Category: Business Written by The Nation Mirror Admin
• Total customers served stood at 43.7 million
• Substantial investments in 3G and 4G LTE networks continue to pay off as data revenues surge by a healthy 16%, forming 15% of total Group revenues
• Instability in Iraq and unavoidable Forex impacts affect key financial indicators
Kuwait - 3 November 2014
Zain Group, the pioneer of mobile telecommunications across the Middle East and Africa, announces its consolidated financial results for the nine-month and third-quarter period ended 30 September, 2014.
Zain Group serves 43.7 million customers as of 30 September 2014. Zain is the market leader in six of its eight operations by customer numbers.
Group Key Performance Indicators (USD and Kuwaiti Dinars) for the first nine-months 2014
Consolidated Revenues USD 3.3 billion - KD 921 million stable
EBITDA USD 1.4 billion - KD 389 million down 2%
EBITDA Margin 42.2%
Net Income USD 570 million - KD 161 million down 2%
EPS USD 0.15 - 41 fils
Nine months ended 30 September 2014 comparative results to same period in 2013
For the first nine months of 2014, Zain Group generated stable consolidated revenues of USD 3.3 billion (KD 921 million), while consolidated EBITDA for the period reached USD 1.4 billion (KD 389 million) down 2%, reflecting a healthy EBITDA margin of 42.2%. Consolidated net income reached USD 570 million (KD 161 million), reflecting a 2% Y-o-Y decrease and Earnings Per Share of USD 0.15 (KD 0.041) for the nine-month period.
Group Key Performance Indicators (USD and Kuwaiti Dinars) for the third quarter of 2014
Total Managed Active Customers 43.7 million down 1% on Q3, 2013
Consolidated Revenues USD 1.04 billion - KD 294 million down 6%
EBITDA USD 434 million - KD 123 million down 8%
EBITDA Margin 41.9%
Net Income USD 163 million - KD 46 million down 13%
EPS USD 0.05 - 12 fils
Q3- 2014 comparative results with Q3- 2013
For the third quarter of 2014, Zain Group recorded consolidated revenues of USD 1.04 billion (KD 294 million) down 6% when compared to USD 1.1 billion (KD 313 million) for the same period in 2013. EBITDA for the quarter reached USD 434 million (KD 123 million) compared to USD 471 million (KD 134 million), a decrease of 8%. Net income for the quarter amounted to USD 163 million (KD 46 million), reflecting a 13% decrease compared to USD 186 million (KD 53 million) for the same period of 2013. Earnings Per Share for the quarter reached USD 0.05 (KD 0.012).
Key Operational Notes:
1. Group data revenues (excluding SMS and VAS) witnessed a healthy 16% growth for the first nine-months of 2014, forming 15% of the Group’s total revenues.
2. The recent appreciation of the US Dollar against Kuwaiti Dinar along with foreign currency revaluation losses predominantly in the Republic of Sudan and to a lesser degree in Iraq, cost the company USD 111.1 million for the first nine months of 2014 (USD 53.7 million last year) and USD 52.4 million specifically for the third quarter of the year (USD 21.4 million same quarter last year). Excluding the currency variance impact, net income would have increased by 7.5% for the nine months to 30 September 2014 and would have been up 3.9% for the third quarter of 2014.
3. In Iraq, due to a change in the definition of an “active customer” implemented by the country’s regulator, Zain’s customer base in Iraq decreased 9% from 14.5 million at the end of the third quarter 2013 to 13.3 million customers at the end of the third quarter 2014.
4. As mandated by its mobile operating licence, Zain Bahrain completed an Initial Public Offering of 15% of its share capital on 30 September, 2014. All new shareholders were allotted their shares on 9 October, 2014 and the company expects shares to be traded on the Bahrain bourse during November 2014.
Commenting on the results, the Chairman of the Board of Directors of Zain Group, Mr. Asaad Al Banwan said, “Zain’s ability to maintain relatively stable revenues and healthy EBITDA and profit margins for the first nine months of the year is an achievement, reflecting the company’s ability to deal competently with the rise in competition and the other business and social challenges it faces.”
The Chairman continued, “As a market leader in six of our eight operations, the Board remains focused on further strengthening our dominant presence in our home market of Kuwait while at the same time investing in network upgrades and enhancing our positions across all our other markets. We are constantly evaluating business enhancing and acquisition opportunities that will drive value for shareholders.”
