period of the lease.
Derivative financial instruments

The Company uses derivative financial instruments to hedge its interest rate risk on the floating rate
Syndicate Murabaha facility. The Company designates these derivatives financial instruments as cash flow
hedges in accordance with the approved policies and consistent with the Company’s risk management
strategy. The Company does not use derivative financial instruments for speculative purposes. These
derivative financial instruments are measured at fair value. The effective portions of changes in the fair
value of derivatives are recognized in hedging reserve under the statement of shareholders’ equity. The
gain or loss relating to the ineffective portion is recognized immediately in the income statement. Gains
or losses recognized initially in hedging reserve are transferred to the income statement in the period in
which the hedged item impacts the income statement.
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Annual Report 2015
3. CASH AND CASH EQUIVALENTS

2015 2014
SR’000 SR’000
Cash on hand 33 259
Cash at banks 178,465 31,858
Time deposits 1,200,000 1,060,000
1,378,498 1,092,117
The Company invests part of the surplus cash in time deposits with maturity period of three month or less
with local commercial banks. The annual commission rates on these deposits during 2015 were 0.62 %
(2014: 0.89 %). The total commission earned by the Company during 2015 was SR 7.41 Million (2014: SR
9.38 Million).
4. ACCOUNTS RECEIVABLE, NET

2015 2014
SR’000 SR’000
Billed receivables (Notes 4.1 and 4.2) 1,527,390 1,759,987
Unbilled receivables 87,194 109,324
Other 1,800 3,411
1,616,384 1,872,722
Less: Provision for doubtful receivables
(523,528) (479,033)
1,092,856 1,393,689
Movement in provision for doubtful receivables is as follows:
2015 2014
SR’000 SR’000
Balance as at 1 January 479,033 421,818
Additions 44,495 57,215
Balance as at 31 December 523,528 479,033
4.1 The Company has agreements with other operators whereby amount receivable from and payable to
the same operator are subject to offsetting. At 31 December 2015 and 2014, the net amounts are included
in accounts receivable and accounts payable are as follows:
2015 2014
SR’000 SR’000
Accounts receivables, net 554,606 829,032
Accounts payables, net 412,732 703,034
4.2 Billed receivable includes amount due from related parties amounting to SR 115.6 million (2014:
SR 100 million) for providing telecommunication services to related parties.
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Annual Report 2015
5. INVENTORIES, NET
2015 2014
SR’000 SR’000
Handsets and accessories 131,789 80,006
SIM cards 3,565 13,823
Prepaid recharge cards 2,757 2,387
Other 1,124 1,430
139,235 97,646
Less Provision for slow moving items (35,622) (34,966)
103,613 62,680
Movement in provision for slow moving inventory items is as follows:
2015 2014
SR’000 SR’000
Balance as at 1 January 34,966 -

Additions 12,557 46,425
Reversal (11,901) (11,459)
Balance as at 31 December 35,622 34,966
6. PREPAID EXPENSES AND OTHER ASSETS

2015 2014
SR’000 SR’000
Advances to suppliers and refundable deposits (Note 6.1) 1,157,783 1,037,876

Prepaid rent 197,071 146,629
Advances for transmission lines and fiber links 68,270 135,852
Prepaid software license fee 8,736 3,215
Prepaid insurance 6,628 4,532
Prepaid advertisement 3,550 2,581
Other 78,881 9,216
1,520,919 1,339,901
6.1. This includes advances amounting to SR 1,253 million provided by the Company during 2015 to
various suppliers under the agreements signed by the Company for telecommunications infrastructure
supply that will increase the network coverage and enchanted the quality of mobile telecommunications
services provided by the Company.
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Annual Report 2015
7. PROPERTY AND EQUIPMENT, NET

January Additions Disposals/ December
1, 2015 Transfers 31, 2015
SR’000 SR’000 SR’000 SR’000
Cost
Leasehold improvements 282,050 22,583 13,214 317,847
Telecommunications equipment (a) 7,478,421 1,030,155 98,852 8,607,428
IT systems and servers 465,736 41,849 13,697 521,282
Furniture, fixtures and office equipment 100,735 32,171 - 132,906
Vehicles and other transportation
3,770 - - 3,770
equipment
Capital work in progress (b) 65,252 381,592 (153,532) 293,312
8,395,964 1,508,350 (27,769) 9,876,545
Accumulated depreciation
Leasehold improvements 205,607 35,585 - 241,192
Telecommunications equipment 3,426,519 685,132 (126) 4,111,525
IT systems and servers 383,848 37,208 (142) 420,914
3,770 - - 3,770
equipment
4,099,529 769,820 (268) 4,869,081
Carrying Amount 4,296,435 5,007,464
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Annual Report 2015
7. PROPERTY AND EQUIPMENT, NET (Continued)

