ZAIN KSA

WORKING DRAFT

Confidential

March 2015

Caring through

Winning

Zain KSA Investor Presentation

2

Expectations and projections regarding future performance of the

company referenced in this presentation are forward-looking

statements within the meaning of applicable securities laws and

regulations. These are statements which the management believes

are true at the time of their preparation based on available data and

information and are subject to future events and uncertainties and

to the successful and timely execution of plans and strategies,

that could cause actual results to differ materially from

those anticipated in these forward-looking statements.

Table of contents

3

1. Overview of Zain KSA

2. Strategic Objectives

3. Operational Update

5. Financial Performance

4. Regulatory Update

KSA mobile market is promising

4

Source: GlobalWebIndex Jan14

8th Most active country

on Twitter (1) accounting

for 2.33% of all tweets

5

KSA is a digital environment as confirmed by user behavior

(1) as of April 2014 Source: Global Digital Statistics 2014, Reuters

88% Smartphone expected penetration in 2015

51% Social media penetration as a % of the total population

60% Access internet on their smartphones at least once a day

87% Visit social networks

91% Watch video online regularly

Largest user of YouTube per capita in

the World

6

KSA is a large market in the region

2014 mobile market size

% Share of Data

Saudi Arabia

Bahrain

Kuwait

Lebanon

Iraq

Jordan

14.7 27%

2.7 23%

1.2 25%

5.1 8%

0.6 30%

Sudan

1.9 18%

3.4 17%

Morocco

0.3

South

Sudan

0.1

Market Size Total Revenues USD Billion

Yemen

1 13%

Oman

1.1 38%

UAE

5.3 33.7%

1.6 39%

Qatar

Syria

.8 15%

Algeria Libya

Tunisia

1.3 9%

Egypt

3.84 10%

4.6 8%

3.4 11%

7

IPO in February 2008

Zain KSA

Commercial

Launch

Technology Neutral License award in July,

2007 with an amount of

SAR 23 Bn

Reaching EBITDA

breakeven

First operator commercially launching 4G-

LTE service in KSA Completed a Capital Reduction of

SAR 9.2 Bn, and then a Rights

Issue transaction of SAR 6 Bn

Repayment of SAR 750 Mn out of

the SAR 9.38 Bn MFA Facility

Entered into an agreement with MoF to postpone the government dues

estimated at SAR 800 Mn annually for the next 7 years

Successfully refinanced the MFA* Loan of SAR 8.63 Bn for 5 years tenor

* Murabaha Facility Arrangement

Signing of SAR 4.5 Bn Network

Expansion Agreements

Project Reload

2007 2008 2009 2010 2011 2012 2013 2015

EBIDTA up 24%

in 2014 YoY

Zain KSA Key milestones

2014

Completed a Capital

Reduction from SAR 10.8 Bn

to SAR 5.8 Bn

37.05%

20.80% 42.16% Founding Shareholders

Public

Provides Zain KSA with operational, technical, brand &

financial support

Zain Group:

1. Faden Trading & Contracting Est. 6.0%

2. Saudi Plastic Factory Est. 5.9%

3. Abu Dhabi Investment House P.J.S.C. 2.1%

4. Al Marai Co. 2.1%

5. HH Prince Sultan Al Kabeer 2.1%

6. Al Jeraisy Development Co. Ltd. 1.1%

7. Architectural Elite Est. 0.6%

8. Al Sale Al Sharkiya Co. Ltd. 0.5%

9. Rakisa Holding Co. 0.4%

Stake(%)

Zain KSA Current Shareholding Structure

8

Zain KSA shareholders structure is well diversified

Around 400,000 Shareholders

Table of contents

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10

Key challenges faced by Zain KSA

Price of license

Terms of license

Telecom regulatory environment

Competition

Capital structure (Completed)

Operational transformation

Industry trends and OTTs impact

Zain KSAs plan will address three main challenges to improve its operation and financial performance

11

Operational

Transformation Regulatory Balance Sheet

Plan

Progress

The plan

A B C

12

Zain KSA strategic objectives

20% market share

Profitable growth

Operational excellence

Progressive, dynamic and modern brand

#1 in customer experience

13

Vision & Mission

Vision

Mission

To provide a superior customer experience, and to be known as the video-

streaming mobile operator-of-choice

To create a fulfilling work environment

To build a long-lasting prosperous relationship with our business partners

To deliver our promises of value creation to our shareholders in a transparent way

To proudly contribute to the economic and social development of the Kingdom

To be the customer-centric Saudi telecom operator, providing reliable services through a caring approach

Zain KSAs Strategy

14

The Winning Through Caring

Strategy

Competitive Network

More and Better

Distribution

Better Customer

Experience

Competitive Products &

Services

Growth in Business Segment

More Efficiency

Caring Culture

Brand Values

15

We want to become the customers best choice

We are the trend- setter, modern, dynamic and enthusiastic

We are happy to serve our customers, we cherish the relationship!

