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Zain Group generated revenue of US$ 1.9 billion and recorded net income of US$ 269 million for the first half of 2015
July 30, 2015, 11:41 am
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Zain Group, a pioneer of mobile telecommunications across the Middle East and Africa, announces its consolidated financial results for the six months ended 30 June, 2015.

Active customers served reach 46.3 million as at 30 June, 2015. Zain is the market leader in six of its eight operations by customer numbers.

H1-2015 Consolidated Group Key Performance Indicators (US$  and Kuwaiti Dinars)

Total Managed Active Customers

46.3 million           

Consolidated Revenues

US$  1.9 billion       (KD 562 million)

EBITDA

US$  806 million     (KD 241 million) 

EBITDA Margin

43 percent  

Net Income

US$  269 million     (KD 80 million)        

EPS

US$  0.07                   (KD 0.021)

 

Group Key Performance Indicators (US$  and Kuwaiti Dinars) for the first half of 2015

For the first six months of 2015, Zain Group generated consolidated revenues of US$  1.9 billion (KD 562 million) down 15 percent Year-on-Year (Y-o-Y) in US$  terms (down 10 percent Y-o-Y in KD terms). The Group’s consolidated EBITDA for the period reached US$  806 million (KD 241 million), down 14 percent Y-o-Y in US$  terms (down 9 percent Y-o-Y in KD terms). EBITDA margin stood at a healthy 43 percent at the end of the period. Consolidated Net Income reached US$  269 million (KD 80 million), down 34 percent Y-o-Y in US$  terms (down 30 percent Y-o-Y in KD terms). Earnings per share for the period stood at US$  0.07 (Fils 21).

Group Key Performance Indicators (US$  and Kuwaiti Dinars) results for 2nd quarter of 2015

For the second quarter of 2015, Zain Group generated consolidated revenues of US$  940 million (KD 283 million). EBITDA for the quarter reached US$  411 million (KD 124 million), resulting in a healthy EBITDA margin of 44 percent. Net Income for the quarter reached US$  130 million (KD 39 million). Earnings per share for the quarter amounted to US$  0.03 (Fils 10).

 

Key Operational Notes for H1-2015:

1.    Consolidated Group data revenues (excluding SMS and VAS) witnessed a 10 percent growth rate Y-o-Y, with data now constituting 20 percent of the Group’s total revenues.  

2.    Foreign currency translation impact mainly due to the appreciation of the US$  cost the company US$  57 million on revenue, US$  26 million on EBITDA and US$  13 million on net income.

3.    Healthy growth in Zain Saudi Arabia saw the operation increase its customer base by 25 percent to serve 11.3 million customers, with net losses narrowing by 29 percent Y-o-Y.

4.    Zain Sudan performed extremely well as revenues increased by 6 percent and net income by 31 percent (in US$  terms) Y-o-Y.

5.    Zain Iraq completed its operating licence requirement of listing on the Iraq Stock Exchange on 23 June, 2015, offering 25 percent of the company’s equity to the public.

6.    The continued social instability in Iraq and heightened levels of competition severely impacted Zain Iraq’s and consequently the Group’s overall key financial metrics

7.    Zain Group entered into the area of venture capital investment through several strategic participations in Middle East Venture Partners’ (MEVP) latest fund and WAMDA’s future growth fund, both of which invest in early stage and growth technology companies.

8.    Zain Group announced the expansion of its existing Partner Market Agreement with Vodafone, to deliver Machine-To-Machine (M2M) services to Enterprise and Government sectors across the region.

Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mr. Asaad Al Banwan said: “Zain Group continues to deal with the diverse market and social challenges that it faces to the best of its ability, especially in conflict areas where circumstances beyond our control have impacted our overall key financial results for the six month period.”

The Chairman continued, “The Board is working closely with senior management in driving efficiency and cost optimization, upgrading and expanding our networks, maintaining our market leadership positions across our country operations, and constantly evaluating business-enhancing and acquisition opportunities. The Board is confident that the company’s innovation and digital strategy will generate long-term value for shareholders.”

