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Zain Group achieves net income of USD 184 million for first quarter 2013, a 3% increase on fourth quarter of 2012
- Impact of adverse foreign currency translation cuts revenues by USD 179 million, EBITDA by USD 76 million and net profit by USD 44 million
- Consolidated Revenues reach USD 1.06 billion, EBITDA USD 449 million
- 10% annual customer growth sees 3.9 million additions, to reach 44.1 million
- Substantial investments in 3G and 4G LTE networks paying off as data revenues increase 14%
Kuwait, 8 May 2013: Zain Group, the pioneer of mobile telecommunications across the Middle East and North Africa, announces today its consolidated financial results for the three months ending 31 March, 2013.
Q1, 2013 Key Performance Indicators (USD and Kuwaiti Dinars):
Total Managed Active Customers: 44.1 million (up 10% on Q1, 2012)
Consolidated Revenues: USD 1.06 billion (KD 299 million)
EBITDA: USD 449 million (KD 127 million)
EBITDA Margin: 42.4%
Net Income: USD 184 million (KD 52 million)
EPS: USD 0.05 (KD 0.013)
Zain Group added 3.9 million new active customers over the past twelve months to now serve 44.1 million, reflecting a 10% growth rate. The Group added 1.4 million customers during the first three months of 2013. Zain is a market leader in six of its eight operations.
For the first quarter of 2013, Zain Group recorded consolidated revenues of USD 1.06 billion (KD 299 million), and the company’s consolidated EBITDA for the same period reached USD 449 million (KD 127 million), reflecting a healthy EBITDA margin of 42.4%.
Consolidated Net Income reached USD 184 million (KD 52 million), representing a 3% increase on the fourth quarter of 2012. Earnings per share for the quarter stood at USD 0.05 (KD 0.013).
Key Group Quarter Operational Notes:
1. Adverse currency translation impact in Sudan costs the company the equivalent of USD 179 million in revenues, USD 76 million in EBITDA and USD 44 million in net profit for the quarter.
2. Although Zain Saudi Arabia continues to narrow its operating loss, Zain Group’s increased ownership from 25% to 37% pressures Group operating results.
3. The gap between traditional voice and data revenues reduce as data revenues see impressive 14% growth.
4. Shareholders receive USD 685 million (KD 195 million) cash distribution after Annual General Assembly Meeting approved dividends of 50% of share face value (50 fils).
5. Benefits of Vodafone Partner agreement began to take effect as Zain agrees to pilot the ‘joyn’ Rich Communications Services initiative formulated by the GSM Association. The service will allow the company to compete more effectively against OTT players by providing customers access to leading-edge technology and services in a shorter period of time. The Zain brand was also exposed to a global motor racing audience as the Vodafone Mercedes McLaren cars and team were branded Zain during the recent Bahrain Grand Prix.
Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mr. Asaad Al Banwan said: “It is promising from a forward-looking perspective to see the addition of 3.9 million customers notwithstanding the Group’s key financial indicators having been impacted by adverse currency fluctuations, and to a lesser extent by the Group’s increased stake in Zain Saudi Arabia.”
The Chairman also noted, “Our substantial investment in expanding and upgrading our 3G and 4G networks across our markets are paying off and continual attention to such areas is necessary to maintain the company’s growth momentum.”
On his part, Zain Group CEO, Scott Gegenheimer noted, “Operationally our Group companies are performing well in local currency terms and despite intense competitive challenges, they are all attaining the targets set at the beginning of the year. The adverse effect on our financial results by the devaluation of the Sudanese pound, which fell by 53% against the US dollar over the last 12 months, is unavoidable as there is no effective hedge on the currency.”
Gegenheimer added, “Our focus today is to drive efficiency and to build on our many competitive strengths with the aim to cement our market leadership position in the countries we serve. Empowering our customers with the latest innovative technologies is a critical focus and the 14% growth in data revenues reflects positively on our efforts and investments in this area. We expect data revenue growth to continue, in line with industry trends worldwide”.
The percentage growth in data revenues is all the more significant and promising for Zain when one considers that a large number of the Group’s customers do not yet have smartphones and are located in rural areas across several countries that are vast in their geographies.
With regard to ongoing dealings that will be further elaborated in the near future, Gegenheimer noted that the Group is currently examining several prime adjacent business and key partnership opportunities that will be accretive to both operational efficiency and shareholder value. The company is also in the final stages of entering into numerous commercial and customer enhancing agreements that will improve the Zain service experience.
Zain country operational year-on-year growth highlights:
Kuwait: Launched nationwide 4G LTE with year-on-year customer growth of 9%
Bahrain: Customer base grew by 30%; recently launches 4G LTE
Iraq: Customer base grew by 9% as operation expands network to North Iraq
Jordan: Maintains customer and value leadership through dynamic marketing campaigns
Lebanon: Management contract extended to 30 June 2013
Saudi Arabia: 4G LTE network and aggressive marketing campaigns contribute to32% customer growth, revenue growth of 17%
Sudan: In SDG currency terms, revenues grew by 25% year-on-year, net income grew by 57%
South Sudan: Customer base grew by 44% while revenues grew by 8%
About Zain Group:
Zain is a leading telecommunications operator across the Middle East and North Africa providing mobile voice and data services to over 44.1 million active customers as of 31 March, 2013. With a commercial presence in 8 countries, Zain operates in: Bahrain, Iraq, Jordan, Kuwait, Saudi Arabia, Sudan and South Sudan. In Lebanon, the Group manages ‘touch’ on behalf of the government. In Morocco, Zain has a 15.5% stake in Wana Telecom, now branded ‘INWI’, through a joint venture. Zain is listed on the Kuwait Stock Exchange (stock ticker: ZAIN).
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