We aim to be transparent, convenient, and straightforward

We deliver a superior customer experience you can rely on us!

Reliable Trendy

Simple Caring

Smart

We are proud to be Saudi! Contributing to the economic and social development of KSA

Saudi

Table of contents

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17

We have introduced 4 bold moves in 2014

BOLD MOVE #1

> Buy our data for fast 4G and get free calls to all networks

> Grow voice market share through our current main acquisition driver : data demand

BOLD MOVE #2

> Buy unlimited access to YouTube and we will offer you data and voice

> Grow penetration in Saudi youth segments

BOLD MOVE #3

> Move from unreal unlimited to complete worry-free postpaid packages

> Reposition ourselves on the wealthy mid and high-end postpaid / hybrid market.

> Grow value share.

Commercial

BOLD MOVE #4

> Enjoy FREE UNLIMITED CALLS inside Zain Network

> Prepaid: Recharge your line with 10 SAR card ONLY!

> Postapid: free calls all day long without any limitations! (24/7)

18

Commercial

Current offers are not efficient enough in terms of pricing

MultiSIM available starting from 5GB with 30% price increase

+ >30% increase

Size 2 GB 5 GB 10GB

Price 30 SAR 50 SAR 70 SAR

Old prices

Size 2 GB 5 GB 10GB 50 GB

Price 40 SAR 70 SAR 100 SAR 200 SAR

New prices

Data prices are about to be increased with shared MultiSIM data offers

19

The Video Clip embedded in this page is available on a separate file or through the following YouTube Link:

http://www.youtube.com/watch?v=UJV5Yqx6VjM&list=UUur1wvE5t_L-tM3b6Si8bSQ

Commercial

20

Commercial

Flagships / FBOs / Kiosks Snapshots

60 new shops have been rolled out with the new experience

STO

RE

REV

AM

P

21

Zain KSA will have more kiosks in major malls

Zain KSA will be present in all major cities, leaving no black spots

Noticeable growth in revenues of > 40% for the new Concept shops

Better Shops

1,426

1,180

814988

758

Q3 2014 Q1 2014 Q2 2014 Q4 2013 Q3 2013

+45% +75%

2 More Shops 1

20141 20131 20151

1 Including Shop-in-Shops, based on initial plans

Commercial

Increasing sales footprint while increasing the quality of sales

400

300

204

22

Commercial

We improved coverage in Jeddah, the main Western city

Sales increase following the introduction of new sites

All sites LTE sites

50

350

250

300

400

200

150

100

0

Febru

ary

Janu

ary

212

396

294

Decem

ber

No

vemb

er

Octo

ber

Septem

ber

Au

gust

July

Jun

e

May

Ap

ril

March

360

+22% SALES IN JEDDAH [ M SAR]

NB: sales curve for the Western region, out of which Jeddah represents approximately 70%

Introduction of new LTE sites.

When network coverage is improved, commercial benefits are immediately observable +11% for the region, +3% for Jeddah

