Zain Group full year 2016 net profit up 2% as company records revenues of KD 1.1 billion (USD 3.6 billion)
- Board of Directors recommends cash dividend of 35 Fils per share- EBITDA up 3% for full year 2016 to reach a healthy 47% margin- Data revenues increase 6%, representing 23% of total Group revenues- Significant currency devaluation in Sudan, and negotiated settlement of tax disputes in Iraq, impacts results
Kuwait - 19 February, 2017
Zain Group, a leading mobile telecom innovator in eight markets across the Middle East and Africa, announces its consolidated financial results for the year 2016, and fourth quarter ended 31 December, 2016. Zain served 47 million customers at the end of 2016, reflecting a 3% increase year-on-year (Y-o-Y).
Group Key Performance Indicators (KD and USD) for the Full-Year 2016
For the full-year 2016, Zain Group generated consolidated revenues of KD 1.1 billion (USD 3.6 billion), down 4% Y-o-Y, while consolidated EBITDA for the period grew by 3% Y-oY and reached KD 512 million (USD 1.7 billion), reflecting a healthy EBITDA margin of 47%. Consolidated net income reached KD 157 million (USD 519 million), up 2% and reflecting Earnings Per Share of 40 Fils (USD 0.13).
For the full-year 2016, foreign currency translation impact, predominantly due to the 60% currency devaluation in Sudan from 6.4 to 15.9 (SDG / USD) in the beginning of November 2016, cost the company USD 92 million in revenue, USD 38 million in EBITDA and USD 44 million in net income.
The Board of Directors of Zain Group recommended a cash dividend of 35 Fils per share subject to the Annual General Assembly and regulatory approvals.
Group Key Performance Indicators (KD and USD) for the 4th Quarter 2016
For the fourth quarter of 2016, Zain Group recorded consolidated revenues of KD 261 million (USD 860 million), a decline of 8% on the same period of the previous year (Q-o-Q). EBITDA for the quarter reached KD 122 million (USD 400 million), reflecting a healthy EBITDA margin of 47%. Net income for the quarter reached KD 32 million (USD 106 million), reflecting Earnings Per Share of 8 Fils (USD 0.03).
Specifically, for the fourth quarter of 2016, currency translation impact cost the company USD 83 million in revenue, USD 33 million in EBITDA and USD 42 million in net income, again predominantly due to Sudan currency devaluation from 6.4 to 15.9 (SDG / USD), a 60% decrease.
Key Operational Notes for 12 months ended 31 December, 2016:
Gegenheimer continued, "We are delighted by the success of our data monetization and Enterprise (B2B) initiatives across our operations, both of which are fast-growing and profitable business areas. During 2016 in key operations, we built-up dedicated B2B business units and premium B2B care models, installed state-of-the-art IoT/M2M platforms as well as developing new service propositions for Small Medium Enterprises and small home offices, leading to high-double digit sales growth. We are excited by the enormous potential that B2B offers and will continue to invest in and develop this strategic area of the business."
The CEO concluded, "Our strategic investment in smart city solutions are starting to reap benefits and we expect exponential growth in this lucrative key area. We are committed to our strategy that will leverage our strengths, including our people, brand, customer experience, cutting edge technology innovations, and geographic coverage in our bid to become a diversified and innovative digital lifestyle operator."
Operational review of key markets for the 12 months ended 31 December, 2016:
Kuwait: Maintaining its market leadership, the flagship operation of Zain Group saw its customer base grow 1% to serve 2.95 million in a very challenging year that saw intense price competition impact its financial performance for the year. Revenues remained stable at KD 322 million (USD 1.1 billion), EBITDA amounted to KD 160 million (USD 531 million) and net income came in at KD 90 million (USD 298 million). Zain Kuwait's healthy EBITDA margin of 50% for the year reflects the efficiency drive implemented by the operation, with Zain Kuwait's nationwide 4G LTE network seeing data revenues (excluding SMS & VAS) form 36% of total revenues.
Iraq: The exceptional circumstances facing the operation plus the negotiated settlement of USD 93 million saw Zain Iraq's financial performance severely affected, with revenues for the full-year reaching USD 1.1 billion, a decrease of 11% Y-o-Y, with EBITDA reaching USD 394 million, down 18%, with a net loss of USD 5 million, down 104% Y-o-Y. EBITDA margin stood at 36%, and with the launch of 3.9G services at the beginning of the year, data related revenue formed 9% of total revenues, reflecting an annual growth of 21%.
Sudan: In local currency (SDG) terms, the operator continues to perform well, as revenues grew by 15% Y-o-Y to reach SDG 5.2 billion (USD 709 million, down 1% in USD terms) for the full-year 2016. EBITDA increased by 4% to reach SDG 2.1 billion (USD 290 million, down 7% in USD terms) while net income decreased 62% to reach SDG 398 million (USD 91 million, down 44% in USD terms). Data revenues (excluding SMS and VAS) formed 13% of total revenues, with an impressive annual growth of 42% (23% in USD terms).
Saudi Arabia: The cost optimization and efficiency drives of the third operator in the Kingdom are taking effect, resulting in a 10% increase in EBITDA to reach USD 479 million, reflecting an EBITDA margin of 25%. For the full-year 2016, the operator recorded a 2% Y-o-Y increase in revenues to reach USD 1.9 billion, with net losses relatively stable to reach USD 261 million. The introduction of the biometric identification requirement during the year adversely affected the total customer base by 10% which stood at 10.7 million customers at the end of 2016. Impressively, the operator witnessed a 36% rise in data revenues (excluding SMS & VAS) Y-o-Y, which represents 33% of total revenues.
Jordan: Despite the intensification of price competition, Zain Jordan managed to increase its customer base by 5% Y-o-Y, serving 4.3 million customers, and maintaining its lead in the market. Y-o-Y revenues increased 5% to reach USD 483 million, with EBITDA reaching USD 240 million, with a healthy EBITDA margin of 50%. Net income reached USD 105 million. With the launch of 4G services, data revenues (excluding SMS & VAS) represented 34% of total revenues, growing by 23% Y-o-Y.
Bahrain: During 2016, Zain Bahrain generated revenues of USD 175 million, down 9% Y-o-Y. EBITDA for the period reached USD 66 million, down 12%, reflecting an EBITDA margin of 38%. Net income amounted to USD 11 million, reflecting a 17% decrease. The operation's focus on new attractive packages coupled with a totally revamped 4G network in Zain Bahrain, saw a 22% increase in the customer base to reach 971,000 with data revenues (excluding SMS & VAS) increasing 11%, representing 41% of overall revenues
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