Kuwait-based Zain has reported a 20% drop in net income for the first half of the year, to KWD113 million ($397.4 million), with adverse currency movements in Sudan largely to blame for the setback.
The company, which owns telecoms businesses across the Middle East and parts of Africa, also reported an 8% fall in revenue, to KWD612 million.
“Although we are frustrated with the adverse foreign currency exposure predominantly in Sudan, where the local currency fell by 51% against the US dollar over the last 12 months, we have not let this come in the way of our efficiency and innovation drives,” said Scott Gegenheimer, Zain’s chief executive.
Zain (Kuwait City, Kuwait) reckons the currency movements in Sudan cost it the equivalent of $347 million in revenues and $80 million in net profit over the first six months of the year.
Nevertheless, the operator claimed good progress on signing up customers, saying it has added three million subscribers over the past year to give it 44.4 million in total.
“Zain Group continues to deal competently with the competitive challenges that it faces,” said Asaad Al Banwan, Zain’s chairman. “It is encouraging to see an additional three million customers join Zain, a direct result of extensive investments in upgrading and expanding our networks coupled with attractive service offerings across our operations.”
Among other initiatives, Zain insists that investments in 3G and 4G LTE networks are paying off, with data revenues up by 19% over the first six months of the year, compared with the same period of 2012.
Even so, Sudan is not the only source of the company’s problems.
In Saudi Arabia its loss-making unit is forced to pay “entitlements” to authorities, although Zain reached an agreement on June 4 to postpone these payments for the next seven years.
Zain estimates the total cost of its entitlements payments at $213 million per year, or $1.5 billion over the seven-year period.