1, 2014 Transfers 31 2014
SR’000 SR’000 SR’000 SR’000
Cost
Leasehold improvements 223,551 13,809 44,690 282,050
Telecommunications equipment 6,499,168 384,816 594,437 7,478,421
IT systems and servers 381,589 27,408 56,739 465,736
Furniture, fixtures and office equipment 81,199 16,377 3,159 100,735
3,770 - - 3,770
equipment
Capital work in progress 552,599 220,369 (707,716) 65,252
7,741,876 662,779 (8,691) 8,395,964
Accumulated depreciation
Leasehold improvements 171,551 34,056 - 205,607
Telecommunications equipment 2,859,923 566,596 - 3,426,519
IT systems and servers 338,748 45,098 - 383,846
3,749 23 - 3,772
equipment
3,449,260 650,269 - 4,099,529
Carrying Amount 4,292,616 4,296,435
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Annual Report 2015
8. INTANGIBLE ASSETS, NET

1, 2015 Transfers 31, 2015
SR’000 SR’000 SR’000 SR’000
Cost
License fee* 23,359,180 - - 23,359,180
Computer software licenses 251,865 20,199 9,715 281,779
Rights of use 63,675 296,587 17,789 378,051
23,674,720 316,786 27,504 24,019,010
Accumulated amortization
License fee* 6,032,287 949,454 - 6,981,741
Computer software licenses 170,016 28,207 140 198,363
Rights of use 3,407 22,743 - 26,150
6,205,710 1,000,404 140 7,206,254
Carrying Amount 17,469,010 16,812,756

1, 2014 Transfers 31, 2014
SR’000 SR’000 SR’000 SR’000
Cost
License fee* 23,359,180 - - 23,359,180
Computer software licenses 195,679 47,495 8,691 251,865
Rights of use 18,875 44,800 - 63,675
23,573,734 92,295 8,691 23,674,720
Accumulated amortization
License fee* 5,082,833 949,454 - 6,032,287
Computer software licenses 138,622 31,394 - 170,016
Rights of use 1,153 2,254 - 3,407
5,222,608 983,102 - 6,205,710
Carrying Amount 18,351,126 17,469,010
* Pursuant to the Ministerial Resolutions No. 176 dated 25 Jumada I, 1428H (corresponding to June 11,
2007) and No. 357 dated 28 Dhu Al-Hijjah, 1428H (corresponding to January 7, 2008) and Royal Decree
No. 48/M dated 26 Jumada I, 1428H (corresponding to June 12, 2007), the 3rd license to provide mobile
telecommunication services within the Kingdom of Saudi Arabia over 25 years was granted to the Company
for an amount of Saudi Riyals 22.91 billion. The license fee also comprises an amount equal to Saudi Riyals
449.18 million related to financing costs which was capitalized as part of license cost in accordance with
the accounting standards applicable in the Kingdom of Saudi Arabia.
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Annual Report 2015
9. LONG TERM BORROWINGS

