Zain Group third-quarter 2016 net income increases 12%

EBITDA margin increases to 49.2% for Q3 2016
Q3 results, Zain, Zain Group third-quarter 2016 net income increases 12%

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Zain Group has announced its consolidated financial results for the nine-month and third-quarter periods ended 30 September 2016. The company ended the period serving 45.8 million customers.

For the first nine months of 2016, Zain Group generated consolidated revenues of KD 826 million ($ 2.7 billion), down 3% year-on-year (Y-o-Y) in KD terms, while consolidated EBITDA for the period reached KD 390 million ($ 1.3 billion), up 5% Y-o-Y, reflecting a healthy EBITDA margin of 47.2%. Consolidated net income reached KD 124 million ($ 413 million), reflecting a 5% Y-o-Y increase. Earnings Per Share amounted to KD 0.032 ($ 0.11) for the nine-month period.

The Group incurred foreign currency variance losses amounting to $ 96 million for the first nine-month period of 2016 predominantly accounted for by operations in Iraq and Sudan. This reflects a $ 27 million increase from the same period in 2015.

For the third-quarter of 2016, Zain group recorded consolidated revenues of KD 275 million ($ 911 million), down 6% Y-o-Y in KD terms. EBITDA for the quarter reached KD 135 million ($ 448 million), an increase of 3% Y-o-Y in KD terms, reflecting a 49.2% EBITDA margin. Net income for the period amounted to KD 43 million ($ 141 million), reflecting 12% Y-o-Y increase. Earnings per share for the quarter reached KD 0.011 ($ 0.04).

For the third quarter of 2016, the Group incurred foreign currency variance losses amounting to USD 39 million, reflecting a $ 12 million increase from same period in 2015.

Chairman of the Board of Directors of Zain Group, Asaad Al Banwan said: “It is pleasing to report growth in several key financial metrics for the third-quarter and nine-month periods of 2016 given the company’s exposure to conflict zones and currency fluctuations, which continue to impact the growth potential of our business. We are committed to continually upgrading our networks to offer our customers a better mobile experience and to maintaining our leadership position in our key markets.”

Concerning Zain Saudi Arabia being granted an extended, unified license, Al Banwan said: “I would like to thank the Custodian of the Two Holy Mosques and the Kingdom of Saudi Arabia’s telecommunications regulator, CITC and other government authorities for granting these concessions which are in line with the Kingdom’s Vision 2030. This will enhance the competitiveness of the telecom sector and support the future prosperity of Zain Saudi Arabia for the benefit of all stakeholders.”

Zain Group CEO, Scott Gegenheimer said: “The implementation of several data monetisation and cost optimisation initiatives continues to bolster our financial performance as we remain steadfast in our strategy and commitment to delivering an affordable and compelling digital lifestyle experience to our customers. We draw confidence from the growth in data revenues for the nine-month period that now accounts for 22% of overall service revenues and we will continue to foster and develop this area of the business.

“We are working closely with the Board of Directors and the management team of all our operations in dealing with the many challenges we face, which are impacting our financial performance on several fronts. These essentially relate to the ongoing civil instability and sales tax increases in Iraq; the intense price competition in Kuwait; the biometric registration requirement in Saudi Arabia; and the currency issues in both Sudan and Iraq. We are optimistic that these issues will gradually subside and are confident that the strategies we have in place to tackle them will be effective.”

Gegenheimer added: “We are grateful and pleased with the license concessions that Zain Saudi Arabia received, which will allow us to invest more in network upgrades and expansion as we roll out to meet the ever increasing demand for telecommunications across the Kingdom.”

Operational review of key markets for the nine months ended 30 September, 2016:

Kuwait: Zain Kuwait saw its customer base serve 2.9 million. Revenues reached KD 242 million ($ 803 million), EBITDA amounted to KD 118 million ($ 393 million) and net income came in at KD 65 million ($ 215 million). Data revenues (excluding SMS & VAS) formed 36% of the operation’s total revenues. Zain Kuwait remains the most efficient mobile operator within the Group.

Iraq: The revenues for the period reached $ 804 million and EBITDA reaching USD 284 million. Net income amounted to $ 29 million, with the EBITDA margin standing at 35.3%. Data-related revenues formed 9% of overall revenues for the first nine-months of 2016 and customers served totalled 11.8 million, a 3% increase Y-o-Y.

Sudan: In local currency (SDG) terms, the operator’s revenues grew by 10% Y-o-Y to reach SDG 3.7 billion ($ 577 million, up 8% in $ terms) for the first nine months of 2016. EBITDA increased by 14% to reach SDG 1.6 billion ($ 244 million, up 12% in $ terms), while net income decreased 10% to SDG 646 million ($ 100 million, down 11% in $ terms). Data revenues (excluding SMS and VAS) formed 13% of total revenues, with an impressive annual growth rate of 44% (42% in $ terms). The operation saw its customer base expand 8% to reach 12.5 million.

Saudi Arabia: The operation served 10.5 million customers at the end of September 2016, a 11% decline Y-o-Y due to the biometric registration required by the country’s telecom regulatory authority. Revenues were relatively stable for the nine-month period at $ 1.4 billion, while EBITDA grew 7% to reach $ 348 million and net losses amounted to $ 225 million for the period. Zain Saudi Arabia’s EBITDA margin reached 24.7%. The operator witnessed a 37% Y-o-Y rise in data revenues (excluding SMS & VAS), representing 31% of total revenues as the company invested heavily and expanded its modern 4G LTE network.

Jordan: Zain Jordan grew its customer base by 2% Y-o-Y, to serve 4.2 million customers. Y-o-Y revenues increased 6% to reach $ 363 million, with EBITDA up by 18% to reach $ 179 million, reflecting an impressive 49% EBITDA margin. Net income increased 11% to reach $ 79 million. With the launch of 4G services, data revenues (excluding SMS & VAS) represented 33% of total revenues, up by 24% Y-o-Y.

Bahrain: Zain Bahrain saw its customer base increase 19% to reach 969,000 and generated revenues of $ 132 million for the nine-month period, down 8% Y-o-Y. EBITDA for the period reached $ 49 million, down 11%, reflecting an EBITDA margin of 37%. Net income amounted to $ 8 million, reflecting an 11% decrease. Data revenues (excluding SMS & VAS) increased 8% Y-o-Y, representing 39% of overall revenues.

 

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