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Zain Group records robust revenues of $1.1bn in Q1

Asaad Al-Banwan & Scott Gegenheimer

Asaad Al-Banwan & Scott Gegenheimer

KUWAIT: Zain Group, the pioneer in mobile telecommunications across the Middle East and Africa, announced its consolidated financial results for the first quarter ended 31 March, 2014.
Regarding customers, Zain Group added 2.1 million net additions over the last twelve months to serve 46.2 million as of 31 March 2014, reflecting a 5 percent growth rate. Zain is the market leader in six of its eight operations by customer numbers.
For the first quarter of 2014, Zain Group generated consolidated revenues of $1.1 billion (KD 311.1 million) up 4 percent when compared to the same period in 2013. EBITDA for the quarter reached $469 million (KD 132.2 million) compared to $448.7 million during Q1-2013, a comparative increase of 5 percent. Net income for the quarter reached $198.4 million (KD 55.9 million), reflecting an 8 percent increase compared to $184.2 million for the same period of 2013. Earnings Per Share for the quarter reached $0.05 (14 fils).

Key operational notes
1.    Consolidated Group data revenues (excluding SMS and VAS) witnessed a healthy 27 percent growth year-on-year, with data now forming 15 percent of all Zain’s service revenues.
2.    Two major loans were announced at the Group level: In early March 2014, the successful closing of a $ 800 million five-year amortizing syndicated revolving credit facility. This development was a resounding vote of confidence from the financial community as 11 leading regional and international banks participated. Additionally, in early April 2014, Zain secured a favorable $250 million five-year Murabaha facility, led by Kuwait-based Boubyan Bank and with the participation of Kuwait International Bank and Qatar Islamic Bank.
3.    At the Mobile World Congress in Barcelona, Zain announced the publication of a report entitled, The Socio-Economic Impact of Mobile Telecommunication in the MENA Region. The report was completed in collaboration with PricewaterhouseCoopers, and underlines the seriousness with which Zain takes its role as thought-leader and regional innovator, as well as the Group’s eagerness to share its experience and insights with the wider community.
4.    In Lebanon, the management agreement of mobile operator ‘Touch’ was extended by three months from 1 April, 2014.
Commenting, the Chairman of the Board of Directors of Zain Group, Asaad Al-Banwan said: “Zain’s ability to increase revenues, EBITDA and earnings year-on-year is a significant achievement in today’s environment, reflecting Zain’s resilience in dealing competently with the rise in competition and a multitude of other market challenges it faces. With a solid 46.2 million customer base that continues to grow, we are confident the company will continue to flourish and produce positive results.”
On his part, Zain Group CEO, Scott Gegenheimer noted, “Across many of our markets, we are witnessing growth in key financial indicators as we drive efficiency and innovation. The healthy 27 percent annual growth rate in data revenues with data now reflecting 15 percent of all Zain Group’s service revenues, emphasizes the appeal and quality of our product and service offerings and justifies the huge investment we continue to make in our 3G and 4G networks.”
Regarding Zain’s operation in Kuwait, the Group CEO welcomed the growth in all key financial indicators considering the highly saturated market conditions present with penetration rates of around 205 percent. “Zain Kuwait performed exceptionally well during the quarter, with revenue reaching $313 million, EBITDA reaching $153 million and net income of $98 million reflecting year-on-year (Y-o-Y) growth of 9 percent, 12 percent and 8 percent respectively. The appeal and quality of Zain Kuwait’s nationwide 4G LTE network is truly differentiating the mobile operator amongst its peers, with data revenues growing by 23 percent Y-o-Y, representing 31 percent of the operation’s total revenues. The operator also witnessed impressive customer growth of 8 percent to now serve 2.5 million customers.”
Zain Iraq also performed exceptionally well in the first quarter of 2014 with revenues of $432.3 million, EBITDA of $167.8 million and net income of $78.3 million reflecting Y-o-Y growth of 3 percent, 3 percent and 24 percent respectively compared to Q1-2013. “The operation performed remarkably well and we expect Zain Iraq to be one of the Group’s major growth drivers in all facets of the business during the course of the year. The 18 percent growth in customer numbers Y-o-Y to reach 16 million bodes well for the on-going development of the company given the imminent granting of 3G spectrum this year. Zain Iraq is the largest contributor to Zain Group’s customer base with 35 percent of all customers and Zain Iraq’s revenues represents 40 percent of total Group consolidated revenues.”
Additionally, the Group CEO also noted the improved performance from Zain Saudi Arabia. “The transformation efforts by the new management in Saudi Arabia are taking effect, highlighted by the 45 percent Y-o-Y increase in EBITDA with net losses narrowing by 20 percent and by 31 percent compared to Q4, 2013. The operator saw a phenomenal 52 percent rise in data revenues Y-o-Y reflecting 17 percent of total revenues as the company expands its state-of-the-art 4G LTE network. The efficiency drive coupled with new commercial strategies is proving successful to date and we are confident that the management in Saudi Arabia will successfully drive the mobile operator towards fulfilling its potential.”

Other Zain country operational First quarter 2014 highlights:
Bahrain: Customer base grew by 13 percent Y-o-Y and the operation recently launched 4G LTE, which is driving future growth. Data revenues grew 7 percent with data revenue reflecting 29 percent of total revenues.
Jordan: Despite a highly competitive and penetrated market, Y-O-Y the operation grew its customer base by 5 percent and net income by 2 percent. Data revenue growth was a healthy 19 percent with data revenue reflecting 24 percent of total revenues. In mid April 2014, Zain Jordan attained frequencies to enhance and expand its third generation network and also to roll-out 4G LTE in the Kingdom, boding well for the operator to provide superior mobile and data services to its customer base going forward.
Lebanon: Management contract extended to 30 June 2014
Sudan: Revenues grow by 4 percent in USD terms with a customer base of 11.9 million at the end of the period. In local SDG currency terms, revenues grew by 8 percent year-on-year
South Sudan: Several challenges resulted in reduction of customer base.

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