Zain Group, a leading telecommunications operator across the Middle East and Africa, generated consolidated revenues of KD552 million ($1.83 billion) for the first six months of 2016, down 2 per cent year-on-year (Y-o-Y).

The Group’s consolidated EBITDA for the period reached KD255 million ($846 million), up 6 per cent Y-o-Y in KD terms. EBITDA margin increased to a healthy 46.2 per cent at the end of the period, compared to 42.8 per cent for the same period of 2015.

Consolidated net income reached KD82 million up 2 per cent Y-o-Y. Earnings per share for the period stood at 21 Fils ($0.07).

The Group incurred foreign currency variance losses amounting to $57 million for the first six-month period of 2016, a $15 million increase from a $42 million impact for the same period in 2015, predominantly accounted for by operations in Iraq and Sudan.

For the second quarter of 2016, Zain Group recorded consolidated revenues of KD275 million ($912 million), down 3 per cent on the same period in the previous year. EBITDA for the quarter reached KD132 million ($439 million), up 7 per cent Y-o-Y in KD terms, reflecting an increased EBITDA margin of 48.1 per cent, compared to 43.7 per cent for the same period of 2015.

Net income for the quarter reached KD45 million ($148 million), up 14 per cent Y-o-Y in KD terms reflecting earnings per share of 11 Fils ($0.04).

For the second quarter of 2016, the Group incurred foreign currency variance losses amounting to $22 million, a $13 million decrease from a $35 million impact for the same period in 2015.

Asaad Al Banwan, chairman of Zain Group said: “It is pleasing to report growth in several of our key financial metrics for the second quarter and six-month 2016 periods given that Zain Group is exposed to conflict zones and currency fluctuations that continue to impact the growth potential of our business.”

“Zain is committed to innovation, quality of service and maintaining our leadership position in our markets, and the Board continues to work closely with management to continually evaluate business-enhancing and value-creating opportunities and to deal with the diverse market and social challenges that we face,” he added.

Zain Group CEO, Scott Gegenheimer noted: “The effectiveness of our data monetization initiatives and cost optimization drive in such challenging conditions across several of our key markets has been reflected in our improved results for the second quarter and six-month periods of 2016, outperforming our peers across many of our country operations. We are committed to a growth strategy in which we are successfully leveraging our state-of-the-art 4G infrastructure and implementing numerous data monetization initiatives. We draw confidence from the consolidated 7 per cent growth in data revenues for the six-month period, with data now accounting for 22 per cent of overall service revenues.”

“The severe impact of ongoing civil instability in Iraq is a concern for us, both from the perspective of the human suffering that it causes, but also due to the detrimental impact it has on our business. The sales tax instituted in the country also had a determined negative effect on our overall financial results, though we remain optimistic that the strategy we have in place is the correct one for our circumstances.

“Similarly, for our home operation in Kuwait, we are focused on dealing with the intense price competition there and we are confident that the initiatives we are implementing will result in incremental revenue generation. All the same, we are encouraged to see growth on several fronts in key markets, with Jordan, Saudi Arabia and Sudan witnessing healthy growth with respect to numerous key financial indicators,” he added.

“We are actively seeking and securing sources of incremental revenue in the digital space including enterprise M2M services and smart city solutions to governments and mega real estate projects across the region. We have entered into several strategic partnerships recently, which we strongly believe will fast-track and further enhance our ambitions to unlock many lucrative opportunities in the connected society revolution,” Gegenheimer concluded.

Operational review of key markets for H1

Kuwait: Maintaining its market leadership, Zain Group’s flagship operation saw its customer base serve 2.9 million in a very challenging six-month period that witnessed intense price competition impact its financial performance for the period. Revenues reached KD165 million ($548 million), EBITDA amounted to KD80 million ($264 million) and net income came in at KD44 million ($144 million). Zain Kuwait’s EBITDA margin stood at 48 per cent at the end of the six-month period, with data revenues (excluding SMS & VAS) forming 35 per cent of total revenues.

Saudi Arabia: The operation served 10.7 million customers at the end of the first six months of 2016. Revenues grew 5 per cent Y-o-Y to reach $956 million while EBITDA grew 4 per cent to reach $218 million and net losses amounted to $154 million for the period. Zain Saudi Arabia’s EBITDA margin reached 22.8 per cent. Impressively, the operator witnessed a 57 per cent Y-o-Y rise in data revenues (excluding SMS & VAS), representing 31 per cent of total revenues as the company invested heavily and expanded its modern 4G LTE network.  

Bahrain: Zain Bahrain generated revenues of $86 million for the six-month period, down 9 per cent Y-o-Y. EBITDA for the period reached $32 million, down 12 per cent, and reflecting an EBITDA margin of 38 per cent. Net income amounted to $4.9 million, reflecting an 11 per cent decrease. Data revenues (excluding SMS & VAS) increased 5 per cent Y-o-Y, representing 37 per cent of overall revenues. – TradeArabia News Service