23

Technical

Network Objectives and Beyond

Deliver the best mobile data network in KSA

Increase Network Reliability and Customer Experience

Improve operational effectiveness

Reload project: To build a competitive 3G & 4G network in phases

Provide the necessary capacity to cope with the broadband traffic demand

Prepare the network infrastructure to support future innovation and services

Optimize revenue generation and customer experience

Enhance network coverage and quality of service

Improve vendor management

Optimize cost structure

Track results, measure performance and take action to improve outcome

Reload population network coverage per technology

24

16,735

Phase1 Current

12,230

2G Site 6,046

LTE Site

3G Site 4,514

1,670 4,217

5,722

6,796

Nu

mb

er o

f S

ites

Total Sites in Network

Current and Projected Coverage Population

Coverage Population % Current Phase1

2G Coverage Population %

93.4% 94%

3G Coverage Population %

84.5% 89%

LTE Coverage Population %

52% 77%

Technical

25

Technical

KSA LTE Coverage 2014 - 2015

-95>X>=-105dBm

-105>X>=-115dBm

4G Legend

X>=-75dBm

-75>X>=-85dBm

-85>X>=-95dBm

-95>X>=-105dBm

-105>X>=-115dBm

4G Legend

X>=-75dBm

-75>X>=-85dBm

-85>X>=-95dBm

4G Coverage Prediction 2014 4G Coverage Prediction 2015

26

Technical

-95>X>=-105dBm

-105>X>=-110dBm

3G Legend

X>=-68dBm

-68>X>=-75dBm

-75>X>=-85dBm

-85>X>=-95dBm

3G Coverage Prediction 2015

KSA 3G Coverage 2014 - 2015

-95>X>=-105dBm

-105>X>=-110dBm

3G Legend

X>=-68dBm

-68>X>=-75dBm

-75>X>=-85dBm

-85>X>=-95dBm

3G Coverage Prediction 2014

27

Technical

KSA 2G Coverage 2014 - 2015

-95>X>=-102dBm

2G Legend

X>=-58dBm

-58>X>=-65dBm

-65>X>=-75dBm

-75>X>=-85dBm

-85>X>=-95dBm

-95>X>=-102dBm

2G Legend

X>=-58dBm

-58>X>=-65dBm

-65>X>=-75dBm

-75>X>=-85dBm

-85>X>=-95dBm

2G Coverage Prediction 2014 2G Coverage Prediction 2015

28

Experienced management team in place, driving the transformation

Joined ZAIN in Sep'13

Joined ZAIN in Jan'13 Joined ZAIN in Jan'14 Joined ZAIN in Jul'14 Joined ZAIN in Jul'11

Joined ZAIN in Feb'08

Joined ZAIN in Jul'14 Joined ZAIN in Jan'13

Joined ZAIN in Oct14

CEO Hassan Kabbani

CFO Wissam Farhat

CCO Matthieu Galvani

CTO Frederick

Vermeulen

COO Saud

Al-Bawardi

CCCO Abdulmajid Al-Rashoudi

CTRO Montgomery

Hong

CSO Andrew White

CHRO Sulaiman Al Sultan

Human Resources

We commit

To collaborate as ONE team!

to deliver!

to care!

to fix and not to blame!

to change!

to put Zain as our first priority!

to show mutual trust

to WIN!

Table of contents

29






10.2%

15%

30

Zain KSA competitive setting in a clearer perspective

Services

Relative size1) [Q4 2014 revenue figures]

Source: Q4 2014 public financial reports, WCIS

Mobile only Mobile Broadband (fiber)

Mobile Broadband (fiber and copper) Fixed line

1) Relative to overall revenues in KSA

Rev. Share

Mkt. Share

12%

19%

88%

of the market value is under

duopoly

Q3

40%

35%

28%

31%

49.8%

50%

60% 50%

Q4

Q3

Q4 Q3

Q4

31

Challenging regulatory environment for the 3rd entrant

On

-n

et

14H

On

- n

et

10H

Blended rates (illustrative)

An insurmountable obstacle:

Unrestricted (in practice) on-net discounting by the two largest operators, combined with,

High and symmetric interconnection rates

MTR is set by CITC, no change in MTR since 2008, KSA MTR is among the highest in the world

Some tariffs offer free On-net

25H

5H On-net

MT

R 50% of subs. market

31%

of subs. market

25H

25H

25H 19%

of subs. market

MTR = mobile

termination rate

MTR = mobile

termination rate

MTR = mobile

termination rate

Current market context The Club Effect is blocking Zain

Source: Zain KSA information

MTRs have NOT changed in KSA since 2008

32

32

25 25 25 25 25 25

42

36

30

23 19

11

4

2008 2009 2010 2011 2012 2013 2014

KSA MTRs Europe (av)

MTRs : KSA vs European average (source: BEREC)

33

From the CITCs MTR consultation document (29th of September 2014) Clause 6 Page 5

CITC says MTR should be around 8H

34

CITC just approved reducing the MTR rates from 25H to 15H

Table of contents

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331

899 879 890

1,100

6%

14% 14% 14%

18%

2010 2011 2012 2013 2014

2,530

3,200 2,860

3,135 3,223

45%

50%

46% 48%

52%

2010 2011 2012 2013 2014

+6%

+35%

36

CAGR

CAGR

REVENUES [Million SAR]

NET LOSSES/ MARGIN [Million SAR] EBITDA, EBITDA MARGIN [Million SAR]

EBITDA increased by 24% in 2014 YoY and net losses narrowed by 23% in 2014 YoY

GROSS PROFIT/ MARGIN [Million SAR]

+2% CAGR

5,672

6,424

6,171

6,523

6,244

2010 2011 2012 2013 2014

(2,358)

(1,925) (1,749) (1,651)