2015 2014
SR›000 SR›000
Export credit facility - current portion (refer note 9.3) 200,005 200,005
Local commercial bank – current portion (refer note 9.2) 2,250,000 -
2,450,005 200,005
Syndicate Murabaha facility - non-current portion (refer note 9.1) 8,509,470 8,630,769
Long term facility from local commercial bank (refer note 9.2) - 2,250,000
Export credit facility – non-current portion (refer note 9.3) 106,257 306,261
8,615,727 11,187,030
Total 11,065,732 11,387,035
9.1 Syndicated Murabaha facility of approximately SR 9.75 billion was arranged by Banque Saudi Fransi
in July 2009. This Murabaha facility consists of a SR portion totaling SR 7.09 billion and a USD portion
totaling USD 710 million (equivalent to SR 2.66 billion).
Financing charges as specified under the Murabaha facility are payable in quarterly installments over the
life of the loan. As per the terms of the Murabaha financing agreement the Company exercised its two (2)
options to extend the initial maturity date (12 August 2011) for six (6) months each, totaling the renewal
of the facility for one (1) full year with the final maturity date is 27 July 2012. Subsequently, the Company
has successfully obtained several approvals to extend the facility until 31 July 2013. During 2013, the
Company has partially settled an amount of SR 750 million out of the cash proceeds from the rights issue
transaction.
On 31 July 2013, the Company has signed an amended and restated “Murabaha financing agreement”
with a consortium of banks which also includes existing Murabaha facility investors to extend the maturity
date of its Murabaha facility for 5 years ending 30 June 2018 which was due on 31 July 2013. The new
facility has been restructured as an amortizing facility, 25% of which will be due during years 4 to 5 of the
life of the facility, as mandatory minimum amount due, with 75% due at maturity date. The Company has
partially repaid the facility, utilizing a portion of its internal cash resources, and the current outstanding
principal stands at SR. 8.6 billion, SR portion totaling SR. 6.3 billion and USD portion totaling USD 0.6
billion (SR 2.3 billion).
Financing charges as specified under the Murabaha financing agreement are payable in quarterly installments
over 5 years. The new facility is secured partially by a guarantee from Mobile Telecommunications Company
K.S.C and pledge of shares of the Company owned by some of the founding shareholders.
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Annual Report 2015
9. LONG TERM BORROWINGS FACILITIES (Continued)

Financial and other covenants imposed by the financing banks are:
a. Assignment of certain contracts and receivables;
b. Pledge of insurance contracts and operating accounts;
c. Loans and guarantees restrictions to customers, distributors, dealers, retailers, wholesalers, and
employees;
d. No further financial indebtedness, pari passu, insurance on all assets; and
e. EBITDA and leverage level.
As of the third quarter 2014, the Company’s results were below its previous approved business plan and
also fell below one of the loan covenants which is not considered as an event of default per the Murabaha
financing agreement. During the third quarter of 2015, the Company has obtained an extended waiver in
this respect till the first quarter of 2016. Moreover the management of the Company is still in negotiation
with the banks to reset the new covenant based on the new business plan that was approved by the
Company’s Board of Directors on 20 January 2015.
In the second quarter of 2015, the Company made a prepayment for the amount of SR 121.3 million as a
mandatory settlement due to its excess free cash flow.
9.2 This facility consists of a SR portion totaling SR 1,875 million and a USD portion totaling USD 100 million
(equivalent to SR 375 million) and is secured by a guarantee provided by Mobile Telecommunications
Company K.S.C. This facility attracts financing charges as specified in the agreement, and is subordinated
to the existing Murabaha facility and was due for repayment on 3 April 2013. The Company has obtained
the approval from financing banks to extend this long term facility until 5 June 2013.
On 5 June 2013 the Company has signed a new long-term borrowing facility agreement amounting to
SR 2.25 billion with three years maturity to refinance the existing facility. The new facility consists of a SR
portion totaling SR 1,875 million and a USD portion totaling USD 100 million provided by a syndicate
of four banks. This facility attracts financing charges as specified in the agreement, and is subordinated
to the existing Murabaha facility, and secured by an unconditional and irrevocable guarantee by Mobile
Telecommunications Company K.S.C. The new facility will be repaid in one bullet payment at the maturity
date of 5 June 2016.
9.3 On 20 June 2012, an Export Credit Agency facility agreement having two tranches (A and B) totaling to
USD 325 million was signed between the Company and some international banks. This facility is secured by
a guarantee provided by Mobile Telecommunications Company K.S.C. and subordinated to the Murabaha
facility. The purpose of this facility is to:
• Repay amounts due to one of the Company›s technical vendors; and Finance further new
expansion plans provided by the same technical vendor.
• The Company has utilized tranche A (USD 155 million) in full and also utilized USD 98 million
out of USD 170 million of tranche B. The remaining unutilized portion of tranche B has been
cancelled during the first quarter of 2013.
Financing charges as specified under this facility agreement are payable in semi-annual installments over
the life of the loan. Repayment will take place over five (5) years on a semi-annual basis starting July 2012
for tranche A (totaling USD 155 million) and July 2013 for tranche B (totaling USD 98 million). As at 31
December 2015, all twelve (31 December 2014: 8) installments were repaid in full.
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Annual Report 2015
9. LONG TERM BORROWINGS (Continued)

9.4 The maturity details of long term borrowings facilities as at December 31 are as follows:
2015 2014
SR’000 SR’000
2015 - 200,005
2016 2,881,544 2,881,543
2017 1,832,410 1,832,410
2018 6,351,778 6,473,077
11,065,732 11,387,035
10. NOTES PAYABLE

