Kuwait's Zain second quarter net profit slides 28% as coronavirus bites
Telco's revenues dipped 7% to $1.22bn
Zain Group, Kuwait’s biggest telecom provider, posted a 28 per cent year-on-year decrease in second quarter net profit as the Covid-19 pandemic disrupted its overall business.
Consolidated net profit decreased to $117 million (Dh429.4m) in three months to June 30, the company said on Wednesday. Revenue in the period dropped 7 per cent year-on-year to $1.22 billion from the year earlier. Zain's second quarter earnings before interest, taxes, depreciation and amortisation (Ebidta) was $533m, down 7 per cent from the previous year.
“The board has been working closely with management in minimising the impact of Covid-19 on the business as well as ensuring the mobile networks are at optimal performance,” Ahmed Al Tahous, chairman of the board of directors of Zain Group, said.
Lower air time revenues (as key markets provided free airtime), the closure of retail shops and a halting of international business affected roaming revenues. Earnings also fell as the company waived late fees, offered free content and more flexible payment terms, the operator said.
In order to counter the impact of the pandemic, the telco said it took "decisive cost optimisation measures" in areas such as contracts renegotiation, management of cash flows and loan repayments, which helped reduce operational expenses by $68m in the first half of the year.
The group’s net profit decreased 14 per cent year-on-year to $273m in the first half, while revenue reduced to $2.6bn. The number of subscribers dipped 3 per cent year-on-year to 47.6 million during the period.
“The group’s performance in the first half of the year reflected Zain’s resilience to turbulence, given the numerous operational challenges in these unique times,” Mr Tahous said.
Zain Group operates in Kuwait, Bahrain, Iraq, Jordan, Saudi Arabia, Sudan and South Sudan. In Lebanon, it manages mobile operator Touch on behalf of the government.
Revenue from internet data packages grew by 10 per cent to $1.1bn, representing 42 per cent of the telco’s total sales in the first six months.
“The first six months was a mission-critical period as all our operations were focused on providing connectivity during the lockdown to minimise the impact of the pandemic on socio-economic life,” Bader Nasser Al-Kharafi, vice-chairman and group chief executive of Zain, said.
“At the same time, we refocused on digital transformation to better serve businesses, governments, and societies … granting increased digital access to essential medical, commercial and financial services,” he said.
Updated: July 15, 2020 08:33 PM