Kuwait's Zain Group reported a 5 percent decrease in revenues for the six months ended June 30 compared to the same period last year due to massive currency devaluation in Sudan, it said. The company ended the period serving 45.2 million customers across the Middle East and Africa.
In Q2 2017, Zain Group recorded consolidated revenues of KD 261 million (US$ 860 million), down 5 percent compared to the same period in the previous year. EBITDA for the quarter reached KD 104 million (US$ 344 million), down 21 percent year-on-year (Y-o-Y) in KD terms, reflecting an EBITDA margin of 40 percent. Net income for the quarter amounted to KD 44 million (US$ 145 million), down 2 percent Y-o-Y in KD terms reflecting earnings per share of 11 Fils (US$ 0.04).
Foreign currency translation impact, predominantly due to the 61 percent currency devaluation in Sudan, cost the company US$ 157 million in revenue, US$ 62 million in EBITDA and US$ 25 million in net income. Excluding the currency translation impact, Y-o-Y revenues and net income would have grown by 12 percent and 15 percent respectively for the period, it said.
"The company's performance in the first half has been satisfactory given the various operational and forex challenges we face across our footprint," said Chairman of the Board of Directors of Zain Group, Mr. Mohannad Al-Kharafi.
Mr. Bader Nasser Al-Kharafi, Zain Vice-Chairman and Group CEO, said, "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."
He added, "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."
Maintaining its market leadership, Zain Kuwait saw its customer base serve 2.6 million customers. The first half of the year was characterized by intense price competition coupled with additional operational costs in network expansion and upgrades, which impacted the operation's financial performance for the period.
Nevertheless, Zain Kuwait remains the Group's most profitable operation with revenues reaching KD 167 million (US$ 549 million), EBITDA amounting to KD 66 million (US$ 215 million) and net income came in at KD 39 million (US$ 128 million).
Zain Kuwait was awarded and 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. This Smart Meter project is a key step of the company's strategic plans to deploy smart city solutions in Kuwait and beyond.
In Iraq, despite the socio-economic circumstances coupled with the continuation of intense price competition, the operator achieved US$ 523 million revenues due to growth in data usage and numerous customer acquisition initiatives in the northern regions of the country. Zain Iraq's efficiency drive saw EBITDA reach US$ 179 million, reflecting a 34 percent EBITDA margin. Net income amounted to US$ 11 million for the period. Zain Iraq leads the market serving 12.9 million customers.
Zain Saudi Arabia recorded its first-ever half yearly net profit of US$ 14 million, compared to net losses of US$ 154 million in the same period last year. The turnaround and cost optimization program in place at the operation, combined with investment in network upgrades and the introduction of appealing data monetization initiatives, bolstered all key financial indicators for the period. Revenues for the period were up by 9 percent, reaching US$ 1.04 billion.
However, the introduction of the biometric identification requirement during the year and the impact of seasonality saw the Zain Saudi Arabia's total customer base shrink by 15 percent, to stand at 9 million customers at the end of June 2017. But the operator witnessed a 42 percent rise in data revenues (excluding SMS and VAS) Y-o-Y, representing 50 percent of total revenues.
"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 monetization, Enterprise (B2B), and smart city initiatives in several key markets," said Mr. Bader Nasser Al-Kharafi.
Zain Jordan grew its customer base by 3 percent Y-o-Y, serving 4.2 million customers at the end of June, and maintaining its market leading position despite intense price competition. Y-o-Y revenues increased 2 percent to reach US$ 241 million, with EBITDA up 1 percent to reach US$ 116 million, reflecting an impressive 48 percent EBITDA margin.
However, net income decreased 5 percent to US$ 48 million for the six-month period. With the continual expansion of 4G services across the country, data revenues (excluding SMS & VAS) represented 37 percent of total revenues.
Zain Bahrain reported net income of US$ 4 million, reflecting a large 21 percent decrease. The operator generated revenues of US$ 100 million for the first six months of 2017, up 17 percent Y-o-Y. EBITDA for the period amounted to US$ 30 million, down 8 percent, reflecting an EBITDA margin of 30 percent. Data revenues (excluding SMS & VAS) increased 36 percent Y-o-Y, representing 43 percent of overall revenues.