2015 2014
SR’000 SR’000
Current:
Promissory Note - Huawei Reload Project- Current 158,657 -
Promissory Note - Nokia Reload Project- Current 170,884 -
329,541 -
11. ACCOUNTS PAYABLE

2015 2014
SR’000 SR’000
Trade payables 258,567 235,499

Other 27,473 30,042
286,040 265,541
12. RELATED PARTY TRANSACTIONS AND BALANCES

The related parties of the Company include Mobile Telecommunications Company K.S.C, a majority
shareholder and its related entities (including subsidiaries and associates), other founding shareholders
who own shares and voting interests in the Company, members of the board of directors and senior
management.
91
Annual Report 2015
12. RELATED PARTY TRANSACTIONS AND BALANCES (Continued)

Related Party Transactions
Significant transactions with related parties included in the financial statements are as follows:
2015 2014
SR’000 SR’000
Revenue 118,603 75,735

Cost of revenue 84,381 29,362
Management fees expenses 48,779 45,026
Finance charges 198,555 175,516
Mobile Telecommunications Company K.S.C, a majority shareholder has provided several interest bearing
loans to the Company; additionally certain payments were also made by Mobile Telecommunications
Company K.S.C on behalf of the Company. Interest was charged per agreed rates to the Company.
Management fee is charged to the Company by Mobile Telecommunications Company K.S.C, a majority
shareholder as per the basis specified in the underlying agreement.
(Also refer to Note 14)
Related Party Balances

Significant year end balances arising from transactions with related parties are as follows:
(i) Due from a related party – current

2015 2014
SR’000 SR’000
Zain Bahrain 551 -
(ii) Due to related parties – current

2015 2014
SR’000 SR’000
Mobile Telecommunications Company K.S.C–current account 2,971 3,631
Others (62) -
2,909 3,631
Due to related parties, net 2,909 3,631
(iii) Due to related parties – non current

2015 2014
SR’000 SR’000
Mobile Telecommunications Company K.S.C – management fee 834,612 785,833
92
Annual Report 2015
13. ACCRUED EXPENSES AND OTHER LIABILITIES

2015 2014
SR’000 SR’000
Trade 980,641 1,340,546
Accrued expenses 459,846 736,308
Government charges (Note 18) 771,767 488,648
Employees 50,959 67,034
Financial charges 54,136 28,712
Others 380,710 251,385
2,698,059 2,912,633
14. ADVANCES FROM SHAREHOLDERS

In accordance with the arrangements agreed with the shareholders during 2009, some of the founding
shareholders have provided advances to the Company. During 2012, pursuant to all related approvals,
the principal amounts of these advances were utilized to increase the share capital of the Company.
Additionally, a founding shareholder has provided additional loans and made certain payments on behalf
of the Company. (Refer to note 9)
All advances, loans and amounts due to shareholders carry finance cost that approximate the prevailing
market rates.
The breakdown of the above-mentioned advances, loans and amounts due to shareholders and related
accrued financial charges at 31 December are as follows:
2015 2014
SR’000 SR’000
Mobile Telecommunications Company K.S.C. 2,826,939 2,530,352
Abu Dhabi Investment House 8,413 8,413
2,835,352 2,538,765
Accrued financial charges 1,131,247 936,892
3,966,599 3,475,657
The above-mentioned advances from shareholders and the related accrued financial charges are currently
not scheduled for repayment until the settlement of the Existing Murabaha Facility.
93
Annual Report 2015
15. DERIVATIVE FINANCIAL INSTRUMENTS

The fair value of derivative financial instruments (profit rate swaps) (maturing 2018) together with the
contracts notional amounts is as follows:
Fair Value
Contracts notional
2015 2014
amounts
SR’000 SR’000
SR’000
Derivative financial instruments
4,315,385 7,204 66,830
held for cash flow hedges
The notional amounts do not reflect the amount of future cash flow involved.
16. SHARE CAPITAL

The share capital of the Company as at 31 December 2015 (post capital restructuring) (refer to note 1.3)
comprised 583,729,175 shares stated at SR 10 per share owned as follows:
Post-capital reduction Pre-capital reduction