Zain Group CEO, Scott Gegenheimer noted, “Despite unique circumstances and challenges in some of our key markets during the third quarter of 2014, the accumulated financial results achieved during the first nine months of the year are testament to the transformation and efficiency efforts being undertaken across all operations. Kuwait and several other key markets continue to perform well, and we are focused on further investing in and exploiting our 3G and 4G infrastructure to take advantage of the explosion of data usage by our customer base.”
Key markets operational review:
With respect to Zain’s flagship operation in Kuwait, Mr. Gegenheimer acknowledged the growth in all the operation’s key financial indicators, which are even more impressive considering the highly penetrated market conditions present. Zain Kuwait performed well over the first nine months of 2014, with revenue reaching USD 935 million, EBITDA reaching USD 440 million and net income amounting to USD 289 million, reflecting Y-o-Y growth of 5%, 4% and 4% respectively. The appeal and quality of Zain Kuwait’s nationwide 4G LTE network is truly differentiating the mobile operator from its peers, with data revenues growing by 14% Y-o-Y, representing 31% of the operation’s total revenues. The operator also witnessed impressive annual customer growth of 10% to now serve 2.7 million customers.
Mr. Gegenheimer noted the solid performance of Zain Iraq over the first nine months of 2014, considering the escalation of social instability in Iraq in recent months that has seen several million people displaced internally coupled with Zain Iraq enduring frequent temporary network shutdowns and associated higher network operational costs. Despite these exceptional circumstances that adversely affected the operation’s financial performance specifically for the third quarter of 2014, the operation’s revenues for the first nine months reached USD 1.24 billion, a moderate 4% decrease, with EBITDA reaching USD 463 million, down 11% and net income amounting to USD 224 million, down 14% year-on-year.
Furthermore, Mr Gegenheimer reiterated the Group’s and the local Zain Iraq team’s commitment to maintaining a resilient and efficient network regardless of the situation in the country, also noting the operator’s readiness to launch 3G services as soon as the licence is acquired. Mr. Gegenheimer foresees significant growth on all key financial indicators from the introduction of 3G in country.
Zain Iraq is the largest contributor to Zain Group’s customers, accounting for 30% of the base, while its revenues represent 38% of the Group’s total consolidated revenues. Mr. Gegenheimer reconfirmed Zain Group’s attentiveness and commitment to its regulatory requirement to undertake an IPO in Iraq in the near future at an appropriate time that is conducive to its business operations.
Mr. Gegenheimer noted the continued improvement of the mobile operation in the Kingdom. For the first nine months of 2014, net losses decreased by 19% compared to same period in 2013, EBITDA increased significantly by 21% reaching USD 220 million with the EBITDA margin improving reaching 17% compared to 13% in same period in 2013. Impressively, data revenues grew significantly by 43%, representing 17% of total Zain KSA revenues.
In regard to Sudan, Mr Gegenheimer noted that the operation continues to perform well in local currency terms (SDG) with revenues increasing 13% and EBITDA increasing 11% Y-o-Y, with net income decreasing by 8%. Excluding the forex loss variance, net income would be higher by 18%. Data revenues have increased substantially, up 75% to reflect 6% of total revenues. Of note was the 7% reduction of customers due to the registration policy implemented by the country’s regulator, with the operation now serving 11.1 million customers.
Zain Jordan continues to grow its customer base, which reached 4 million, up 3% for the first nine months of the year. The operation witnessed a 14% increase in data revenue where data represents 23% of Zain Jordan’s total revenues, said Mr Gegenheimer.
Zain Bahrain’s nationwide network has recently been upgraded to 4G LTE, and the operation witnessed a 4% increase in data revenues for the first nine months of the year, representing 30% of the company’s revenues. The appeal of the enhanced network and new marketing initiatives has driven customer growth of 4% to now serve 787,000 customers.
About Zain Group
Zain is a leading telecommunications operator across the Middle East and Africa providing mobile voice and data services to over 43.7 million active customers as of 30 September, 2014. With a commercial presence in 8 countries, Zain operates in: Bahrain, Iraq, Jordan, Kuwait, Saudi Arabia, Sudan and South Sudan. In Lebanon, the Group manages ‘touch’ on behalf of the government. In Morocco, Zain has a 15.5% stake in Wana Telecom, now branded ‘INWI’, through a joint venture. Zain is listed on Kuwait Stock Exchange (stock ticker: ZAIN).