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Zain announces record financial results for 2008

Mobile operator Zain is present in 22 countries. It has just released its 2008 results, and is reporting great strides in key performance indicators. For example, its active customer total is up to 63.5 million, 50% over 2007, its consolidated revenues are up 26% to US$7.44 billion and EBITDA is up 15% to US$2.78 billion.

Zain also witnessed  several landmark events, not least when Iraqi operators MTC-Atheer and Iraqna united as Zain soon after attaining a 15-year licence. By April 2008 One Network was launched in four Middle East countries (Bahrain, Iraq, Sudan and Jordan) which provided 14 million Zain customers with preferential cross-border rates when travelling, while by  August Zain ahad achieved  the biggest brand launch ever in Africa when Celtel became Zain. This move coincided with the linking of two continents to a single market which even Europe has never achieved: 15 countries, 50 million customers and potentially 500 million people to benefit from the service. By the end of 2008 Zain had entered Saudi  Arabia and Ghana.

Zain CEO Dr Saad Al Barrak comments: "I am delighted that for the first time we are announcing our financial results under the umbrella of one brand, following the successful rebranding of all our Africa operations to Zain and the successful launch of commercial operations in the Kingdom of Saudi Arabia and Ghana. We firmly believe that the Zain brand will act as a catalyst and propel the company to our 2011 target of being a top-ten global operator...Despite a very challenging environment on many fronts and huge investments in network expansion, the Group was able to achieve appealing and realistic levels of profitability during 2008, a testament to the sound management practices and excellent operational performance of all 22 operations in the Middle East and Africa."
Dr Al Barrak also commented that in 2008 "...Zain committed over US$3 billion in network upgrades and expansion, primarily in vast and viable markets such as Ghana, Iraq, Nigeria, Saudi Arabia and Sudan, all resulting in robust customer acquisition and revenues. These markets will continue to grow and we expect to further reap further rewards in the years ahead especially since they are all part of our ground-breaking and customer-alluring One Network...Overall, due to our massive network investment across all operations, we expect and are targeting a 30% increase on many of our financial indicators in 2009."
Zain has in some respects had a challenging 12 months. It has had to defend a share price that sees it trading at historical low Price Earnings multiples, amid the negative sentiment that is gripping world stock markets and seeing billions wiped off valuations - including in the range of 30-70% for telecom groups. For Dr Al Barrak: "We believe this is unjustifiable in Zain's case as the debt levels of the Group fall within a reasonable range when compared to many other international mobile groups. The Group has sound reserves, an excellent track record of wise borrowing and repayment, as well as diverse funding sources to support its strategic expansionary plans. Today's stock price represents excellent value for investors."
In more general terms Dr Al Barrak continues: "Zain views this crisis as an opportunity to make further acquisitions given valuations of many prime telecom assets are considerably lower than they were just six months ago and we are actively pursuing such prospects.  Going forward in the current economic climate, Zain will adapt its strategy where it makes commercial sense and where it is economically viable to take up an attractive opportunity. This includes share swapping with and acquiring minority stake deals in other telecom operations."  He remains optimistic: "Despite the fact that company had to endure higher borrowing rates in the second half of the year and a currency exchange cost of US$ 138 million which was predominantly in Africa, it still performed admirably. Without this currency fluctuation we would have added another 12% to the net profit figure."

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