Zain Q3 group net profit up 7% to $327m, customers reach 56.3m up 54%

The results showed significant growth in revenues with customer numbers reaching 56.3m.

For the third quarter of 2008, Zain Group recorded consolidated revenues of $1.887bn, an increase of 25% compared to Q3-2007. The company's consolidated EBITDA increased by 20% for the same period to reach $763.6m. Zain consolidated net profits reached $326.6m, an increase of 7% on Q3-2007 profits.

Year on year customer growth across the two continents where Zain operates was 54% with the Zain Group serving 56.3 million managed active customers at 30 September, 2008.

Commenting on the Q3-2008 period and financial results, Zain Chief Executive Officer Dr. Saad Al-Barrak said:

"This quarter has been both the most challenging and most rewarding in Zain's corporate history since the launch of our profitable expansion strategy in 2003, laying the foundation for our 2011 targets of being a top-ten global telecommunications company. Despite financial turmoil across the globe, we are delighted to have succeeded in raising $4.5bn through our capital increase. Additionally the launch of services of the Kingdom of Saudi Arabia has been very successful given we have acquired one million customers in less than two months notwithstanding the fierce competition in that market."

Dr Al Barrak further added "Our ground-breaking "One Network" service now linking two continents is playing a pivotal role in customer acquisition, contributing to the success of the Saudi Arabia launch as well as in the other 15 operations where it is available. The Zain brand has been warmly received across the African continent since its explosive launch on August 1, 2008. Through one brand, we will be better positioned to offer our customers common state-of-the-art products and services such as "One Network".

In regard to operational matters, Dr Al Barrak commented "In recent years we have invested heavily in both licence acquisitions and network upgrades on two continents so as to meet our 2011 targets of 150 million customers and $6bn EBITDA. Nevertheless, we continue to record impressive financial results this quarter reflecting exceptional operational efficiencies and we expect even better results in the years ahead. Our Kuwait operation continues to contribute considerably to our net profit and our team are focused on strategies to contest the 3rd mobile entrant expected later in 2008. The Bahrain operation continues to shine exceeding all targets, while our operations in Iraq, Jordan and Sudan are maintaining their respective markets share in competitive and challenging environments. The integration of the acquired Iraqna operation in Iraq has been successfully completed and we expect to reap the rewards in the not so distance future".

On Africa, Dr Al Barrak noted "Our Nigerian operation is witnessing exponential customer growth based on the heavy investment in network upgrades and expansion. We are extremely excited by the future potential in all facets of this operation. In East Africa, our Madagascar, Tanzania and Uganda operations focus on customer acquisition is paying off, all three recording impressive results. We expect our revamped Kenyan operation to follow suit as the new management team is now totally geared to the challenges ahead with concerted Zain Group support on all fronts. Our Ghana operation will commence mobile services by the end of 2008"

One Network connects two continents, abolishing high roaming rates

On August 1, with the launch of the Zain brand across the African continent, Zain extended the 'One Network' service to connect Africa and the Middle East offering up to 500 million people favorable rates for cross-border communications. Zain customers in 16 countries can now stay in touch with loved ones or do business, free of high roaming charges.

These countries are: Bahrain, Burkina Faso, Chad, the Republic of Congo, the Democratic Republic of Congo, Gabon, Iraq, Jordan, Kenya, Malawi, Niger, Nigeria, Saudi Arabia, Sudan, Tanzania and Uganda. Countries currently not in the One Network are Kuwait, Lebanon, Madagascar, Sierra Leone, Zambia. Ghana will join One Network on launch of commercial services. Zain plans to roll-out One Network in all its operations, subject to regulatory approvals.

On the connecting of One Network across Africa and the Middle East on August 1, 2008, Dr Al Barrak said "This truly is a defining moment in the history of global telecommunications. We believe that being connected to such a valuable service will be one of many factors that will attract customers to Zain."

Capital Increase raises $4.5bn

On Sept 20, 2008 Zain announced the successful completion of its capital increase raising $4.5bn (KWD1.2bn) with 99% of all shareholders subscribing. The amount raised is unprecedented in Kuwaiti's history exceeding all expectations, given the gloomy trends that have recently dominated local and international markets and resulted in sharp declines in the prices of oil as well as significant collapses in the financial markets worldwide.

"The successful completion of this capital increase is an unanimous vote of confidence by our shareholders in Zain's management team, the performance to date and in our profitable expansion strategy," said Dr Al Barrak, adding that "the proceeds will provide the company with the liquidity necessary to continue its ambitious expansion strategy, while reducing the borrowing costs of the company's operations and increasing shareholder value in the long termbe used to finance future strategic expansion plans and meet financial commitments."