Zain to focus on data in tough operating environment

Kuwaiti-headquartered operator Zain has said it plans to focus on data services after posting slight gains in profit and revenues for the six months ending in June.

The company, which operates in eight markets across the Middle East and North Africa, grew net income by 1%, year on year, to 141.9 million dinars ($509.6 million), while its revenues also rose by just 1% to 663.5 million dinars.

Zain says it is facing a challenging industry and economic environment, with tough competition and currency fluctuations putting it under considerable pressure.

“Zain continues to be a pioneer in the markets in which it operates despite competitive, economic, and political pressures in many of our countries of operation,” said Nabeel Bin Salamah, Zain’s chief executive, in a statement. “We are facing these challenges head-on, having reduced our funding costs, as well as continuing with our policy to actively reduce administrative and operational expenses.”

Zain’s most problematic market is undoubtedly Sudan, which was the third-biggest contributor to group revenues at the end of 2011, after Kuwait and Iraq. Fighting between Sudan and South Sudan has inevitably had an impact on the company’s operations, although Zain says it is encouraged by the recent rapprochement between the two countries.

On a more positive note, Zain has reported growing interest in the use of smartphones and data services among its customers.

“Our operations achieved great success in data services during H1, 2012 due to a favorable series of expansion and development programs that were launched last year and have since gained traction,” said Bin Salameh. “Mobile broadband and data transfer remain definite growth areas for Zain Group and we intend to continue investing in these areas in order to meet customer expectations while also increasing shareholder value.”

The operator also managed to grow its overall customer base by 5%, to 41.4 million subscribers, compared with the first half of 2011.

Zain is also shoring up its position in Saudi Arabia, growing its stake in Zain KSA from 25% to 37% following the successful completion of a rights issue.

“Our faith and confidence in Zain KSA remains high, and we remain optimistic regarding the company’s prospects in the future,” said Bin Salameh. “Zain KSA’s capital restructuring is going to be a major factor in boosting its operational and financial performance and its relationship with Zain Group will definitely become stronger resulting in more intense continued support for its new operational strategy.”

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