Zain Group, which operates in eight markets across the Middle East and Africa, announced consolidated revenues of KD277 million (US$919 million) for the first quarter of 2016.
The revenues are similar to the first quarter of 2015 in KD terms, while Zain ended the period serving 45.5 million customers. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter reached KD123 million (US$407 million), up five per cent year-on-year in KD terms, while net income was KD37 million (US$124 million), a fall of nine per cent year-on-year.
Zain incurred foreign currency losses of US$35 million for the three-month period, up by US$28 million from the US$7 million hit it took in the same period in 2015, predominantly in Sudan and Iraq. Continued social unrest in Iraq - coupled with heightened levels of price competition and implementation of a new 20 per cent sales tax on mobile services - had a negative effect on Zain’s metrics.
The company made substantial investments in 3G and 4G LTE network expansion and upgrades, which it said were continuing to pay off as data revenues grew eight per cent year-on-year to represent 21 per cent of the Group’s consolidated revenues. “The Board and executive management are content with our stable consolidated revenues and higher EBITDA results given the many challenging socio-economic circumstances we are dealing with in a number of our key markets of operation,” said Asaad Al Banwan, chairman of the Board of Directors of Zain Group.
“We are managing the highly changeable environments we face particularly with regard to the social unrest and hefty tax increases in Iraq that has impacted mobile consumption, as well as the intense price competition in our home market of Kuwait in a pragmatic manner, and we remain hopeful of the improving conditions across all our markets.” Al Banwan said Zain was pleased with the performance of its Jordan and Saudi Arabia operations - where it saw growth having invested significantly in 3G and 4G network expansion upgrades and spectrum licenses.
Zain Group CEO Scott Gegenheimer said it was “unfortunate” that “unavoidable” currency fluctuations and unique market conditions impacted upon the company’s net income. “Our data monetisation initiatives on multiple fronts are bearing fruit across all key markets and we draw confidence from the eight per cent growth in the uptake of data services, which now account for 21 per cent of overall service revenues. The Group will continue to foster and develop this key area of the business,” he said. “Several strategic partnerships we have entered into recently are set to fast-track and enhance Zain’s delivery of innovative digital services to customers and enterprises, as well as unlock many lucrative opportunities in the connected society revolution by delivering smart city services and solutions to governments and mega real estate projects across the region.”
He said Zain is committed to its strategy of implementing operational efficiency and data monetisation initiatives as it looks to develop new business areas and become a diversified and innovative digital lifestyle provider.