Dear all, As you might have heard, at Zain, we are in the process of changing the way in which we operate. With this message I would like to provide clarity to all of you with regards to potential upcoming changes and provide you with more information on the Modular Business Model. Our objective of becoming a top 10 global mobile operator by 2011 with 110 million customer and an EBITDA of US$ 6 billion demands from all of us an exceptional performance necessitating the need for us to continually re-examine the way in which we operate. Based on a successful model implemented in other major operations, Zain Group has decided to embark on a change process across all of our operations in Africa and the Middle East. In close collaboration between Zain Group functions and the management of the Zain operations we have developed a Modular Business Model which will continue to evolve during 2009. The aim of the Modular Business Model is to enable the operations to focus on the key customer facing activities - delivering true market differentiation and continuing to deliver on our Zain brand promise. Through a combination of managed outsourcing, standardization and centralization we will strive to improve our efficiencies, leverage capabilities and improve training and development for our Zain people. We are engaging with several of our key strategic partners to assess the viability of outsourcing certain functions, with such strategic partners providing ongoing services on behalf of Zain as part of the overall Zain family. Under this model, it is likely that some of our employees will transfer to future strategic outsource partners. We will be working closely with the management of our Zain operations and the government throughout this journey. There is a clear opportunity to leverage benefits of scale and deliver greater efficiencies across our 22 operations - resulting in the ability to provide more value to our customers. In summary the key elements of the Modular Business Model are: - Enabling the operations to focus on core customer facing and commercial activities; - Centralization of capabilities in order to maximize economies of scale and hence realize significant efficiencies and cost savings; and - Outsourcing various activities to strategic partners, providing the outsourced Zain employees with new training and development possibilities, whilst still remaining part of the larger Zain family. As we embark on this journey together, we look to engage and inform you in the process. This message is the start of regular updates that you will receive as we progress together in order to accomplish the implementation of the Modular Business Model. I will continue to provide regular updates as we progress through this journey and will be liaising directly with each team so that you have complete clarity on where we are at and where we are heading. At Zain, we pride ourselves on being bold, daring and different, whilst at all times ensuring the well being of our team members and their families. We encourage you to maintain focus during this exciting stage of our evolution and to raise any queries or concerns that you may have with your department manager. Best regards, Khaled Muhtadi Managing Director ====================================================== Zain announces record financial results for 2008 Customer base increases 50% to 63.5 million Company revenues jump 26% to US $7.44 billion despite currency fluctuations Net profit up 6% to US$ 1.2 billion translating to US$ 0.33 per share Strong performance allows company to pay off $1.8 billion in financial obligations and due to challenging market conditions Zain will adapt its strategy to take up prime opportunities Huge investment in network expansion expected to reap rewards in 2009 and beyond Kuwait, March 1, 2009 Zain, the leading mobile telecommunication operator in the Middle East and Africa present in 22 countries, announces today its consolidated financial results for the year ended 31 December 2008. The results showed significant growth in many key indicators. 2008 Key Performance Indicators Total Managed Active Customers 63.54 million up 50% Consolidated Revenues US$ 7.44 billion up 26% EBITDA US$ 2.78 billion up 15% Net Income US$ 1.2 billion up 6% EPS US$ 0.33 Shareholders Equity US$ 8.69 billion up 36% For the year 2008, Zain Group recorded all time high consolidated revenues of US$ 7.441 billion, an increase of 26% compared to 2007. The companys consolidated EBITDA increased by 15% for the same period to reach US$ 2.78 billion. Consolidated net profits reached US$ 1.2 billion, an increase of 6% on 2007. The earnings per share were US$0.33 and the shareholders equity was up 36% to US $8.69 billion. Year on year customer growth across the two continents in which Zain operates was 50% with the Zain Group serving 63.54 million