(1,270) -42%

-30% -28% -25%

-20%

2010 2011 2012 2013 201424%

3% -4%

-23%

702 780

2,385

1,293 1,092

2010 2011 2012 2013 2014

8,323 8,085 7,994 8,716

9,696

2010 2011 2012 2013 2014

37

+4% CAGR

CUSTOMERS BASE [Million Customers] CAPEX, CAPEX/ REVENUES [Million SAR]

CASH BALANCE [Million SAR] OPERATING CASHFLOWS (NET) [Million SAR]

Customer base increased in 2014 by 11% YoY

+12% CAGR

1,404 1,195

1,055 1,228

685

25%

19% 17%

19%

11%

2010 2011 2012 2013 2014

462

(88)

(1,150)

229 287

2010 2011 2012 2013 2014

11%

-16%

-44%

25%

Description Provider Outstanding Amount [Million]

Maturity SAR USD

Junior Debt Consortium of 4 banks 2,250 600 05 Jun, 2016

Export Credit Agency Facility Agreement

International Banks 506 135 31 Jan, 2018

Murabaha Facility Arrangement (MFA) Consortium of 8 banks 8,631 2,302 30 Jun, 2018

Government Loan (MoF) Ministry of Finance 801 214 01 Jun, 2027

Shareholders' Loans Founding Shareholders 2,539 677 Open

Total 14,727 3,927

Murabaha Facility Arrangement (MFA) Successful Refinancing (July 2013) Zain KSA successfully closed a deal of the new Murabaha Facility amounted to SAR 8.63 Billion (USD 2.3 Billion): a long-term tenor of 5 years with a lower interest rate and a 3-year grace period of principal repayment

Ministry of Finance financing arrangement (June 2013) Zain working capital and liquidity have benefited from the agreement entered into with the Ministry of Finance: seven years deferral of royalty fees payable to the Government estimated at SAR 800 Million (USD 213 Million) annually

Shareholders loans Significant amount of these loans are due to Zain Group

Zain KSA Borrowings summary (as of December 31th, 2014)

Confirmed support obtained from key financial institutions, shareholders and the ministry of finance

38

39

Appendices

40

Mobily dispute: Executive summary

Zain agreed to purchase services including national roaming from Mobily in 2008

To date, Zain has paid Mobily around SAR1.4b for these services

Zain has accepted and paid all invoices for the units consumed, at the prices mutually agreed (except the declared SAR13m)

However, the dispute arises from Mobilys unilateral reversal of agreed contract amendments

Mobilys claim filed with the arbitration panel consists of three (3) A4 pages, claiming an additional SAR2.2b

41

Mobily dispute: Arbitration Panel

Dr. Fahd Abu Himad Chairman

Dr. Abdulaziz Al Ateeq Zain appointee

Al Jadaan (Clifford Chance)

Zain lawyers

Dr. Saeed Yahyed Mobily appointee

Majed Garoub Mobily lawyers

Allen & Overy

Mobily lawyers

Arbitration Panel

(3 members)

Arbitration panel timeline: 20th Dec 2014: First panel hearing, at which Mobily submitted a 3 page claim for SAR2.2b

plus SAR59m damages. 7th Jan 2015: Al Jadaan informed the panel: Mobily shall provide more details, or the case

should be dismissed. 7th Feb 2015: Next scheduled meeting of the panel.

42

Capital Reduction

The Company announced on Tadawul on to 27/11/2014 its BoD recommendation for Capital Reduction as follows:

1.Reducing the Company's capital from SAR 10,801,000,000 to SAR 5,837,291,750, by 45.96%. 2.Reducing the number of shares from 1,080,100,000 shares to 583,729,175 shares. 3.This will be through the cancellation of 496,370,825 shares to write-off nearly 100% of the

accumulated losses as at 30th September, 2014. Reasons of Capital Reduction:

By 30 September 2014, the Company had accumulated SAR 4,963,708,250 in losses. This represented 45.96% of its paid up capital

In order to avoid triggering the requirements imposed on companies with accumulated losses in excess of 50%, the Company is seeking to eliminates its accumulated losses through a capital reduction in an equivalent amount.

EGM Timeline:

Capital reduction application submitted to CMA on 8th December, 2014 Received the CMA approval on 27th January, 2015 EGM was held on 25th February, 2015 and has been approved by 99% of attendees by the

Shareholders

43

Q & A

44

For more information, please contact Zain KSA Investor Relations Team: Email: [email protected] Telephone: +966 59 244 8888 Website: www.sa.zain.com

Thank you!

Caring through

Winning

ZAIN KSA

Documents

overview of zain ksa

bn repayment of sar

loan of sar

yoy zain ksa key milestones

capital reduction of

bn mfa facility

al sale al sharkiya

al marai