4Q15 Results Highlights: Revenue – KWD283mn (-3% Y-o-Y, -3% Q-o-Q) +2% vs. EFGe. EBITDA margin – 44.9% (+4.5pp Y-o-Y, +0.1pp Q-o-Q) +4.3pp vs. EFGe. Net income – KWD36mn (+8% Y-o-Y, -5% Q-o-Q) -4% vs. EFGe. Dividends – KWD0.030/share (-25% Y-o-Y, -14% vs. EFGe)   Zain Group published its 4Q2015 headline figures, with earnings of KWD36 million, only just 4% below our estimate, despite revenue being in line with our estimate due to a better-than-expected EBITDA margin. We suspect 4Q2015 earnings will have been pressured by further FX losses which we usually do not forecast. The company mentioned that a strengthening USD had resulted in FX losses in KWD-terms, impacting 4Q2015 revenue negatively by USD41 million, EBITDA by USD18 million and earnings by USD5 million.   The main negative surprise was dividends as it cut its FY2015 dividend by 25% Y-o-Y to 30 fils versus last year’s 40 fils, and missed our conservative dividend estimate of 35 fils. The dividend implies a 75% pay-out ratio, down from 80% in 2014, and the dividend is subject to regulatory and shareholders’ approval. While the dividend cut might be taken negatively by investors, we believe it still offers an attractive yield of 8.7%, which is the highest across our MENA Telecoms coverage universe. We reiterate our Buy rating on the stock as our FV implies 48% upside potential, and the stock is trading at undemanding valuations with a 2016e P/E of 7.4x versus 9.8x for MENA Telecoms and a 2016e EV/EBITDA of 4.9x versus 5.0x for MENA. Even if we assume zero earnings growth for FY2016e, its P/E would still be at a relatively cheap 8.7x.   Zain explained that it continued to face challenging operating environments, particularly in Kuwait where price-based competition remained intense and in Iraq where social unrest continues to affect telecom spending. Revenue from Kuwait in 4Q2015 fell 5% Y-o-Y and 5% Q-o-Q, broadly in line with our estimate, while revenue from Iraq fell 15% Y-o-Y and 9% Q-o-Q, also in line with our expectation. On a more positive note, the performance of the Sudanese operation in local currency terms remained healthy, with SDG-denominated revenue up 13% for the year, mostly driven by a Y-o-Y doubling of data revenue, and EBITDA up 22% Y-o-Y. Sudan’s 4Q2015 revenue in KWD-terms was 6% above our estimate. (Omar Maher, company disclosure)