By John Lee.
Kuwait-based telecommunications group Zain has said that revenues at its Iraqi unit fell by 11 percent in 2016.
In its full-year results, the company blamed "exceptional circumstances" with revenues for the full-year reaching USD 1.1 billion, and EBITDA reaching USD 394 million, down 18 percent, with a net loss of USD 5 million, down 104 percent Y-o-Y.
EBITDA margin stood at 36 percent, and with the launch of 3.9G services at the beginning of the year, data related revenue formed 9 percent of total revenues, reflecting an annual growth of 21 percent.
Among the Key Operational Notes, the company said that in December 2016, Zain Iraq entered into a negotiated settlement with the country’s Finance Ministry for USD 93 million related to an imposition of a capital gains tax on its acquisition of Iraqna in 2007. This resulted in the lifting of restrictions on the trading of Zain Iraq's shares, access to the company’s bank deposits and also waived penalties and interest on taxes.
The continued political instability in Iraq during 2016 saw the operator endure frequent temporary network interruptions and associated higher network operational costs. These unavoidable occurrences coupled with heightened levels of price competition and a 20 percent sales tax on mobile services hit spending on mobile services.
All these factors contributed to a negative impact on Zain Iraq’s and consequently Zain Group’s overall key financial metrics.
Zain Group CEO, Scott Gegenheimer (pictured) said:
“Considering the sound operational progress and transformation we have undertaken across all our markets, it’s unfortunate that exceptional circumstances such as the currency issue in Sudan and the tax settlements in Iraq affected our financial performance, as it would have otherwise been very positive. Nevertheless, we are pleased with the progress of our cost optimization initiatives have had in driving efficiency, resulting in an impressive 47% EBITDA margin for the year.”