Zain Group records net income of KD 40m for 2017 third quarter
Revenues reach KD 767m for first 9 months of 2017
KUWAIT: Zain Group, a leading mobile telecom innovator in eight markets across the Middle East and Africa, announces its consolidated financial results for the nine-month and thirdquarter periods ended 30 September 2017. The company ended the period serving 45.3 million customers.
For the first nine months of 2017, Zain Group generated consolidated revenues of KD 767 million ($2.5 billion), down 7 percent year-on-year (Y-o-Y) in KD terms, while consolidated EBITDA for the period reached KD 316 million ($1.04 billion), down 19 percent Y-o-Y, reflecting a healthy EBITDA margin of 41 percent. Consolidated net income reached KD 122 million ($404 million), reflecting a 2 percent Y-o-Y decrease. Earnings Per Share amounted to KD 0.031 ($0.10) for the nine-month period.
For the first nine months of 2017, foreign currency translation impact, predominantly due to the 61 percent currency devaluation in Sudan from average rate of 6.4 (SDG/USD) in the year to date to September 2016 to 16.5, cost the company $441 million in revenue and $76 million in net income.
Excluding this currency translation impact, Y-o-Y revenues and net income would have grown by 8 percent and 16 percent respectively for the first ninemonths of 2017.
For the third quarter of 2017, Zain Group generated consolidated revenues of KD 259 million ($860 million), down 6 percent Y-o-Y. EBITDA for the quarter reached KD 104 million ($346 million), a decrease of 23 percent Y-oY, reflecting a 40 percent EBITDA margin. Net income for the period amounted to KD 40 million ($133 million), reflecting 6 percent Y-o-Y decrease. Earnings Per Share for the quarter reached KD 0.010 ($0.03).
For the 3rd quarter of 2017, foreign currency translation impact, predominantly due to the 63 percent currency devaluation in Sudan cost the company $148 million in revenue and $20 million in net income. Excluding the abovementioned currency translation impact, Y-o-Y revenues and net income would have grown by 11 percent and 9 percent respectively for Q3, 2017.
Key Operational Notes for Q3, 2017
1. Group data revenues (excluding SMS and VAS) witnessed a 3 percent growth for the first nine months of 2017, representing 25 percent of the Group’s total revenues.
2. Zain sold 425.7 million treasury shares to Omantel for KD 255.4 million ($846.1 million) representing 9.84 percent of Zain’s fully paid up and issued share capital at K$0.600 per share
3. On October 10, 2017, Zain announced an agreement to sell and lease back its telecom towers in Kuwait for KD 50 million ($165 million) to IHS Holding Limited, in partnership with Towershare Management Limited in a regional first
4. Quarter highlighted by notable 10 percent net income growth in Kuwait, robust customer growth of 16 percent in Iraq, healthy revenue and data growth in Saudi Arabia and Jordan, plus Sudan continuing to perform exceptionally well in local currency terms
5. Zain Group’s smart city arm NXN (formerly neXgen) signed a Memorandum of Understanding with the National Digitization Unit (NDU) of the Kingdom of Saudi Arabia marking NDUs first step towards harnessing open data to help accelerate the digital transformation of the Kingdom. The MOU underpins an existing partnership between the two entities to support and develop NDU’s digital transformation agenda in the domains of digital services development and activation, platform innovation and most importantly data governance.
Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mohannad Al-Kharafi said, “The concerted focus on expanding and exploiting our high-quality networks is proving instrumental as we recorded growth in several key financial metrics across many of our markets for the third-quarter and nine-month periods of 2017. Especially pleasing was the healthy revenue and net income growth in our home market of Kuwait and in Saudi Arabia where the turnaround continues to progress. The Board is working closely with management to maintain our market leadership and overcome the many socio-economic challenges across our footprint.”
Bader Nasser Al-Kharafi, Zain ViceChairman and Group CEO commented, “The third quarter and the immediate period beyond witnessed two major transactions that are value enhancing to our stakeholders and will have a profound positive effect on the future of our digital lifestyle strategy. The acquisition of treasury shares by Omantel brought immediate tangible benefit and so will the imminent sale of our telecom towers in Kuwait.”
Al-Kharafi continued, “Both transactions will enhance our financial flexibility as we continue to seek opportunities in the digital space and invest in upgrading our modern networks to enhance our customers’ mobile experience. One transaction set the course for future co-operation with Omantel, in which the two companies will explore mutually beneficial synergies and business enhancing opportunities across the region. The other marked the beginning of a strategy to unlock value from our fixed infrastructure, which can be more efficiently deployed in new technologies and higher yielding investments. The selling of our telecom towers will be replicated in other markets further enabling us to focus on our core business and driving customer satisfaction.”
The Group CEO added, “We continue to undertake transformational programs across all markets and have seen operational progress on several fronts. These include multiple data monetization, smart city and Enterprise (B2B) initiatives across our operations, all which are fast-growing and profitable business areas. While these areas continue to grow, it is unfortunate that one main factor outside of our control, the Sudan currency devaluation issue, has impact- ed overall results for the quarter and yearto-date.
Nevertheless, we draw confidence from the future prosperity of Sudan given the recent lifting of the US sanctions and expected appreciation of the country’s currency.”
Bader Al-Kharafi concluded, “The Board and executive management strongly believe in our strategic and transformational direction and look forward to the final quarter of the year with optimism as we explore more new business and value creating opportunities.”
Operational review of key markets for the nine months ended 30 September 2017
KUWAIT: Maintaining its market leadership, Zain Group’s flagship operation saw its customer base serve 2.5 million in a very challenging nine-month period that witnessed intense price competition. Nevertheless, revenues reached KD 249 million ($820 million), EBITDA amounted to KD 100 million ($329 million) and net income came in at KD 62 million ($206 million). Specifically, for the 3rd quarter of 2017, Zain Kuwait’s revenues and net income grew 6 percent and 10 percent year-on-year respectively. Data revenues (excluding SMS & VAS) formed 32 percent of the operation’s total revenues. Zain Kuwait remains one of the most efficient operations within the Group with a 40 percent EBITDA margin.
IRAQ: Despite the exceptional socioeconomic circumstances coupled with the continuation of intense price competition, Zain Iraq achieved $811 million revenues due to the impressive growth in data usage and numerous customer acquisition initiatives in the northern regions of the country. The operation’s efficiency drive saw EBITDA reach $281 million, reflecting a 35 percent EBITDA margin. Net income amounted to $24 million for the period. Zain Iraq leads the market serving 13.7 million customers, which represented an impressive 16 percent Y-o-Y increase.