Zain Group reports 3.9% drop in 2013 revenues

28 Jan 2014

Kuwait-based telecoms giant Zain Group has announced its consolidated financial results for the twelve months ended 31 December 2013, reporting a 3.9% annual decline in revenues to KWD1.24 billion (USD4.4 billion), down from KWD4.58 billion reported in 2012. Data revenues displayed healthy growth of 25%, due to increased investment in 3G and Long Term Evolution (LTE) technology upgrades. In the period under review, EBITDA reached KWD538.0 million, while the company booked a net profit of KWD216.4 million in 2013, a 14.1% decrease on the KWD252.1 million reported twelve months earlier. Asaad Al Banwan, chairman of the board of directors of Zain Group, explained the negative results by saying: ‘The company’s overall twelve-month financial results were substantially affected by currency translation impact, effectively slashing revenues by USD419 million and EBITDA by USD181 million. Without the effects of this currency translation impact, the company’s consolidated revenues would have grown 5% year-on-year with EBITDA growth of 2%. With regard to net income, if not due to both a foreign currency translation impact of USD92 million and an exceptional increase of USD57 million loss from ‘foreign currency revaluation’ for the twelve-month period, net income would have grown by 1%.’

In operational terms, Zain Group reported 8% growth in its consolidated customer base, which reached 46.1 million at 31 December 2013, equivalent to over three million net additions in the twelve months under review. In Kuwait subscribers increased by 12% y-o-y, to 2.5 million, while Bahrain reported 25% growth in its customer base over the same period. Iraq saw its customer base grow by 16% to 15.9 million, as the local unit’s networks expanded to cover Northern Iraq. Meanwhile, Saudi Arabia contributed 8.5 million users to the total subscriber base, equivalent to 13% annual growth. Elsewhere, Sudan reported a total of 11.7 million users, while customers in South Sudan increased by 22% to reach 812,000. Further, Touch’s Lebanese subscriber base increased by 5% to reach two million, while Zain secured another extension to its management contract in the country, renewable on 31 March 2014.

Zain Group CEO Scott Gegenheimer noted: ‘We have undertaken many transformational initiatives to drive operational efficiency and innovation across our operations which continue to perform well in local currency terms. Although our quarter-to-quarter results are positive, it is disappointing to report declining financial results for the full year considering the sound operational progress achieved during 2013. Factors outside of Zain’s control such as exceptional local currency devaluation in one key market, together with social instability in others continue to adversely affect our financial results. However, we are not discouraged by these set of circumstances and firmly believe that we are implementing the correct strategy for the company’s future growth.’

Bahrain, Iraq, Kuwait, Lebanon, Saudi Arabia, Sudan, South Sudan, Zain Group,

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