Zain blames profit drop on currency losses
Kuwait, February 15, 2013
Zain, Kuwait's No1 telecom operator, said foreign exchange losses were to blame for a 32 percent drop in fourth-quarter profit.
The former monopoly, which operates in eight countries in the Middle East and Africa including Iraq, Saudi Arabia and Sudan, made a net profit of 50.47 million Kuwaiti dinars ($179.04 million) in the three months to December 31, down from 74.6 million dinars in the year-earlier period.
Analysts polled by Reuters on average forecast a quarterly profit of 63.7 million dinars. Zain proposed a dividend of 0.05 dinars per share for 2012.
"Last year was difficult for Zain group due to sharp fluctuations in currency rates," Zain said in a statement, adding these fluctuations led to losses of $109 million.
Although Zain did not specify the origin of its foreign exchange losses, these were likely to have come largely from Sudan, where the pound was devalued by 40 percent in July and fell to a near-record low in late January.
Sudan is one of Zain's key markets, accounting for 30 percent of the group's 41.3 million subscribers and 20 percent of revenue in the nine-months to Sept. 30, the most recently available figures.
Zain group chief executive Scott Gegenheimer, who was appointed in December, said the company faced a number of challenges in Sudan, including fluctuating currency rates and the pound's low value.
Full-year profit for 2012 was 252.1 million dinars, down from 284.9 million dinars in 2011.
In Kuwait, Zain competes with Wataniya, a unit of Qatar Telecom (Qtel), and Viva, an affiliate of Saudi Telecom Co. - Reuters