Number of Share capital Number of Share capital
shares SR’000 shares SR’000
Mobile Telecommunications Company
216,243,575 2,162,436 400,125,067 4,001,251
K.S.C.
Saudi Plastic Factory 34,125,198 341,252 63,143,367 631,434
Faden Trading & Contracting Est. 34,856,143 348,561 64,495,867 644,958
Rakisa Holding Company 2,548,320 25,483 4,715,270 47,153
Abu Dhabi Investment House 12,508,485 125,085 23,145,004 231,450
Almarai Company 12,409,162 124,092 22,961,224 229,612
Ashbal Al-Arab Contracting Est. 12,409,162 124,092 22,961,224 229,612
Al Jeraisy Development Company
6,204,581 62,046 11,480,612 114,806
Limited
Architectural Elite Est. for Engineering
3,243,316 32,433 6,001,253 60,013
and Contracting
Al Sale Al Sharkiyah Company Limited 3,102,290 31,023 5,740,305 57,403
337,650,232 3,376,503 624,769,193 6,247,692

Public shareholding 246,078,943 2,460,789 455,330,807 4,553,308
Total 583,729,175 5,837,292 1,080,100,000 10,801,000
(Also refer to Note 1).
94
Annual Report 2015
17. REVENUE
2015 2014
SR’000 SR’000
Usage charges 6,160,720 5,565,999
Subscription 437,457 395,276
Other 143,205 208,993
6,741,382 6,170,268
18. COST OF REVENUE AND SALES

2015 2014
SR’000 SR’000
Access charges 1,555,858 1,721,081
Government charges 860,409 702,642
Leased lines 161,224 274,082
Other 212,788 249,813
2,790,279 2,947,618
Government charges are related to annual license and commercial provisioning fee under the guidelines
issued by the Communications and Information Technology Commission (“CITC”).
19. DISTRIBUTION AND MARKETING EXPENSES

2015 2014
SR’000 SR’000
Employees’ salaries and related charges 468,047 465,919
Dealers’ commission 450,898 280,997
Rent expenses 396,805 359,527
Repairs and maintenance 298,859 344,894
Advertising 195,063 273,134
Management fees (Note 12) 63,392 45,026
Consulting 45,876 92,122
Bad debts expense (Note 4 ) 44,495 57,215
Utilities 37,744 25,169
Other 46,057 87,454
2,047,236 2,031,457
95
Annual Report 2015
20. GENERAL AND ADMINISTRATIVE EXPENSES

2015 2014
SR’000 SR’000
Employees’ salaries and related charges 122,893 123,234
Repairs and maintenance 74,179 51,151
Consulting services 40,148 23,931
Legal and professional charges 1,422 10,347
Intercompany provision 2,179 -
System support and maintenance 4,634 4,068
Legal provision 18,997 (135,465)
Other 10,613 14,177
275,065 91,443
21.LOSS PER SHARE

Losses per share are computed by dividing the losses for the period by the weighted average number of
shares outstanding at the period end. The loss per share for the corresponding period has been adjusted
to reflect the effect of the capital reduction retrospectively.
22. ZAKAT
Components of Zakat base
The significant components of the Company’s approximate zakat base, for the year ended December 31,
which are subject to certain adjustments under zakat and income tax regulations, are principally comprised
of the following:
2015 2014
SR’000 SR’000
Shareholders’ equity at beginning of year 5,523,630 6,758,672
Provisions at beginning of year 671,653 312,972
Long-term borrowings and shareholders’ advances 14,541,389 14,421,275
Other non – current liabilities 800,920 1,605,034
Adjusted net loss for the year (see below) (886,545) (1,159,930)
Property and equipment (5,007,464) (4,296,435)
Intangible assets (16,812,756) (17,680,704)
Other non-current assets (132,102) -
Approximate negative zakat base of the Company (1,301,275) (39,116)
Zakat is payable at 2.5 percent of higher of the approximate zakat base or adjusted net income.
96
Annual Report 2015
22. ZAKAT (Continued)

