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Zain 2017 net profit up 2pc to $527m

Kuwait Business


Zain Group, a leading mobile telecom operator across the region, has posted a consolidated net profit of KD160 million ($527 million) for 2017, reflecting an increase of two per cent over the previous year.

This marks earnings per share of 39 fils ($0.13), a statement said, noting that Zain now serves 46.6 million customers, reflecting a 1 per cent decrease year-on-year (Y-o-Y).

For the full-year 2017, Zain Group generated consolidated revenues of KD1.03 billion ($3.4 billion), down 5 per cent Y-o-Y, while consolidated EBITDA for the period decreased by 19 per cent Y-o-Y to reach KD414 million ($1.37 billion), reflecting an EBITDA margin of 40 per cent.

For 2017, foreign currency translation impact, predominantly due to the 53 per cent currency devaluation in Sudan from an average of 8.0 to 16.9 (SDG / USD), cost the company $494 million in revenue, $213 million in EBITDA and $82 million in net income. Excluding the above-mentioned currency translation impact, Y-o-Y revenues would have grown by 8 per cent and net income growth would be 17 per cent.

The Board of Directors of Zain Group recommended a cash dividend of 35 Fils per share subject to the Annual General Assembly and regulatory approvals. Despite financial challenges, this dividend comes on the back of the sale of 425,711,648 treasury shares, which will result in an 11 per cent increase of the total value distributed for 2016 from KD136.5 million to KD151.4 million for 2017.

For the fourth quarter of 2017, Zain Group recorded consolidated revenues of KD262 million ($868 million), a similar level to the same period in 2016. EBITDA for the quarter reached KD98 million ($326 million), reflecting an EBITDA margin of 38 per cent. Net income for the period reached KD37 million ($124 million), reflecting a 16 per cent increase, and representing Earnings Per Share of 9 Fils ($0.03).

Specifically, for the fourth quarter of 2017, currency translation impact cost the company $54 million in revenue, $20 million in EBITDA and $6 million in net income, again predominantly due to Sudan currency devaluation from 12.8 to 18.3 (SDG / USD), a 30 per cent decrease.

Mohannad Al-Kharafi, chairman of Zain Group said: "The company’s performance during 2017 and especially the last quarter of the year is very pleasing given the various operational, regulatory, social and forex challenges we face across our footprint.

“It is our focus to maintain market leadership and grow the business further by exerting all our efforts on innovation, and customer service, while at the same driving efficiencies which allow us to consistently deliver strong operational results. The Board is working closely with management to evaluate value-creating opportunities in the ICT sector, while ensuring all strategic partnerships and investments are geared towards maximizing shareholder value."

Zain vice-chairman and group CEO Bader Al-Kharafi said: “The ongoing implementation of our digital lifestyle strategy combined with substantial investment in network technology upgrades and cost optimization initiatives is proving successful as we recorded growth in several key financial metrics across many of our key markets for the full-year and fourth-quarter of 2017. One main factor outside of our control, notably the Sudan currency devaluation issue, has materially impacted our overall results, affecting our net profit by $82 million, otherwise our 2017 profit would have increased by 17 per cent.”

“Notable positive highlights for the year include the SAR 1 billion ($264 million) net profit turnaround in Saudi Arabia where the transformation program is taking full effect resulting in the operation recording its first ever annual net profit. We also returned to profitability in Iraq where socio-economic conditions are gradually improving, and we are proactively taking grasp of the many opportunities in this promising market.

“Across our operations, Zain continues to focus on data monetization, smart city and Enterprise (B2B) initiatives, which are all fast-growing and profitable business areas. Our landmark agreements with Amazon Web Services and Microsoft Azure allow Zain to connect corporations directly and seamlessly to business enhancing cloud solutions. In addition, we are investing in other opportune growth digital initiatives such as Zain Cash mobile money services in Iraq and Jordan, iflix video-on-demand streaming services and are also exploring mobile education and health services,” he added.

“The Board and executive management have confidence in our transformation objectives to unlock the many lucrative opportunities in the connected society and becoming a digital lifestyle operator. We all look forward to 2018 with optimism as we grow the business and create more value for all stakeholders,” Al-Kharafi noted.

Operational review of key markets for 2017

Kuwait: Maintaining its market leadership, the flagship operation of Zain Group saw its customer base serve 2.7 million in a very challenging year that witnessed the impact of intense price competition on its financial performance for the year. Revenues reached KD331 million ($1.1 billion), EBITDA amounted to KD127 million ($418 million) and net income came in at KD80 million ($265 million). Zain Kuwait reported an EBITDA margin of 38 per cent for the year with data revenues (excluding SMS & VAS) forming 32 per cent of total revenues.

Saudi Arabia: Zain Saudi Arabia reported its first ever full-year net profit, amounting to SAR 12 million ($3.1 million) for 2017. This is a milestone achievement for the company, which commenced commercial operations in August 2008 and this net profit amount reflects a SAR 1 billion ($264 million) turnaround on the prior year. Total revenues of SAR 7.53 billion ($2 billion) were achieved reflecting a 6 per cent Y-o-Y increase despite a significant decline in international revenues primarily due to the impact of VoIP and a lower number of prepaid customers.

Bahrain: During 2017, Zain Bahrain generated revenues of $198 million, up 13 per cent Y-o-Y. EBITDA for the period reached $58 million, down 11 per cent, reflecting an EBITDA margin of 30 per cent. Net income amounted to $11 million, reflecting a 1 per cent increase. The operation’s completely revamped 4G network served a customer base of 678,000 with data revenues (excluding SMS & VAS) increasing 23 per cent, representing 44 per cent of overall revenues. – TradeArabia News Service

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