Zain Group generated revenue of USD 1.9 billion and recorded net income of USD 269 million for the first half of 2015
Jul 30, 2015
Customers served reach 46.3 million, healthy growth in several key markets
Focus on exploiting 3G and 4G networks sees consolidated data revenues across all operations increase by 10%, representing 20% of total Group revenue
Company’s efficiency drive sees EBITDA margin stand at a healthy 43%
Continued social instability in Iraq severely impacts consolidated results
Kuwait - 29 July, 2015:
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 (USD and Kuwaiti Dinars)
|Total Managed Active Customers||46.3 million|
|Consolidated Revenues||USD 1.9 billion (KD 562 million)|
|EBITDA||USD 806million (KD 241 million)|
|Net Income||USD 269 million (KD 80 million)|
|EPS||USD 0.07 (KD 0.021)|
Group Key Performance Indicators (USD and Kuwaiti Dinars) for the first half of 2015
For the first six months of 2015, Zain Group generated consolidated revenues of USD 1.9 billion (KD 562 million) down 15% Year-on-Year (Y-o-Y) in USD terms (down 10% Y-o-Y in KD terms). The Group’s consolidated EBITDA for the period reached USD 806 million (KD 241 million), down 14% Y-o-Y in USD terms (down 9% Y-o-Y in KD terms). EBITDA margin stood at a healthy 43% at the end of the period. Consolidated Net Income reached USD 269 million (KD 80 million), down 34% Y-o-Y in USD terms (down 30% Y-o-Y in KD terms). Earnings per share for the period stood at USD 0.07 (Fils 21).
Group Key Performance Indicators (USD and Kuwaiti Dinars) results for 2nd quarter of 2015
For the second quarter of 2015, Zain Group generated consolidated revenues of USD 940 million (KD 283 million). EBITDA for the quarter reached USD 411 million (KD 124 million), resulting in a healthy EBITDA margin of 44%. Net Income for the quarter reached USD 130 million (KD 39 million). Earnings per share for the quarter amounted to USD 0.03 (Fils 10).
Key Operational Notes for H1-2015:
- Consolidated Group data revenues (excluding SMS and VAS) witnessed a 10% growth rate Y-o-Y, with data now constituting 20% of the Group’s total revenues.
- Foreign currency translation impact mainly due to the appreciation of the USD cost the company USD 57 million on revenue, USD 26 million on EBITDA and USD 13 million on net income.
- Healthy growth in Zain Saudi Arabia saw the operation increase its customer base by 25% to serve 11.3 million customers, with net losses narrowing by 29% Y-o-Y.
- Zain Sudan performed extremely well as revenues increased by 6% and net income by 31% (in USD terms) Y-o-Y.
- Zain Iraq completed its operating licence requirement of listing on the Iraq Stock Exchange on 23 June, 2015, offering 25% of the company’s equity to the public.
- 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
- 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.
- 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% 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%. Revenues for the six months reached USD 544 million, EBITDA reached USD 269 million and net income amounted to USD 166 million. The appeal of Zain Kuwait’s nationwide 4G network continues to grow with data revenues now representing 36% 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% 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% 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 USD 604 million, with EBITDA reaching USD 221 million and net income amounting to USD 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 USD 913 million, reflecting a 6% increase, while net losses decreased 29% to USD 122 million, compared to same period in 2014. EBITDA increased significantly by 39%, reaching USD 209 million, while the EBITDA margin improved to 23% compared to 18% in H1-2014. Encouragingly, data revenues grew significantly by 36%, representing 21% of total revenues at the end of the six-month period. The customer base in the Kingdom grew by a healthy 25% Y-o-Y to reach 11.3 million, the highest customer growth rate in the Group.
Sudan: The operation performed well in both USD and local currency terms (SDG) with revenues increasing 6% Y-o-Y in USD terms to reach USD 355 million (up 12% Y-o-Y in SDG terms) for the six-month period. EBITDA increased 2% Y-o-Y to reach USD 139 million (up 8% in SDG terms), with net income increasing 31% Y-o-Y to reach USD 78 million (up 39% in SDG terms). Data revenues have increased substantially Y-o-Y, up 78% in USD terms (89% in SDG terms) to reflect 9% 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% to reach USD 223 million with net income reaching USD 45 million for the period. The operation witnessed a 14% increase in data revenue where data represented 27% 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% Y-o-Y to reach 3.9 million.
Bahrain: During 2014, Zain Bahrain’s nationwide network witnessed a USD 100 million investment in a total network revamp and upgrade to 4G LTE, and the operation witnessed an 8% Y-o-Y increase in data revenues for the first six months of 2015, representing 34% of the company’s revenues. The appeal of the network and new marketing initiatives have driven customer growth by 4% Y-o-Y to now serve 801,000 customers.