KUWAIT: Zain Group, the pioneer of mobile telecommunications across the Middle East and Africa, announced its consolidated financial results for the three months ended 31 March, 2015.
Zain Group served 46.1 million customers at the end of the period, and is the market leader in six of its eight markets of operation, by customer numbers.
For the first quarter of 2015, Zain Group generated consolidated revenues of $942 million (KD 279 million) as compared to $1.104 billion (KD 311 million) for the same period in 2014. EBITDA for the quarter reached $396 million (KD 117 million) as compared to $469 million (KD 132.2 million) for the same period a year earlier, representing an EBITDA margin of 42 percent. Net income for the quarter amounted to $139 million (KD 41 million) as compared to $198.4 million (KD 55.9 million) for the same period in 2014. Earnings Per Share for the quarter reached $ 0.04 (fils 11).
Comparing the fourth quarter of 2014 to the first quarter of 2015, Zain Group reports that consolidated revenues were down 6 percent, EBITDA down 3 percent and net income increased 21 percent.
Key Operational Notes:
- Group data revenues (excluding SMS and VAS) witnessed a healthy 8 percent year-on-year (Y-o-Y) growth for the first three-months of 2015, forming 19 percent of the Group’s total revenues.
- In the first three months of 2015, Zain Group added 1.8 million customers across all operations.
- Growth in Zain Saudi Arabia saw the operation increase its customer base by 27 percent to serve 10.6 million customers, with net losses narrowing by 19 percent Y-o-Y.
- Zain Sudan performed extremely well as revenues increased by 10 percent and net income by 42 percent (in dollar terms) Y-o-Y.
- Zain Jordan launched 4G on 15 February, 2015 following its $270 million investment in license fees for 4G and additional 3G spectrum.
- Zain Iraq launched 3G services across the country on 1 January, 2015. The continued political instability in Iraq and heightened levels of competition, severely impacted Zain Iraq’s and consequently the Group’s overall key financial metrics.
Commenting on the results, the Chairman of the Board of Directors of Zain Group, Asaad Al-Banwan said, “We recognize the exceptional circumstances in one key market over the past nine months that has impacted us significantly. However we are seeing several positive signs of growth over the first three months of 2015 such as the addition of 1.8 million new customers and net income growth of 21 percent for the Group when compared to the final quarter of 2014. When coupled with data revenue growth of 8 percent year-on-year, these developments justify and reflect the appeal of our substantial investments in technology and network upgrades.
Furthermore the Chairman noted, “The Board is working closely with senior management in driving efficiency, maintaining our market leadership positions across our markets, and constantly evaluating business-enhancing and acquisition opportunities. The Board is confident that the company’s innovation and digital strategy will generate long-term value for shareholders.”
Zain Group CEO, Scott Gegenheimer noted, “The quarter reflected mixed results in what were quite challenging conditions in several of our key markets, especially Iraq where the security situation and intense competition is significantly impacting the performance there and subsequently the Group’s overall financials. Nevertheless we witnessed many positive signs of net income and customer growth during the first quarter of 2015 when compared to the final quarter of 2014.”
He added, “It is also encouraging to see Kuwait and Saudi Arabia grow their customer bases by 13 percent and 27 percent year-on-year respectively, with both Saudi Arabia and Sudan witnessing healthy growth in all of their key financial indicators over the past twelve months. We will continue to focus on and invest in our key markets to drive growth and efficiency even further.”
Gegenheimer continued, “All operations witnessed robust growth in data related revenues, and we will continue to develop this area of the business to take advantage of the explosion of data usage by our customers. We are continually upgrading and rolling out 4G enabled networks in Kuwait, Saudi Arabia, Jordan and Bahrain, and we expect the roll-out of 3G services in Iraq to substantially improve performance there, anticipating that the security issues stabilize soon.”
The Group CEO concluded, “The telecommunications landscape Zain operates in is evolving on multiple fronts, and we are facing competitive threats from both intense competition and OTT players on the one hand, in addition to security and forex issues on the other. Accordingly, Zain is transforming itself from being a mobile-centric company into an integrated services provider, in a bid to tap new opportunities for new, profitable revenue streams. In particular we are focusing on innovation, the digital space, and enterprise services such as M2M and smart cities. We are also seeking new deals and partnerships to drive the strategy that the company has designed to embrace the areas of future value realization within the telecoms sector.”
Operational review
Kuwait
Zain’s operation in Kuwait saw its customer base grow 14 percent Y-o-Y to now serve 2.9 million customers on its nationwide 4G network; impressive growth considering the highly penetrated market of over 200 percent. Revenues for the quarter reached $276 million, EBITDA reached $136 million and net income amounted to $89 million. The appeal of Zain Kuwait’s nationwide 4G network continues to grow with data revenues now representing 35 percent of the operation’s total revenues. The recent appreciation of the US dollar against Kuwaiti dinar cost the operation $14 million in revenues, 7 million in EBITDA and $ 4.4 million in net income for the quarter. Nevertheless, the operation remains the most efficient mobile operator within Zain Group and one of the most efficient in the region with an impressive 50 percent EBITDA margin.
