Zain Group announces full-year 2012 financial results

For the 12 months in 2012, Zain Group generated consolidated revenues of $4.58bn (KD1.28bn) compared to 2011 consolidated revenues of $4.79bn (KD1.32bn).

EBITDA for the same period amounted to $2.04bn (KD570.7m) reflecting an EBITDA margin of 44.5%.

Net Income amounted to $902m (KD252.1m), compared to 2011 net income of $1.033bn (KD284.9m).

Earnings per share for the 12 months stood at $0.23 (KD0.065), compared to $0.27 (KD0.073) in the previous year. Additionally, shareholders equity stood at $6.1bn (KD1.7bn).

Subsequently, the Board of Directors recommended a cash dividend of $0.18 (KD0.050) per share subject to the Annual General Assembly and regulatory approvals.

Zain Group's consolidated customer base grew by 6% and stood at 42.714m active customers across all operations at the end of 2012. The Group added 2.451m new active customers over the past twelve months.

Commenting on the full-year results, the Chairman of the Board of Directors of Zain Group, Mr. Asaad Al Banwan, said, "2012 has been a challenging year and Zain's financial indicators suffered from sharp currency translation impact in some of the markets in which we operate, which cost Zain's bottom line approximately $109m."

Al Banwan continued, "In 2012, the Group's key financial indicators were relatively stable. Without the effects of the currency translation impact, consolidated revenues would have been $4.88bn (KD1.4bn), while EBITDA would have been $2.15bn (KD601.7m), and net profits $1bn (KD282.6m)."

Zain Group continued to adhere to its policy of reducing administrative, operational and finance costs during 2012, helping the company lower its overall costs during the year through effective streamlining and efficiency drives.

Al Banwan also took the opportunity to express his hope and confidence that Zain Group's management will continue to successfully pursue the company's growth plans under the leadership of the recently appointed Group CEO, Scott Gegenheimer. Al Banwan described Gegenheimer as, 'one of the most capable and experienced telecom executive leaders in the world'.

On his part, Zain Group CEO, Mr. Scott Gegenheimer, said, "Our Kuwait operation achieved a technological breakthrough in 2012 when it became the first operator in Kuwait to launch a nationwide LTE network." Gegenheimer continued, "Zain KSA successfully completed its rights issue with a full subscription during the summer; a development that formed part of a wider plan to restructure the company's capital. Zain Group continued to back its Saudi Arabia operation both administratively and financially, having taken the strategic decision to increase its ownership in Zain KSA to 37% in the wake of the company's rights issue."

Zain KSA went on to utilize the cash generated from the rights issue to repay some debt in addition to investing in network improvements and services. Additional support from Zain Group ensured the Saudi operator improved its financial performance and results, which led to a reduction in its net loss by 9% year-on-year in 2012.

As a result of the political unrest and economic instability in Sudan and South Sudan, Zain Group faced a number of challenges highlighted by the sharp volatility of the exchange rate and the devaluation of the Sudanese pound, (which fell by 55% against the US dollar during 2012).

Commenting on the situation in Sudan and South Sudan, Gegenheimer said, "I hope that the recent talks between Sudan and South Sudan will result in political stability, favorable economic recovery, support of the local currency, and an increase in the purchasing power of the average Sudanese citizen."

Gegenheimer continued, "Zain continues to have confidence that once structural issues in this part of the world are resolved we will again benefit from the substantial growth of our operations there, despite the heightened taxation and fuel costs."

Commenting on Zain Iraq, Gegenheimer said, "In 2012, our operation in Iraq achieved remarkable results, including a 7% year-on-year rise in its consolidated revenues, 6% rise in net profit." He added, "We expect tangible growth opportunities in Iraq, especially on the back of the widespread expansion of our network into the northern regions of the country. This expansion has helped grow the operation's customer base substantially, resulting in a 10% increase in customers during 2012 to reach 13.7m."

Zain Iraq also continues to be the market leader with respect to customer numbers, and plans to proceed with its stock market listing in H1 2013. Zain Group also entered a number of strategic partnerships with global companies during the course of the year with the dual aim of reinforcing its operational position and maximizing its value proposition to customers.

An example of such cooperation is the Partner Market agreement Zain Group entered into with Vodafone Group in September 2012, which allowed the two Groups to bolster each other's presence and services in the region and other parts of the world. Zain also began to offer high-quality mobile services (data and Wi-Fi) to its customers at favorable rates through partnering with international Wi-Fi specialist iPass.