Zain Group’s net profit goes up by 16% in Q4, 2017

Sale of passive tower network to support investments in infrastructure and new technologies
Operators will need to continue to invest to acquire increasingly scarce resources, Bader Al-Kharafi says.
Operators will need to continue to invest to acquire increasingly scarce resources, Bader Al-Kharafi says.

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Zain Group’s consolidated net profits went 2% YoY for the full-year 2017, while the group achieved a 16% YoY increase in its Q4 profits for the year.

Zain now serves 46.6 million customers, reflecting a 1% decrease YoY.

For the full-year 2017, Zain Group generated consolidated revenues of KD 1.03 billion ($3.4 billion), down 5% YoY, while consolidated EBITDA for the period decreased by 19% YoY to reach KD 414 million ($1.37 billion), reflecting an EBITDA margin of 40%. Consolidated net income reached KD 160 million ($527 million), up 2% and reflecting earnings per share of 39 Fils ($0.13).

53% currency devaluation in Sudan cost the company $494 million in revenue, $213 million in EBITDA and $82 million in net income.

For the fourth quarter of 2017, Zain Group recorded consolidated revenues of KD 262 million ($868 million), a similar level to the same period in 2016. EBITDA for the quarter reached KD 98 million ($326 million), reflecting an EBITDA margin of 38%. Net income for the period reached KD 37 million ($124 million), reflecting a 16% increase, and representing earnings per share of 9 Fils ($0.03).

Group data revenues (excluding SMS and VAS) increased by 3% during 2017, representing 25% of the Group’s consolidated revenues. 

Other notable highlights for 2017 include the SAR 1 billion ($264 million) net income turnaround witnessed by Zain Saudi Arabia; robust customer growth of 16% and return to profitability in Zain Iraq; as well as Sudan continuing to perform well in local currency terms.

Chairman of the board of directors of Zain Group, Mohannad Al-Kharafi said: "The company’s performance during 2017 and especially the last quarter of the year is very pleasing given the various operational, regulatory, social and forex challenges we face across our footprint. It is our focus to maintain market leadership and grow the business further by exerting all our efforts on innovation, and customer service, while at the same driving efficiencies which allow us to consistently deliver strong operational results."

Zain vice-chairman and group CEO, Bader Al-Kharafi said: “Across our operations, Zain continues to focus on data monetisation, smart city and enterprise (B2B) initiatives, which are all fast-growing and profitable business areas.

“Our landmark agreements with Amazon Web Services and Microsoft Azure allows Zain to connect corporations directly and seamlessly to business enhancing cloud solutions. In addition, we are investing in other opportune growth digital initiatives such as Zain Cash mobile money services in Iraq and Jordan, iflix video-on-demand streaming services and are also exploring mobile education and health services."

Al-Kharafi reiterated the strategic importance of the agreement that was penciled in October 2017 to divest the tower infrastructure in Kuwait (for $165 million), which will be replicated in other markets as, “it will unlock value from our fixed infrastructure, and can be more efficiently deployed in new technologies and higher yielding investments, as well as enabling management to focus on core business opportunities and enhancing the customer mobile experience.”

Similarly, Al-Kharafi noted the value-enhancing benefits of selling the company’s treasury shares representing 9.84% of Zain's fully paid up and issued share capital for $846 million to Omantel in August 2017, as “reducing the company’s debt levels and enhancing financial flexibility as we continue to seek opportunities in the digital space as well as investing in the upgrade of our modern networks. The deal set the course for future co-operation with Omantel, in which the two companies will explore mutually beneficial synergies and business enhancing opportunities in the digital arena across the region.”

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