Zain Group, a leading telecom provider across the Middle East and Africa, has posted consolidated net income of KD86.4 million ($287 million) during the first half (H1) of the year, marking a 5 per cent year-on-year (Y-o-Y) growth.

Zain served 47.4 million customers at the end of the six months ending June 30, reflecting a 5 per cent Y-o-Y increase.  

In 2018, Zain applied the new IFRS 9 and IFRS 15 accounting standards that negatively impacted the company’s key financial indicators, particularly EBITDA, a company statement said.

The Group’s consolidated revenues remained stable at KD503 million ($1.67 billion). The Group’s consolidated EBITDA for the period reached KD169 million ($563 million), down 20 per cent Y-o-Y in KD terms, reflecting an EBITDA margin of 34 per cent. Earnings per share for the half-year stood at 20 Fils ($0.07).

For H1 2018, foreign currency translation impact, predominantly due to the 40 per cent currency devaluation in Sudan from an average of 15.8 (SDG / USD), in H1 2017 to 26.5 in H1 2018 cost the company $94 million in revenue, $36 million in EBITDA and $9 million in net income, the statement said.

Excluding this currency translation impact, Y-o-Y revenues would have grown by 6 per cent for H1 2018, it added.

In second quarter of 2018 (Q2), Zain Group recorded consolidated revenues of KD244 million ($811 million), down 6 per cent in KD terms, compared to the same period in the previous year. EBITDA for the quarter reached KD85 million ($282 million), down 19 per cent Y-o-Y in KD terms, reflecting an EBITDA margin of 35 per cent. Net income for the quarter amounted to KD46 million ($150 million), up 3 per cent Y-o-Y in KD terms, reflecting earnings per share of 11 Fils ($0.03).

For Q2 2018, foreign currency translation impact, predominantly due to the 43 per cent currency devaluation in Sudan cost the company $52 million in revenue, $19 million in EBITDA and $4 million in net income.

Excluding the above-mentioned currency translation impact, Y-o-Y revenues would have remained stable and net income would have grown by 6 per cent for Q2, 2018, according to the statement.

Ahmed Al Tahous, chairman of Zain Group, said: “The company’s performance in the first half of the year has been pleasing given the numerous operational and forex challenges we face in several key markets. The Board is working closely with management in implementing wide-ranging programs to improve operational efficiency and cost optimization, to consistently deliver strong operational results.”

“We are also focused on maintaining our leadership position in most of our markets and future-proofing the business by seeking new value-creating opportunities as well as maximizing our state of the art networks by offering innovative digital services to meet the ever-growing demand for high-speed data connectivity,” he added.

Bader Nasser Al-Kharafi, Zain vice-chairman and Group CEO said: "In addition to the consolidated 5 per cent net income growth and 5 per cent customer growth, the first six-months of 2018 produced numerous positive developments such as the operational progress being achieved in Kuwait, Iraq and Sudan as well as the robust growth in our data monetization, Enterprise (B2B), and smart city initiatives especially in our key 4G markets of Kuwait, Saudi Arabia, Bahrain and Jordan.”

“Despite the sound operational progress and transformation we have undertaken across all our markets, it is unfortunate that several factors outside our control, namely the deteriorating currency issue in Sudan and the application of the new IFRS accounting standards, have impacted several performance indicators.

“Our strategic transformation into a digital lifestyle operator continues to make headway and it is pleasing to report data revenue growth of 10 per cent, which now represents 27 per cent of our total revenues. We will continue fostering new value accretive areas to unlock the many lucrative opportunities that exist in the digital arena, in a bid to drive the business forward. We expect continued growth in all facets of our operations in the second half of the year,” he added.

Al Kharafi concluded by commenting on Zain Group’s recent disclosure regarding Zain Saudi Arabia, whereby Zain KSA will be treated as a subsidiary of Zain Group and its financial results will be consolidated with the results of Zain Group starting from the third quarter of 2018.

“The impact of this consolidation will strengthen the Group's financial indicators on various levels, except for the net income, since Zain Group's ownership in Zain KSA will not change,” he said.

Zain Bahrain generated revenues of $87 million for the first six months of 2018, generating an EBITDA of $20 million, reflecting an EBITDA margin of 23 per cent. Net income amounted to $6 million, reflecting a 60 per cent increase Y-o-Y. Data revenues (excluding SMS & VAS) represent 45 per cent of overall revenues.  – TradeArabia News Service