We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Sun 15 Nov 2009 06:43 PM

Font Size

- Aa +

Kuwait's Zain posts 52.8% drop in Q3 net profit

Arab world's third largest telco hit by high financing costs, currency fluctuations.

Kuwait's
Zain

posted a 52.8 percent fall in third-quarter net profit on Sunday, as the Arab region's third-largest telecoms firm was hit by currency fluctuations and high financing costs.

Net income in the three months to Sept. 30 was 41.19 million dinars ($144.3 million),
Zain

said in a statement on the bourse website. The firm made 87.2 million dinars in the third quarter last year.

That was well below a forecast by Coast Investment of third-quarter net profit at 89.89 million dinars, while Shuaa Capiing to a Reuters poll.

"Unfavourable foreign currency fluctuations, particularly in many of our African operations, coupled with reduced interest income and investment income plus higher financing costs, have had a significant impact on the company's overall profit,"
Zain

's chief executive, Saad al-Barrak, said in a statement.

But with improving currency stability in many of
Zain

's African operations, Barrak said he expects better results from 2010 onwards.

In the first nine months to Sept 30, foreign currency fluctuations had a negative impact on the net profit by 36 million dinars, the firm said.

Zain

's customer numbers nevertheless rose 28 percent to 71.8 million in the first nine months, the firm said in a statement.

Revenue in the nine months to Sept. 30 also grew 24 percent to 1.78 billion dinars compared with the same period a year earlier, while EBITDA advanced 37 percent to 757.3 million dinars,
Zain

said. It gave no quarterly data.

Earlier this month, Barrak said he expects the global financial crisis and currency market turmoil to cut $1 billion from its forecast revenue of $9 billion this year.

The drop in profit comes as family conglomerate Kharafi, a major shareholder in
Zain

, is in the midst of sale talk with Asian investors to sell a 46 percent stake in the firm.

The buying consortium which includes India's Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam will pay 2 dinars a share for
Zain

, valuing the stake at about $13.7 billion, making it one of the biggest overseas acquisitions of a Gulf region company.

Last month, Barrak said Zain halted talks to sell its African assets to appease the potential buyers of the stake.

Zain, which is partly owned by the country's sovereign wealth fund, has spent billions to expand in the Middle East and Africa and operates in 23 countries to offset rising competition at home.

Zain's stock fell 3.85 percent on Sunday, trading at 1 dinar. (Reuters)

Arabian Business: why we're going behind a paywall

For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.