Kuwait's Mobile Telecommunications Co, Zain Q2 net profit falls 31.7% on competition, forex losses
Kuwait's Mobile Telecommunications Co., better known as Zain, Sunday posted a 4.2% decline in second quarter net profit, compared with a year ago, as competition and forex losses have hit the telco's net profit.
According to Zawya Dow Jones calculations the telco made a second quarter net profit of KWD70.3 million, down from KWD73.4 million a year ago. The net profit fell short of the KWD88.8 million result penciled in by analysts at Kuwait-based Global Investment House. Analysts at Bahrain's SICO had forecast KWD85 million.
"These results are all impressive when one considers that the net profit for half year was adversely affected by currency fluctuations of an amount of $75 million," said Asaad Al Banwaan, chairman of the board of directors of Zain. Zain said that its mobile customers stood at 39.6 million at the end of June, up 16% from the same period a year earlier. Revenue rose 2% in the first half to KWD659.4 million.
"We are confident that the company's vast investment into South Sudan will be rewarding." Zain Group Chief Executive Nabeel Bin Salamah said."The company is expanding its 3G, voice and data services and heavily investing in fibre and core network to meet the expected triple digit customer growth in the coming years." Zain Sudan managing director told Zawya Dow Jones in a recent interview that revenues grew 14% in the second quarter as the company added more subscribers and that it plans to spend more than $100 million on infrastructure in the south of the country following the region's recent declaration of independence. South Sudan declared independence earlier this month after nearly 50 years of war with Sudan and millions of deaths. The United Nations voted to admit South Sudan as its 193rd member and the country was subsequently issued a new country code by the International Telecommunications Union, or ITU.
Zain was the subject of a takeover offer of close to $12 billion by U.A.E.'s biggest telecom company Emirates Telecommunications Corp., or Etisalat, but the deal fell through in March. Zain sold most of its African assets last year to India's Bharti Airtel Ltd. for $10.7 billion, leaving it vulnerable to takeover attempts to takeover attempts.
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