By John Lee.
Kuwait's Zain Group has reported a 26.7 percent fall in first-quarter profit on Tuesday, as its Iraq business suffered from political instability and intense competition.
Zain Group CEO, Scott Gegenheimer (pictured) noted:
“The quarter reflected mixed results in what were quite challenging conditions in several of our key markets, especially Iraq where the security situation and intense competition is significantly impacting the performance there and subsequently the Group’s overall financials.
"Nevertheless we witnessed many positive signs of net income and customer growth during the first quarter of 2015 when compared to the final quarter of 2014.”
Zain Iraq launched 3G services at the beginning of the year and is very active in rolling out 3G services across the country. The performance of Zain Iraq over the quarter was severely hampered by the escalation of political and social instability that has seen several million people displaced internally, coupled with Zain Iraq enduring frequent temporary network shutdowns and associated higher network operational costs.
These exceptional circumstances coupled with intense competition and currency fluctuations, adversely affected the operation’s financial performance, as its revenues for the first three months reached USD 304 million, with EBITDA reaching USD 110 million, and net income amounting to USD 34 million. Comparing the first quarter 2015 results to the fourth quarter of 2014, Zain Iraq’s revenue decreased by 15%, EBITDA decreased 5%, and net income increased by 4%.
Zain Iraq team is committed to maintaining a resilient and efficient network regardless of the situation in the country and the operator foresees significant growth for all key financial indicators due to mobile data revenue growth given the pent-up demand for broadband services.
The operator now serves 13.5 million customers. On 30 April, 2015, the Iraq Securities Commission (ISC) formally approved Al Khatem JSC’s (Zain’s joint stock company in Iraq) application to list on the Iraq Stock Exchange and the company is in the process of completing all necessary and statutory procedures and steps to ensure that this process is completed in a timely fashion.