managed active customers at 31 December, 2008. Operational Highlights throughout the year January 5: Iraqi operators MTC-Atheer and Iraqna unite as Zain soon after attaining a 15 year licence April 14: One Network launched in four Middle East countries Bahrain, Iraq, Sudan and Jordan providing 14 million Zain customers preferential cross-border rates when travelling June 27: Zain brand introduced to over 1 billion global viewers through the broadcast of Zain sponsored concert celebrating Nelson Mandelas 90th birthday. August 1: All 14 operations in Africa rebranded from Celtel to Zain in the biggest brand launch ever in Africa. This move coincided with the linking of two continents to One Network to then include 15 countries, 50 million customers and potentially 500 million people who can benefit from the service August 26: Commercial services are launched in the Kingdom of Saudi Arabia. The operation joins One Network and ends the year with 2 million customers after only four months of operations. September 20: Zain successfully completes a US$ 4.49 billion capital increase, carried out primarily to meet commitments and finance expansion plans December 15: Zain launches commercial services in Ghana, taking to 17, the number of countries in One Network. Ends year with more than 270,000 customers. Chief Executive Officer of Zain, Dr Saad Al Barrak commented: I am delighted that these 2008 financial results release, for the first time are announced under the umbrella of one brand, following the successful rebranding of all our Africa operations to Zain and the successful launch of commercial operations in the Kingdom of Saudi Arabia and Ghana. We firmly believe that the Zain brand will act as a catalyst and propel the company to our 2011 target of being a top-ten global operator. Ancillary to this Dr Al Barrak said, Despite a very challenging environment on many fronts and huge investments in network expansion, the Group was able to achieve appealing and realistic levels of profitability during 2008, a testament to the sound management practices and excellent operational performance of all 22 operations in the Middle East and Africa. He added, During the year Zain committed over US$ 3 billion in network upgrades and expansion primarily in vast and viable markets such as Ghana, Iraq, Nigeria, Saudi Arabia and Sudan all resulting in robust customer acquisition and revenues. These markets will continue to grow and we expect to further reap further rewards in the years ahead especially since they are all part of our ground-breaking and customer alluring One Network. On this point, Dr Al Barrak noted, Overall, due to our massive network investment across all operations, we expect and are targeting a 30% increase on many of our financial indicators in 2009. Capital Increase to reduce debt and fund expansion On the successful capital increase that raised US$ 4.49 billion in September 2008 whereby 99% of all shareholders subscribed, Dr Al Barrak noted, this unanimous vote of confidence by our shareholders in Zain's management and strategy will assist the company in meeting financial commitments and support our expansion plans of being a top-ten global mobile operator by 2011. Further to this he added, I am pleased to announce that Zain has recently paid back a Murahaba facility of US$ 1.2 billion as well as the first instalment of US$ 525 million for the purchase of Iraqna and several other financial obligations. Also we confidently expect to announce our entry into the Palestinian, and at least one other market, in the very near future. Overcoming the Global Economic Crisis Referring to the global financial crisis and volatility that has affected many equity markets, commodities and currencies, Dr Al Barrak said, Despite the fact that company had to endure higher borrowing rates in the second half of the year and an adverse US$ 138 million in currency exchange cost predominantly in Africa, it still performed admirably. This amount would have added another 12% to the net profit figure should currencies have stayed relatively stable. Defending the Zain share price that sees it trading at historical low Price Earnings multiples, amid the negative sentiment that is gripping world stock markets and seeing billions wiped off valuations, including telecom groups to the range of 30 to 70%, Dr Al Barrak said, We believe this in unjustifiable in Zains case as the debt levels of the Group fall within a reasonable range when compared to many other international mobile groups. The Group has sound reserves, an excellent track record of wise borrowing and repayment, as well as diverse funding sources to support its strategic expansionary plans. Todays stock price represents excellent value for investors. Dr Al Barrak added that, "Zain views this crisis as an opportunity to make further acquisitions given