Zain Group CEO, Scott Gegenheimer noted, “Although our digital transformation and efficiency drive efforts are well on track across many of our operations, we are disappointed by the severe impact that the increased social instability and intense competition in Iraq is having on our overall financial results for the year to date. Nevertheless we are encouraged to see growth of our customer base in key markets, with both Saudi Arabia and Sudan witnessing healthy growth in all of their key financial indicators.”

 

Gegenheimer added, “We will continue to focus on and invest in our key markets to drive growth and efficiency and we remain focused on further exploiting our state-of-the-art 3G and 4G infrastructure and concentrating on new sources of incremental revenue in the digital space including enterprise services such as smart cities and M2M services, embracing the areas of future value realization within the telecoms sector.”

 Key markets operational review for H1- 2015:

Kuwait: Zain’s operation in Kuwait saw its customer base grow 14 percent Y-o-Y to now serve 2.9 million customers on its nationwide 4G network; impressive growth considering the highly penetrated market of over 220 percent. Revenues for the six months reached US$ US$  544 million, EBITDA reached US$  269 million and net income amounted to US$  166 million. The appeal of Zain Kuwait’s nationwide 4G network continues to grow with data revenues now representing 36 percent of the operation’s total revenues. Nevertheless, the operation remains the most efficient mobile operator within Zain Group and one of the most efficient in the region with an impressive 49.4 percent EBITDA margin.

Iraq: Zain Iraq launched 3G services at the beginning of the year and is very active in rolling out 3G services across the country that saw data revenues grow 17 percent Y-o-Y. The performance of Zain Iraq has been severely hampered by the escalation of social instability that has seen several million people displaced internally, coupled with Zain Iraq enduring frequent temporary network shutdowns and associated higher network operational costs. These exceptional circumstances coupled with intense competition and currency fluctuations, adversely affected the operation’s financial performance, as its revenues for the first six months reached US$  604 million, with EBITDA reaching US$  221 million and net income amounting to US$  60 million. The Zain Iraq team is committed to maintaining a resilient and efficient network regardless of the situation in the country and the operator foresees significant growth for all key financial indicators due to mobile data revenue growth given the pent-up demand for broadband services. The operator now serves 12.8 million customers.

Saudi Arabia: Zain Saudi Arabia is continually improving in all key aspects of its business. For the first six months of 2015, revenues reached US$  913 million, reflecting a 6 percent increase, while net losses decreased 29 percent to US$  122 million, compared to same period in 2014. EBITDA increased significantly by 39 percent, reaching US$  209 million, while the EBITDA margin improved to 23 percent compared to 18 percent in H1-2014. Encouragingly, data revenues grew significantly by 36 percent, representing 21 percent of total revenues at the end of the six-month period. The customer base in the Kingdom grew by a healthy 25 percent Y-o-Y to reach 11.3 million, the highest customer growth rate in the Group.

Sudan: The operation performed well in both US$  and local currency terms (SDG) with revenues increasing 6 percent Y-o-Y in US$  terms to reach US$  355 million (up 12 percent Y-o-Y in SDG terms) for the six-month period. EBITDA increased 2 percent Y-o-Y to reach US$  139 million (up 8 percent in SDG terms), with net income increasing 31 percent Y-o-Y to reach US$  78 million (up 39 percent in SDG terms). Data revenues have increased substantially Y-o-Y, up 78 percent in US$  terms (89 percent in SDG terms) to reflect 9 percent of total revenues, boding well for the future given the scarcity of broadband services. 

Jordan: Zain Jordan saw a slight decrease in revenues in H1-2015 of 3 percent to reach US$  223 million with net income reaching US$  45 million for the period. The operation witnessed a 14 percent increase in data revenue where data represented 27 percent of Zain Jordan’s total revenue at the end of the period, with this expected to grow substantially given the recent roll-out of 4G services in the Kingdom. The operation plans to expand and invest heavily in the expansion of 4G services throughout 2015. Zain Jordan’s customer base increased 2 percent Y-o-Y to reach 3.9 million.

Bahrain: During 2014, Zain Bahrain’s nationwide network witnessed a US$  100 million investment in a total network revamp and upgrade to 4G LTE, and the operation witnessed an 8 percent Y-o-Y increase in data revenues for the first six months of 2015, representing 34 percent of the company’s revenues. The appeal of the network and new marketing initiatives have driven customer growth by 4 percent Y-o-Y to now serve 801,000 customers.

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