2Q26 preview: From March dislocation to 2Q run rate; Normalization in focus; Zain Kuwait down to Neutral

Research evidence excerpt

2Q26 preview: From March dislocation to 2Q run rate; Normalization in focus; Zain Kuwait down to Neutral

Goldman Sachs GCC TMT, Mobility & Infrastructure

forecasts.

n Slower/faster-than-expected interest rate cuts: As Zain is a key beneficiary of

monetary easing, slower-than-expected rate cuts would limit EPS growth potential

(downside risk), whereas an accelerated pace of rate cuts would lower financing

costs, boosting profitability and posing upside risk to our estimates.

n Higher/lower-than-expected below-the-line earnings volatility: While reported

earnings could be supported by positive mark-to-market gains from Zain Ventures

(such as portfolio company IPOs), higher-than-expected volatility from

below-EBITDA items (including IAS 29 hyperinflation adjustments, provisions, and FX

fluctuations) poses a downside risk to net income predictability. Conversely, a

reduction in these technical adjustments presents an upside risk.

n Slower/faster-than-expected monetization of high-capex growth verticals: Zain

is in an investment-heavy phase, with Zain Omantel International’s (ZOI) capex

expected to step up alongside heavy investments in towers and core infrastructure.

Slower-than-expected commercialization and cash generation from these digital

verticals (ZOI, ZainTech, and fintech) pose a downside risk to free cash flow, while

faster monetization presents an upside risk to our valuation.

n Successful/unsuccessful execution of Kuwait repricing and supply chain

stabilization: Delays in executing prepaid, postpaid, and broadband repricing

initiatives, coupled with persistent local headwinds from logistics and handset

availability, pose downside risks to Kuwait’s service revenue growth. Successful

implementation of these repricing strategies and supply chain normalization