Zain Q2 net profit inches up 1%

Kuwaiti telecom operator Zain reported a one percent rise in quarterly profit on Monday, missing analysts' estimates.

Zain said it made net profit of 70.97 million dinars ($251.58 million) in the three months to June 30. That compares to profit of 70.26 million dinars in the prior-year period, the company said in a bourse statement.

Analysts forecast average profit of 76.9 million dinars, in a Reuters poll.

The former monopoly, which operates in seven countries, made a first-half net profit of 141.8 million dinars, up from 140.2 million dinars in the same period a year ago.

Commenting on the results, the Chairman of the Board of Directors of Zain Group, Asaad Al-Banwan said, "The Group's consolidated revenues for H1-2012 grew around one percent as compared to the same period in 2011, which is a positive outcome given the challenging environment in the sector. The increase in consolidated revenues to KD 663.5 million ($2.384 billion), up around one percent year-on-year, highlights Zain's ability to sustain a high level of performance despite substantial competitive pressures and currency fluctuations in many of the markets in which it operates."

Al-Banwan also noted that, "A growing number of customers continue to benefit from utilizing Zain's services, with 1.8 million customers added in the 12 months to June 30, 2012, representing almost 5 percent growth rate. Our strategy is focused on achieving greater leadership across all our operations, and we remain determined to provide the latest technology along with high quality services to our customers."

Zain Group CEO Mr Nabeel Bin Salamah said: "Zain continues to be a pioneer in the markets in which it operates despite competitive, economic, and political pressures in many of our countries of operation. We are facing these challenges head-on, having reduced our funding costs, as well as continuing with our policy to actively reduce administrative and operational expenses."

Bin Salamah continued, "Our operations achieved great success in data services during H1, 2012 due to a favorable series of expansion and development programs that were launched last year and have since gained traction. Mobile broadband and data transfer remain definite growth areas for Zain Group and we intend to continue investing in these areas in order to meet customer expectations while also increasing shareholder value."

Bin Salamah pointed out that there will be greater emphasis placed on data due to pent-up demand for such services, particularly in light of the growth in the usage of smartphones. Commenting on Zain operations in Sudan and South Sudan, Bin Salamah revealed that Zain Group is currently facing challenges in the two countries, but hopes that the recent rapprochement between them will ultimately result in an improvement in the political and economic situation in both countries and may reflect positively in reducing the impact of such challenges.

Detailing developments within its operation in Saudi Arabia, Bin Salamah said: "Zain KSA is witnessing a radical shift given the successful completion of its rights issue, where the Group increased its stake in the company from 25 percent to 37 percent. Our faith and confidence in Zain KSA remains high, and we remain optimistic regarding the company's prospects in the future."

Bin Salamah went on to say, "Zain KSA's capital restructuring is going to be a major factor in boosting its operational and financial performance and its relationship with Zain Group will definitely become stronger resulting in more intense continued support for its new operational strategy."

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