Zain group records stable profits in H1

Currency devaluation in Sudan cost the company $305 million in revenue
Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO
Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO
Chairman of the Board of Directors of Zain Group, Mohannad Al-Kharafi
Chairman of the Board of Directors of Zain Group, Mohannad Al-Kharafi

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For the first six months of 2017, Zain Group generated consolidated revenues of KD 508 million ($ 1.67 billion) down 8% YoY in KD terms. Consolidated net income remained stable at KD 82 million ($270 million).

The Group’s consolidated EBITDA for the period reached KD 212 million ($ 695 million), down 17% YoY in KD terms, reflecting an EBITDA margin of 41.7%. Earnings per share for the half-year stood at 21 Fils ($0.07).

The group further explained in its earnings statement that foreign currency translation impact, predominantly due to the 61% currency devaluation in Sudan from 6.4 (SDG / USD), in H1 2016 to 16.5 cost the company $305 million in revenue, $131 million in EBITDA and $58 million in net income. Excluding this currency translation impact, YoY revenues and net income would have grown by 8% and 21% respectively for H1, 2017.

In Q2, the Group recorded consolidated revenues of KD 261 million ($860 million), down 5% YoY. EBITDA for the quarter reached KD 104 million ($344 million), down 21% Y-o-Y in KD terms, reflecting an EBITDA margin of 40%. Net income for the quarter amounted to KD 44 million ($145 million), down 2% Y-o-Y in KD terms reflecting earnings per share of 11 Fils ($0.04).

The Chairman of the Board of Directors of Zain Group, Mohannad Al-Kharafi said: "The Company’s performance in the first half has been satisfactory given the various operational and forex challenges we face across our footprint. It is our focus on innovation, customer service, and the driving of efficiencies that allows us to consistently deliver strong operational results and maintain our leadership position in the majority of our markets. The Board is working closely with management to continually evaluate new business and value-creating opportunities."

Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO said: "The first six-months of 2017 produced some defining positive developments such as the progress being achieved through the turnaround program in Saudi Arabia and robust growth in our data monetisation, Enterprise (B2B), and smart city initiatives in several key markets.”

The Group CEO added: “It is unfortunate that one main factor outside of our control, namely the Sudan currency devaluation issue, has impacted overall performance considering the sound operational progress and transformation we have undertaken across all our markets. At the same time, the various operational management teams are focused on dealing with such costly and unavoidable socio-economic challenges across several key markets and are laying the foundations to take full advantage of improving conditions, once they occur.

 “We also entered into several key strategic partnerships and ramped up our investment in digital technologies to further maximise the output of our modern networks with the aim of improving the customer experience and future-proofing the company’s growth. The Board and executive management strongly believe in our strategic direction to unlock the many lucrative opportunities in the connected society space and look forward to the second half of the year with optimism as we deliver further on our transformation objectives in becoming a digital lifestyle operator.”

Operational review for H1, 2017

Kuwait

Customer base: 2.6 million

Revenues: KD 167 million ($ 549 million)

EBITDA: KD 66 million ($215 million)

Net income: KD 39 million ($128 million)

EBITDA margin: 39%

Data revenues: 32% of total revenues

Moreover, Zain Kuwait’s financial performance in Q2 was better than the Q1 and the group attributes it to diversification of broadband offerings and increased revenues from new business streams.

Zain Kuwait is currently implementing a smart meter project, in one of the sector’s largest ICT projects for the country’s Ministry of Electricity and Water.

Iraq

Revenues: $523 million

EBITDA: $179 million

EBITDA margin: 34%

Net income: $11 million

Customer base: 12.9 million (+15% YoY)

Sudan

A significant 61% currency devaluation in Sudan from 6.4 (SDG / USD) to 16.5 (rate change started at the beginning of November 2016) affected this operation’s financial results in USD terms for the first six months of 2017.

Revenues: SDG 3.4 billion (+38% YoY in SDG terms) ($213 million, down 44% in $ terms)

EBITDA: SDG 1.3 billion (+22% YoY in SDG terms) ($81 million, down 50% in $ terms)

Net income:  SDG 545 million (+14% YoY in SDG terms) ($34 million, down 54% in $ terms) Data revenues: 15% of total revenues (+ 69% YoY)

Customer base: 12.9 million (+3% YoY)

Saudi Arabia

The turnaround and cost optimisation programme in place at the operation, combined with investment in network upgrades and the introduction of appealing data monetisation initiatives bolstered all key financial indicators in H1, 2017.

Net profit: $14 million (compared to net losses $154 million in H1 2016)

Revenues: $1.04 billion (+9% YoY)

EBITDA: $346 million (+59% YoY)

EBITDA margin: 33%

Data revenues: 50% of total revenues (+42% YoY)

Customer base: 9 million (-15% YoY) (attributed to the introduction of the biometric identification requirement during the year and the impact of seasonality)

Jordan

Customer base: 4.2 million (+3% YoY)

Revenues: $241 million (+2% YoY)

EBITDA: $116 million (+1% YoY)

EBITDA margin: 48%

Net income: $48 million (-5% YoY)

Data revenues: 37% of total revenues (+15% YoY)

Bahrain

Revenues: $100 million (+17% YoY)

EBITDA: $30 million (-8% YoY)

EBITDA margin: 30%

Net income: $4 million (-21% YoY)

Data revenues: 43% of overall revenues (+36% YoY)

 

 

 

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