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Zain 3Q Net Pft -12.8%; FX Losses Hit $100m

Wednesday, Nov 02, 2011

(This story was originally published Tuesday)

-- Third quarter profit close to analysts' forecasts

-- Zain sees growth in broadband revenues

-- Gap between data and voice narrows, boosting APRUs

-- Forex losses seen due to Sudanese operations

DUBAI (Zawya Dow Jones)--Kuwait's Mobile Telecommunications Co., better known as Zain (ZAIN.KW), Tuesday posted a 12.8% decline in its third quarter net profit, and announced that losses from currency movements amounted to $100 million during the first nine months of the year.

Third quarter net profit amounted to KWD70 million, according to Zawya Dow Jones calculations. The comparable figure for 2010 is KWD80.3 million, according to Zawya.com. Zain only releases figures for the first nine months of the year.

Third quarter net profit exceeded the KWD68.1 million result penciled in by analysts at Kuwait-based Global Investment House. The results almost matched Bahrain's SICO forecast of KWD71 million.

Zain said that its mobile customers stood at 41.4 million at the end of September, up 17% from the same period a year earlier. Revenue rose 2.2% during the nine month period to KWD988.1 million, while net profit was up 7% at KWD762.5 million, the company said.

"We have seen significant growth in broadband revenues particularly as a result of increased use of social networking sites and applications via smart phones and tablets," Zain Group Chief Executive Nabeel Bin Salamah said in an e-mailed statement. Bin Salamah said the gap between data revenues and the company's traditional voice revenues is narrowing, boosting the company's average revenue per user.

"These nine-month results are all the more impressive when one considers that the net profit for the period was adversely affected by currency variances totaling $100 million," Asaad Al Banwan, chairman of the board of directors of Zain said in the statement.

Zain didn't provide details of the currency losses, but analysts said they were likely due to the drop in the Sudanese currency which affected transfers from the company's Sudan operations. Zain reported losses from currency movements amounting to $75 million for the first six months of 2011.

The telco said that its earnings per share for the nine month period stood at KWD0.054. According to Zawya.com data, Zain 's earnings per share were KWD0.252 in the first nine months of 2010.

In late September, Saudi Arabia's Kingdom Holding and Bahrain's Batelco scrapped their joint bid for 25% of the Saudi unit of Zain , estimated to be worth as much as $1.2 billion, after failing to agree terms with the Saudi telco's Kuwaiti parent. Zain 's Saudi unit later blamed the failure of the deal on the banks refusal to transfer debt guarantees from Zain Group to the Kingdom-Batelco alliance.

Zain itself was the subject of a takeover offer of close to $12 billion by U.A.E.'s biggest telecom company Emirates Telecommunications Corp., or Etisalat (ETISALAT.AD), but the deal fell through in March. Zain sold most of its African assets last year to India's Bharti Airtel Ltd. (532454.BY) for $10.7 billion, leaving it vulnerable to takeover attempts.

Zain shares closed 1% up Tuesday at KWD0.940.

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

Copyright (c) 2011 Dow Jones & Co.

(END) Dow Jones Newswires

02-11-11 0359GMT