valuations of many prime telecom assets are considerably lower than they were just six months ago and we are actively pursuing such prospects. Going forward in the current economic climate, Zain will adapt its strategy where it makes commercial sense and where it is economically viable to take up an attractive opportunity. This includes share swapping with and acquiring minority stake deals in other telecom operations. Attractive dividend for shareholders On a final note, Dr Al Barrak noted that the Board of Directors had recommended a cash dividend of 50 fils per share subject to the approval of the general assembly to be held at the end of March 2009 explaining that the dividend value compared to last years distribution is in fact equal to 110 fils, if one take into account the 75% capital increase by the group in the third quarter of 2008. ########## About Zain: Zain is a leading emerging markets player in the field of telecommunications aiming to become one of the top ten mobile operators in the world by 2011. Today it is the 4th largest mobile network in the world in terms of geographic presence with a footprint in 22 countries spread across the Middle East and Africa providing mobile voice and data services to 63.5 million active customers (as at 31 December 2008). Zain operates in the following countries: Bahrain, Burkina Faso, Chad, the Republic of the Congo, the Democratic Republic of the Congo, Gabon, Ghana, Iraq, Jordan, Kenya, Kuwait, Malawi, Madagascar, Niger, Nigeria, Saudi Arabia, Sierra Leone, Sudan, Tanzania, Uganda and Zambia. In Lebanon, the company manages the network on behalf of the government operating as mtc-touch. The company offers innovative services in its markets such as One Network, the worlds first borderless mobile telecommunication network enabling customers to receive and make calls throughout many countries in Africa and the Middle East at free or local rates. The Zain brand is wholly owned by Mobile Telecommunications Company KSC, which is listed on the Kuwait Stock Exchange (Stock ticker: ZAIN). Zain is listed in the Financial Times Global 500 Index which ranks the worlds largest companies based on market capitalization (FT.com / FT 500 The world's largest companies). For more, please visit www.zain.com or email email@example.com Note to editors and analysts: the complete Zain Q4 earnings release will be soon posted on the Zain Corporate website www.zain.com in the Investor Relations section. ================================================= Dear Zain Family, I am writing to all of you to brief you on the following: Our 2008 Results Modular Business Model Our 2009 Targets 2008 Results The first two quarters of 2008 were slow so we did not see much growth in customers or revenues. With cross functional operational excellence team work and focused attention on our Branding, Marketing, Sales, Network, People, and Operational Profitability (EBITDA) initiatives we started seeing impressive results in Q3 and Q4. We focused our efforts in Q3 and Q4 on our most valuable resource, our Zain People. We improved our communication through our Intranet, newsletters, and our regional and breakfast meetings. We had several social and professional gatherings to ensure that our staff are informed and engaged and we recognized and rewarded our stars. Our Network quality and stability has clearly improved in Q4 following significant investments and technology upgrades during Q1 to Q3 of 2008 with a significant reduction in outages. Our Brand launch and acceptance in the market has been a great success. Tanzania has great expectations of our brand in 2009 so we have to ensure that we deliver our brand promise internally and externally. Marketing did quite well in Q3 & Q4 with Jirushe, Jiachie, Zain Nights, and 3G. Combined with improved Sales and Distribution we saw a steady increase in gross adds and net adds. It is obvious that our customers are most loyal to us. The competition churn results are much higher than us as all of them continue to lose much more customers than we do. This has led to a steady increase in our customer base closing the year with 3.85 million customers. We grew our customer base by over 50% in 2008. We added 1.3 million additional active customers to our base. Similarly, our revenues grew by over 30% to reach $328 million and our operational profit (EBITDA) grew by over 40% to reach $135 million. As a result of your effort we are today the Number One Operator in Tanzania in active customers with over 4 million customers. Given the global financial crisis which has affected the entire business World, there is no doubt that this is a great performance from a great team. However, despite our impressive performance on most of the fronts we did not achieve the budget target which we set for ourselves. Our EBITDA target was $150 million for 2008 and