Wednesday, May 08, 2013
DUBAI (Zawya Dow Jones)--Kuwait's Mobile Telecommunications Co. (ZAIN.KW), better known as Zain, posted a 27% drop in first-quarter profit as volatility on currency markets hurt income and its Saudi Zain investment continued to underperform.
The telecommunications firm, which operates in eight markets across the Middle East and North Africa, made a first-quarter net profit of 52 million Kuwaiti dinars ($184 million), compared with a profit of KWD70.9 million a year earlier, according to calculations based on Zawya Dow Jones data. Analysts at Cairo-based investment bank EFG Hermes had forecast first-quarter profit of KWD56 million.
Zain recorded revenues of KWD299 million for the first quarter, while earnings per share was KWD0.013, according to an emailed statement.
The telco said that an adverse currency translation in Sudan impacted the company by the equivalent of $179 million in revenues and $44 million in net profit for the quarter. The company has suffered from the continued devaluation of the Sudanese pound since South Sudan became independent from North Sudan in 2011.
"The adverse effect on our financial results by the devaluation of the Sudanese pound, which fell by 53% against the US dollar over the last twelve months, is unavoidable as there is no effective hedge on the currency," Scott Gegenheimer, Zain chief executive, said in the statement.
Zain added that increasing its ownership stake in under-performing subsidiary Zain KSA from 25% to 37% also pressured the group's operating profits. The telco has added 3.9 million new active customers over the past twelve months to 44.1 million and the group is also examining several "prime adjacent business and key partnership opportunities", it added in the statement.
Write to Rory Jones at rory.jones@dowjones.com
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(END) Dow Jones Newswires
08-05-13 1334GMT