Calculation of adjusted net loss
2015 2014
SR’000 SR’000
Net loss for the year (971,949) (1,269,565)
- Provision for employees’ end-of service-benefits 15,756 17,454
- Provision for doubtful and other receivables and for slow
45,151 57,215
moving inventory items
-Others 5,500 -
-Other provision 18,997 34,966
Adjusted net loss for the year (886,545) (1,159,930)
Status of assessments
The Company had finalized its zakat and tax status up to 2008 and obtained the related certificate.
The Company had submitted its financial statements along with zakat and returns for the years 2009 to
2014 and paid zakat and withholding tax according to the filed returns.
On 18 Ramadan 1436 (corresponding to 07 July 2015), the Company received the Zakat and WHT
assessments from DZIT for the years 2009 to 2011 whereby they asked to pay an additional amount of SR
619,852,491 of which SR 352,481,222 are related to zakat differences and SR 267,371,269 as withholding
tax subject to delay penalty payable from the due date up to the settlement date equals to 1% for every
30 days.
The Zakat and tax advisors believe that there is a valid argument to support the Company position on
appealing such assessment; therefore, during the quarter ended 30 September 2015 the Company filed
an appeal within the allowed period of 60 days. The outcome of the appeal cannot be reliably determined
at this stage; furthermore, the Company has taken adequate provision based on the advice of its Zakat
and tax advisor.
23. COMMITMENTS AND CONTINGENCIES

Capital Commitments
The Company has entered into arrangements with suppliers for the purchase of telecommunication
equipment. The capital commitments are comprised of the following:
2015 2014
SR’000 SR’000
Within 12 months 493,258 667,643
Within 2 to 5 years 2,203,849 2,240,535
2,697,107 2,908,178
97
Annual Report 2015
23. commitments and Contingencies (Continued).

23.1 Claim by an operator
On 16 November 2014, the Company received a request from Etihad Etisalat Company (“Mobily”) to
begin an arbitration proceeding related to a disputed and rejected claim of SR 2.2 billion and a claim for
damages of SR 58.7 million raised by Mobily against the Company.
As a result of the above, the Company is a party in an arbitration proceeding against Mobily in relation
to a disputed claim arising from the Services Agreement (“Agreement”) entered into by both parties on
6 May 2008 and the related Amendment I, Addendum I and an offer letter, which were implemented by
both parties in normal course of operations till Mobily acted unilaterally to revoke these Amendment I,
Addendum I and offer letter. The Company considers that this unilateral revocation from Mobily is the
basis of its claims and which, according to the Company’s management, have no basis, are unfounded
and illegitimate.
Based on external legal and technical advice, the Company believes that Mobily did not have the unilateral
right to revoke Amendment I, Addendum I and offer letter related to the Agreement, neither by way of
terms in the contracts nor under Sharia Law and rejected Mobily’s actions and any subsequent invoices
which were not in line with the terms of Amendment I, Addendum I and offer letter initially implemented
by both parties in normal course of operations.
The arbitration sessions, which are in progress, started effective 20 December 2014. The following have
occurred during the period relevant to this financial statement. On 06 October 2015, Zain KSA submitted
its response to Mobily’s on 27 August 2015 submission in which it asserted counter claims against Mobily
in the amount of SR 29,932,478.52.
On 24 October 2015, the panel held a hearing in which it requested specific information from Mobily. The
panel requested that Zain KSA submits a response to Mobily’s submission within 30 days of the date of
receiving it.
Mobily submitted a memorandum, dated 30 November 2015, accompanied by several binders of documents
and supplemental report prepared by Mobily’s appointed expert. In its memorandum, Mobily asserted its
demand for dues from Zain KSA under the Agreement in the amount of SR 2,102,512,041 (the “Demand”).
According to Mobily, this demand is based on a calculation using the quantities of services rendered during
the relevant period and the rates set forth in the Agreement only. The calculation, according to Mobily,
ignores and does not take into account the discounted prices and waiver of certain commitments agreed
upon by the parties in subsequent amendments to the Agreement, namely Amendment 1, Addendum 1,
and the offer letter.
On 23 December 2015, Zain responded to Mobily’s submission of 23 November 2015. Zain KSA’s response
included independent expert reports from internationally recognized telecommunications and accounting
experts. The opinion of experts is consistent with Zain KSA’s established position.
The panel has indicated that it will appoint an independent expert to review the claims of each party and
submit a report.
98
Annual Report 2015
23. commitments and Contingencies (Continued).