we fell short of that. This is mainly due to the fact that our profitability was well below budget during the first 6 months and despite our good performance in the last 6 months of the year, we were not able to bridge the gap. Similarly, 13 out of the 15 Zain Africa operations missed their EBITDA target. This comes at a time when Zains share price has dropped significantly to its lowest level due to the global financial crisis affecting the Worlds major stock markets. This creates tremendous pressure on Zain Group and Zain Opco management teams alike. The most critical pre-requisite for stock price recovery is good financial performance of all Zain operations. We are confident of the good health of Zains financial fundamentals and confident that the stock price will recover gradually as long as our operations are delivering good financial results. As a result, Zain is now strictly linking rewards to financial performance through the success sharing scheme which we committed to in 2008. If we achieve or exceed our EBITDA target, we will be eligible to distribute a share of the companys operational profit to the staff as bonus. Since we are among the 13 African operations that failed in 2008 to achieve a threshold of 80% of the budgeted growth over the previous year, we are not entitled to the success sharing bonus. I should emphasize here that this in no way diminishes from your achievements in 2008 and it does not diminish Zains appreciation for your continued commitment to our goals of becoming among the Worlds top ten mobile operators. Zains Modular Business Model (MBM) The financial challenges in 2009 will most likely take a heavier toll on the entire regions economy. If we carry on with business as usual, we will be under threat of missing our ACE targets for 2011. Therefore the entire Group focus as per Dr. Saads directives are on becoming much more efficient and by maximizing Group synergies rather than performing as independent companies. The following are some of the MBM initiatives and directives in 2009: Group and opcos should realize direct synergies on Marketing, Network, and IT Maximize customer service operation and cost optimization across Africa and the ME Hiring Freeze in 2009. No headcount increase across all operations. Cut Marketing & Sales Budgets by 50% across all operations Cut down capex and control network procurement tightly Create succession plans for the next level of leadership from local talent rather than through expats Minimize organization hierarchy to 4 levels 2009 Targets The lesson for 2009 is that we must ensure above budget performance throughout the year. Unfortunately, the performance during January and the first part of February is below budget again. This is primarily due to continued weaknesses in sales and distribution and delays in launching new products and services which allowed competition to take the lead in acquisitions. We must reverse this trend immediately and I am sure with your commitment and dedication we will be able to do so in the next days and weeks. We have set the following targets for ourselves in 2009: KPI 2007 2008 08 Growth 2009 09 Growth Customers 2.5 M 3.85 M 54% 6M 55% Revenues USD $253M $328M 30% $414M 26% EBITDA USD $97M $135M 39% $199M 47% Our Strategic Thrusts in 2009 are: Zain People Engagement: we must raise our peoples engagement levels from the current level of 60% to over 75%. Uncontested Leadership: We must strengthen our lead of the market and widen the gap with the competition in terms of customers, revenues, and profitability. Regional Dominance: To widen the gap with the competition we must become number one in every region. We must not allow the competition to maintain their lead in any of the urban or rural regions. Maximize Return On Investment and Control Capex and Opex: we invested over $500 million in our network infrastructure in the last 5 years. However, big parts of our network are still underutilized. The only way to achieve our aggressive 2009 targets will be through minimizing underutilization, controlling our spending, and maximizing return on investment in every part of our network. Execution Excellence: While we have great talent, innovation, and dedication among our people we tend to fail too often in execution. We often miss deadlines, exceed budgeted costs, and miss revenue targets. We must commit to improve our track record in execution in 2009. Tough challenges test our capabilities, bring the best out of us, and produce the great leaders of tomorrow. By achieving these goals, we will be undisputed market leader in 2009 and I am counting on all of you to make this a reality. Once again let me take this opportunity to thank every one of you for your dedication, hard work, and loyalty to this great company and great Group and together we will show the world that we are Number One.