KUWAIT: Zain Group, a leading mobile telecom innovator in eight markets across the Middle East and Africa, announces its consolidated financial results for the nine-month and third-quarter period ended 30 September 2015.
Zain Group serves 45.6 million customers as of 30 September 2015, a 4% increase when compared to the same period in 2014.
Nine months ended 30 Sept, 2015 comparative results
For the first nine months of 2015, Zain Group generated consolidated revenues of KD 855 million (USD 2.8 billion), while consolidated EBITDA for the period reached KD 372 million (USD 1.2 billion), down 4% year-on-year (YoY), reflecting a healthy EBITDA margin of 43.5%. Consolidated net income reached KD 118 million (USD 394 million), reflecting a 27% Y-o-Y decrease. Earnings Per Share amounted to KD 0.030 (USD 0.10) for the nine-month period.
Third quarter 2015 comparative results
For the third quarter of 2015, Zain Group recorded stable consolidated revenues of KD 292 million (USD 968 million) when compared to KD 294 million (USD 1.0 billion) for the same period in 2014. EBITDA for the quarter reached KD 131 million (USD 433 million) compared to KD 123 million (USD 434 million), an increase of 6%. Net income for the period amounted to KD 38 million (USD 125 million), reflecting 18% decrease compared to KD 46 million (USD 163 million) for the same period of 2014. Earnings Per Share for the quarter reached KD 0.010 (USD 0.03).
Key Operational Notes:
- Group data revenues (excluding SMS and VAS) witnessed a healthy 14% growth for the first nine months of 2015, representing 20% of the Group’s total revenues.
- Foreign currency translation impact mainly due to the appreciation of the USD against the KWD cost the company USD 177 million on revenue, USD 77 million on EBITDA and USD 25 million on net income for the first nine-months of the year.
- Additional amortization on both Zain Iraq’s 3G licence, Zain Jordan’s 4G and newly acquired 3G spectrum fees impacted the bottom line.
- In Iraq, continued social instability in the country and heightened levels of competition severely impacted Zain Iraq and consequently the Group’s overall key financial metrics.
- Implementation of a new 20% sales tax on mobile services as well as wide-ranging tax increases on other sectors in Iraq, that commenced 1 August 2015, hit spending on mobile services.
- Zain Group made its third venture capital investment through a strategic participation in the Luxembourg-based ‘Digital East Fund’, managed by venture capital specialist Earlybird.
- Zain Group announced a Group-wide agreement with Uber, to offer Zain customers discounted and preferential services when using the Uber platform. The partnership is currently effective and operational in Bahrain, Jordan, and Saudi Arabia and will become available in Kuwait soon.
Commenting on the results, the Chairman of the Board of Directors of Zain Group, Asaad Al Banwan said, “The board is working closely with the executive management team to prudently deal with the rise in competition and other unavoidable currency and social challenges in several key markets. As the market leader in most of our eight operations, we remain focused on further strengthening our dominant presence while at the same time investing in network upgrades across the territories. We are constantly evaluating business optimization and acquisition opportunities that will drive value for shareholders.”
Zain Group CEO, Scott Gegenheimer noted, “We are pleased to see the continued growth in data usage and related revenue metrics across all our operations, reflecting the success of the company’s primary focus to upgrade its networks and commitment to delivering an affordable and compelling digital lifestyle experience to our customers. Despite not witnessing year-on-year growth in several key aspects of the Group’s consolidated financial results predominantly due to the unavoidable circumstances facing our operation in Iraq, our impressive EBITDA margin of 43.5% reflects the success of Zain Group’s operational efficiency drive.”
Gegenheimer continued, “The positive momentum and improving financial performance of our operations in Saudi Arabia and Sudan bodes well for the future of both companies. We continue to grow our customer base in our home base of Kuwait and we are working closely with the management team there to address the major competitive challenges in this lucrative market. It is gratifying to see both the Bahrain and Jordan operations continue to grow their customer base and data related revenues on the back of their respective upgraded and newly installed 4G networks. We are hopeful that the social unrest in Iraq subsides soon, so the operation can fully capture its growth potential with its newly operational 3G service.
