, KUWAIT, Nov 17 – The Zain Group has announced a 17 percent decline in after tax profit, recording $677.1 million (Sh50.4 billion) for the nine months ending September 30.
Commenting on the results Zain Chief Executive Officer Dr Saad Al Barrak said foreign currency fluctuations have negatively impacted net profit by $130 million, a 125 percent increase relative to the same period for 2008.
“With improving currency stability in many of our African operations, we expect to attain better results in 2010 and beyond,” he said.
The global economic crisis, coupled with reduced interest income and investment income and higher financing costs, have had a significant impact on the company’s overall profit.
The Zain Group however recorded impressive consolidated revenues of $6.169 billion, an increase of 24 percent compared to the first nine months of 2008.
The company’s consolidated EBITDA increased by 37 percent for the same period to reach US$2.624 billion with EBIT rising 33 percent to reach KWD US$1.576 billion.
“This is a result of our vast and capital intensive network expansion and marketing programs that are attracting new customers and further enhancing our young award winning Zain brand,” Dr Al Barrak said.
Dr Al Barrak further added: “The nature of the nine months 2009 net income result is all the more impressive when one takes into account that during this period in 2008 we had an extraordinary gain of $99 million from the successful Zambia IPO. This is an indication that operational net income growth is better than indicated for this period.”
Zain has invested heavily in its network expansion in key growth driving several operations like Nigeria, Zambia, Sudan, and Iraq, has resulted in an increase in fixed costs from depreciation and amortization, with the company being further burdened by increases in financing costs.
Dr Al Barrak added start-up capital and operational expenditures in two large and promising operations launched in the last 12 months, the Kingdom of Saudi Arabia and Ghana, as well increased fixed costs charges as a result of network expansion in many of its markets.
During the period under review, on the two continents across which Zain operates, customer base grew by 28 percent to 71.8 million customers.
The group added over 15 million new active customers relative to the same time last year while the Group undertook a company wide exercise to increase its focus on the acquisition and retention of high value customers.
“We have seen impressive customer growth in several of our key revenue generating operations, and these huge network investments will reap more financial rewards in the very near future,” he noted.
Earlier in the year, the company introduced ‘Drive11’, an initiative that sees Zain focusing on customer-facing services and commercial activities to enhance customer experience, while centralizing and outsourcing non-core functions to strategic partners.
The program was aimed at improving efficiencies allowing Zain to provide communication services within an optimum cost structure thereby enhancing stakeholder value.