Zain Group is set to continue the sale of infrastructure assets as the company refocuses on new technologies and higher yield investments, CEO Bader Nasser Al-Kharafi (pictured) revealed in the company’s Q3 results.
During the quarter Zain signed an agreement to sell its towers in Kuwait to infrastructure investment company IHS Holdings for KWD50 million ($165 million) to free up capital to pursue new business areas.
The transaction is set to complete “imminently”, with Zain then leasing the infrastructure from IHS.
Zain plans to replicate the strategy in other markets, Al-Kharafi said adding the deal was the: “beginning of a strategy to unlock value from our fixed infrastructure, which can be more efficiently deployed in new technologies and higher yielding investments.”
The executive said he also expected Zain to benefit from increased “mutually beneficial synergies” with Omantel after the latter completed a deal for a 9.84 per cent stake in Zain for KWD255.4 million in August.
The continued review of its assets and strategy comes as the company’s revenue and earnings were hit by socio-economic uncertainty in Sudan – one of its biggest markets.
During Q3 Zain Group’s net income fell 6 per cent year-on-year to KWD40 million on revenue of KWD259 million (also down 6 per cent). The company attributed the drop to a 63 per cent devaluation in the Sudanese pound during the quarter.
Zain is the largest operator in Sudan with a customer base of 12.9 million at end-September, making up 29 per cent of the group’s total customer base. The currency weakness cost the company KWD44.7 million in revenue and KWD6 million in net income during Q3.
“It is unfortunate that one main factor outside of our control, the Sudan currency devaluation issue, has impacted overall results for the quarter and year-to-date,” Al-Kharafi said: “Nevertheless, we draw confidence from the future prosperity of Sudan given the recent lifting of the US sanctions and expected appreciation of the country’s currency.”