23.2 Claim by an operator (Continued).
On 26 December 2015, the fifth session was held before the panel. The session was procedural. Based on
the consent of both Zain KSA and Mobily, the panel has decided to extend the duration of the arbitration
12 months, commencing from 10 December 2015.
On 28 June 2015, the Board of Directors of Mobily decided to increase the provision related to Zain KSA’s
account receivables by SR 800 million, to reach a total of SR 2 billion.
The management believes that the ultimate outcome of the arbitration cannot be determined reliably at
this stage, and the amounts stated in the Company’s books as of 31 December 2015 are adequate, and
there is no need for any additional provision.
23.3 Other legal proceedings, penalties and other claims

The Company in the normal course of business is subject to and also pursuing lawsuits, proceedings,
penalties and fines imposed by the regulator, municipalities and other claims from suppliers and
telecommunication providers. The management of the Company and based on its internal and external
lawyers and technical advisors believe that these matters are not expected to have a significant impact on
the financial position or the results of operations of the Company.
24. OPERATING LEASES COMMITMENTS

The Company leases sites, technical buildings and offices in connection with its operations. The lease
commitments relating to such operating leases are as follows:
2015 2014
SR’000 SR’000
Within 12 months 309,984 275,546
Within 2 to 5 years 1,239,936 1,102,186
Over 5 years 1,549,920 1,377,732
3,099,840 2,755,464
99
Annual Report 2015
25. SEGMENT INFORMATION

The objective of the segment reporting standard promulgated by the Saudi Organization for Certified
Public Accountants is to disclose detailed information on the results of each of the main operating
segments. Given that the requirements of this standard, in terms of the prescribed threshold, taking
into consideration the Company’s operations which comprise Mobile Voice, Data, Internet and other
related communication services which are substantially concentrated in mobile phone services since
commencement of its activities, are not met as of the balance sheet date, accordingly, the Company’s
management believes that operating segments information disclosure for the Company is not applicable.
The Company carries out its activities in the Kingdom of Saudi Arabia.
26. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value
and cash flow commission rate risks and price risk), credit risk and liquidity risk. The Company’s overall risk
management program focuses on the unpredictability of financial markets and seeks to minimize potential
adverse effects on the Company’s financial performance.
Risk management is carried out by senior management. Senior management identifies, evaluates and
hedges financial risks in close co-operation with the Company’s operating units. The most important types
of risk are discussed in this note below.
Financial instruments carried on the balance sheet include cash and cash equivalents, accounts receivable,
borrowings, notes payable and accounts payables. The particular recognition methods adopted are
disclosed in the individual policy statements associated with each item.
Financial asset and liability is offset and net amounts reported in the financial statements, when the
Company has a legally enforceable right to set off the recognized amounts and intends either to settle on
a net basis, or to realize the asset and liability simultaneously.
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign
exchange rates. The Company’s transactions are principally in Saudi Riyals, and US Dollars which is
pegged to the Saudi Riyals. Management closely monitors the exchange rate fluctuations and believes
that Company’s exposure to currency risk is not significant.
Fair value and cash flow commission rate risks

Fair value and cash flow commission rate risks are the exposures to various risks associated with the effect
of fluctuations in the prevailing commission rates on the Company’s financial positions and cash flows. The
Company’s commission rate risks arise mainly from borrowing facilities including syndicated Murabaha
financing, notes payable and advances from shareholders and which are at floating rate of commission and
are subject to re-pricing on a periodic basis. The Company manages its cash flow commission rate risk on
syndicated Murabaha financing by using floating-to-fixed commission rate swaps. Such commission rate
swaps have the economic effect of converting Murabaha financing from floating rates to fixed rates. Under
the commission rate swaps, the Company agrees with other parties to exchange, at specified intervals
(primarily quarterly), the difference between fixed contract rates and floating-rate commission amounts
calculated by reference to the agreed notional amounts. (Refer to note 15)
100
Annual Report 2015
26. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

Price risk
The risk that the value of a financial instrument will fluctuate as a result of changes in market prices,
whether those changes are caused by factors specific to the individual instrument or its issuer or factors
affecting all instruments traded in the market. The management believes that the Company is currently
not exposed to significant price risk.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause
the other party to incur a financial loss. The Company has no significant concentration of credit risk. Cash
is placed with banks with sound credit ratings. Account receivables are carried net of provision for doubtful
receivables.
Liquidity risk
Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments
associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly
at an amount close to its fair value. The Company incurred net loss for the year ended 31 December 2015
and has accumulated deficit as of that date. These conditions indicate that the Company’s ability to meet
its obligations as they become due and to continue as a going concern are dependent upon the Company’s
ability to arrange adequate funds in a timely manner. The directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence for the foreseeable future.
Liquidity risk is managed by monitoring on a regular basis that sufficient funds are made available to meet
any future commitments. (Also please refer see note 1).
Fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable
willing parties in an arm’s length transaction. As the Company›s financial instruments are compiled under
the historical cost convention, except for derivative financial instruments at fair value, differences can
arise between the book values and fair value estimates. Management believes that the fair values of the
Company›s financial assets and liabilities are not materially different from their carrying values.
27. COMPARATIVE FIGURES

