Zain Group's third quarter net profit fall 6% on currency woes

Kuwait-based telco reports 40m dinar net profit

Omantel's revenues during the first nine months of 2018 increased to Dh14.3bn. Bloomberg

The Zain Group, Kuwait’s largest telecom provider, said on Sunday its third-quarter net profit plunged 6 per cent year-on-year to 40 million dinars (Dh485m) because of foreign currency fluctuations in countries including Sudan.

Consolidated revenue fell 6 six per cent year-on-year in the third quarter to 259m dinars, the company said in a statement to the bourse.

Earnings before interest, tax, depreciation and amortization for the quarter reached 104m dinars, a decrease of 23 per cent year-on-year.

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Zain Group said performance in the third quarter was affected by foreign currency fluctuations – in particular a 63 per cent currency devaluation in ­Sudan, which cost the company US$148m in revenue and $20m in net income.  

Excluding this impact, year-on-year revenues and net income would have grown by 11 per cent and 9 per cent respectively for the quarter, the group said.

Zain's total customer base stood at 45.3 million in the third quarter. The period was marked by 10 per cent net income growth in Kuwait, "robust" customer growth of 16 per cent in Iraq, and healthy revenue and data growth in Saudi Arabia and Jordan.

Zain Group chairman 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.”  

Among the operational highlights during the third quarter were the sale of ­almost 10 per cent of Zain, in August to Oman Telecommunications Com­pany  or Omantel for 255.4m dinars, and the imminent sale-and-leaseback of the company's telecom towers in Kuwait for 50m dinars to IHS Holding, Zain said.

Bader Al Kharafi, Zain vice-chairman and group chief executive said: "Both transactions will enhance our financial flexibility as we continue to seek opportunities in the digital space and upgrade our networks.

“One transaction set the course for fut­ure co-operation with Omantel…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.”

Omantel said earlier this month it has also agreed to buy a further 12.1 per cent stake in Zain, making it the second-largest shareholder in the Kuwait operator.