Zain Group, which operates in eight countries across the Middle East and Africa, felt the force of political instability, fluctuating currencies and further amortisation of 3G and 4G licences in its third-quarter results.
The group reported third-quarter revenue of KWD 292 million ($968 million), a slight decrease from the year-ago KWD 294 million, while net income fell by 18 per cent to KWD 38 million.
The group named a number of culprits for the disappointing performance. Violence and instability in Iraq had a severe impact on its local operations. The same country also introduced a new 20 per cent sales tax on mobile services, as part of a wider tax reform which also impacted spending on mobile services.
More pain came from foreign exchange movements, particularly the appreciation of the US dollar against the Kuwaiti dinar, which cost $177 million in revenue, and $25 million in net income, in the first nine months of 2015.
The group’s bottom line was also impacted by further amortisation of its 3G licence in Iraq, 4G licence in Jordan, as well as fees on newly acquired 3G spectrum.
Zain Group CEO, Scott Gegenheimer, found some good news: “We are pleased to see the continued growth in data usage and related revenue metrics across all our operations, reflecting the success of the company’s primary focus to upgrade its networks and commitment to delivering an affordable and compelling digital lifestyle experience to our customers.”
Group data revenue (excluding SMS and VAS) witnessed a 14 per cent growth for the first nine months of 2015, and now represents 20 per cent of total revenue. Among the markets namechecked for their positive contribution in this regard was Bahrain and Jordan.
“Despite not witnessing year-on-year growth in several key aspects of the group’s consolidated financial results predominantly due to the unavoidable circumstances facing our operation in Iraq, our impressive EBITDA margin of 43.5 per cent reflects the success of Zain Group’s operational efficiency drive,” added Gegenheimer.
Last week the CEO noted that Zain is making some “big bets” in areas such as smart cities – but admitted that the monetisation of many of its new digital services remains a challenge in the short term.