20 Feb 2017
Kuwait-based telecoms giant Zain Group has published its consolidated financial results for the twelve months to 31 December 2016, reporting a 4% decrease in revenues to KWD1.1 million (USD3.6 billion). In the period under review, EBITDA reached KWD512 million, up 3% year-on-year, while the company booked a net profit of KWD157 million in 2016, up 2% from the KWD154 million reported in the previous year. The company disclosed that it incurred foreign currency losses amounting to USD96 million in revenue, USD38 million in EBITDA and USD44 million in net income for the twelve-month period to 31 December. Further, the continued political instability in Iraq and the newly introduced 20% tax on mobile services in the market severely impacted its operations and the group’s overall key financial indicators. In addition, ‘heavy investment’ in 3G and 4G network expansion upgrades across the group’s operations saw CAPEX for the year amount to USD635 million (excluding Saudi Arabia), reflecting 18% of group revenues.
Zain Group highlighted that its Saudi Arabian unit received a 15-year mobile licence extension in October 2016, while securing a Unified Telecommunication Licence, which allows the company to provide all telecommunications services, including fixed telephony. The licence extension will reduce the annual amortisation charge by SAR433 million (USD115 million) starting from the date of the extension, reducing the company’s net losses by the same amount. The positive financial impact of this will take effect in Q4 2016. Further, in December 2016 Zain Iraq entered into a negotiated settlement with the country’s Finance Ministry for USD93 million related to an imposition of a capital gains tax on its acquisition of Iraqna in 2007. This resulted in the lifting of restrictions on the trading of Zain Iraq’s shares, access to the company’s bank deposits and also waived penalties and interest on taxes.
In operational terms, Zain Group reported a consolidated customer base of 47 million at 31 December 2016, up 3% y-o-y. In Kuwait, subscribers grew marginally by 1% to 2.95 million, while Jordan saw its customer base increase by 5% y-o-y to 4.3 million. Zain Saudi Arabia’s subscriber base, meanwhile, decreased by 10% to 10.7 million in Q4 2016, due to the country’s biometric registration process.