Certain comparatives figures have been reclassified to conform to the presentation in the current period.
28. APPROVAL OF FINANCIAL STATEMENTS

These year-end financial statements were approved by the Board of Directors on xxx February 2016.
101

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Mobile Telecommunication Company

A Few Words from Network Overview 46

From the Industry’s

Our Brand Values

A Few Words from

May the peace and blessings of Allah be upon you.

Naif bin Sultan bin Mohammad bin Saud Al Kabeer

HH Prince Naif bin Sultan bin Mohammed bin Saud

Joining date: 21/10/2015

Bader bin Nasser Al-Kharafi

Joining date: 21/10/2015

Fahd bin Ibrahim Al-Dughaither

Mr. Al-Dughaither studied English at Linn Benton Community College in

Abdulaziz bin Yaqub Al-Nafisi

Mr. Al-Nafisi earned his Bachelor’s degree in Business Administration from

Mark Scott Gegenheimer

A telecom veteran with over 25 years of experience, Mr. Gegenheimer has a

He holds a Bachelor’s of Science degree in Finance and Management from

Ossama Michael Matta

Thamer Ahmed Obeidat

Raied bin Ali Al Saif

Eng. Farhan Bin Naif Al-Faisal Al-Jarba

With over 34 years of experience in the telecommunication industry, Eng.

Leaving date: 21/10/2015

Dr. Abdulaziz Salem Al Ruwais

Leaving date: 11/12/2015

Mr. Schorderet is a Certified Accountant with an MBA from International

Leaving date: 22/3/2015

Mr. Kabbani holds a Bachelor’s degree in Business Marketing from the

Mr. White holds a Master’s degree in Business Administration, awarded with

Mr. Alrashoudi holds a Bachelor’s degree in Business Administration from King

Eng. Sultan Abdulaziz Al-Deghaither

Eng. Al-Deghaither holds a Bachelor’s of Science in Communication and

Mr. Tahoun holds a Bachelor’s of Science degree in Civil Engineering from

Mr. Al-Shahrani holds a Bachelor’s degree in Management Sciences from King

Matthieu holds a Master’s degree in Econometrics and a Post Graduate

Leaving date: 23/02/2016

Frederick has 25 years of experience in the telecommunication industry and has

Frederick holds a Bachelor’s degree in Electronic Engineering as well as a

Leaving date: 31/01/2016

Abu Dhabi Investment House (ADIH) 2.14%

Almarai Co. 2.13%

HH Prince Sultan Bin Mohammed Bin Saud Al Kabeer Al

Al Jeraisy Development Co. Ltd. 1.06%

Architectural Elite Est. for Engineering & Contracting 0.56%

Al Sale Al Sharkiyah Co. Ltd. 0.53%

Rakisa Holding Co. 0.44%

BRAZIL 3.9 BRAZIL 5.2 JAPAN 91%

PHILIPPINES 3.2 PHILIPPINES 5.2 SOUTH KOREA 90%

SOUTH AFRICA 3.0 SOUTH AFRICA 4.9 GERMANY 89%

THAILAND 3.9 THAILAND 4.7 AUSTRALIA 88%

ARGENTINA 3.5 ARGENTINA 4.7 USA 87%

INDONESIA 3.5 INDONESIA 4.7

Source: GlobalWebIndex, Q4 2015. Based on a survey of internet users aged 16-64.

VIETNAM 2.4 VIETNAM 4.6 ARGENTINA 80%

MALAYSIA 3.6 MALAYSIA 4.6 HONG KONG 79%

MEXICO 3.4 MEXICO 4.6 SPAIN 77%

UAE 3.6 UAE 4.4 RUSSIA 72%

TIME SPENT ON THE INTERNET

US 1.9 US 4.3 SAUDI ARABIA 64%

SINGAPORE 2.1 SINGAPORE 4.2 ITALY 63%

TURKEY 2.6 TURKEY 4.2 TURKEY 58%

SAUDI ARABIA 3.8 SAUDI ARABIA 4.1 BRAZIL 58%

A Few Words from Network Overview 46