Tuesday, May 08, 2012

(This item was originally published Monday.)

--1Q net profit at KWD70.9 million, up 2% from the year before

--Customer base grew 7% on year to 40.3 million subscribers

--Zain Sudan prepaid EUR220 million loan in full in 1Q

By Shereen El Gazzar

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Kuwait's Mobile Telecommunications Co. (ZAIN.KW), better known as Zain, said Monday its first-quarter net profit rose slightly in challenging market conditions.

The telco made a first quarter net profit of 70.9 million Kuwaiti dinars($255.1 million), up 2% from the year before, Zain said in an emailed statement. It didn't provide a comparative number and its net profit stood at KWD69.9 million in the year before period, according to Zawya.com.

Cairo-based investment bank EFG Hermes had pencilled in a KWD70.3 million effort, while Kuwait-based Global Investment House predicted it at KWD70 million.

"The local, regional and international markets continue to suffer from the global financial crisis, which imposes more challenges on the group's operations, yet in spite of this, Zain has managed to maintain encouraging growth rates during this difficult period," Zain Chairman Asad Ahmad Al-Banawan said in the statement.

The telco said its customer base grew 7% on year to 40.3 million subscribers across all its operations in the first-quarter. It had 40.2 million subscribers at the end of 2011, according to a previous statement.

The group generated consolidated revenues of KWD325.7 million in the first quarter, up 1% over the same period last year, Zain said.

"Zain Group reported mixed results. The revenues came 2% below our estimates because subscribers were also below our expectations. Zain's bottom line was in line with our expectations," said Marise Ananian, vice president of equity research at EFG Hermes.

Zain continues to face many challenges in its home and the regional markets that it operates in, especially Sudan--where a worsening political and economic situation will "undoubtedly" influence its operations during the rest of the year, the company said.

In November, Zain Sudan's Chief Executive Elfatih Erwa told Zawya Dow Jones that 2012 will be a difficult year due a drop in the Sudanese pound.

Zain on Monday said its Sudanese unit prepaid a EUR220 million loan in full in the first quarter, thus eliminating the group's largest exposure to the single currency.

Sudan was the third biggest contributer to Zain's revenues at the end of 2011, after its homes market Kuwait and Iraq.

The telco said its Iraqi operations performed well during the first quarter. "Our expansion and development projects in Iraq have helped us to deploy more of our operations in the northern regions of the country, and we have experienced great success at the operational level of our business in Iraq during this period," Zain said.

The telco's shares ended 1.4% lower at KWD0.730 Monday.

-By Shereen El Gazzar, Dow Jones Newswires; +971 444 61684; Shereen.elgazzar@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

08-05-12 0348GMT