Zain has reported earnings that surpassed analyst expectations as the company moves closer to being taken over.
Zain third-quarter profits ahead of expectations
The Kuwaiti telecommunications operator Zain has reported third-quarter earnings that surpassed analyst expectations as the company moves closer to being taken over. Etisalat has offered to buy a 46 per cent stake in Zain for US$10.5 billion (Dh38.56bn). Kharafi Group, one of the largest private shareholders in Zain, is in the process of persuading enough of the operator's investors to approve the bid.
Zain reported net profits of 80.7 million Kuwaiti dinars (Dh1.04bn), a decrease of 58 per cent from the same quarter last year. The results, however, beat analysts' forecasts of 72.4m dinars. In its results, Zain included a one-time 770.3m dinar capital gain it received from Bharti Airtel from the sale of 15 of its African assets in June. Active subscribers across Zain's eight operations throughout the Middle East and Africa increased 25 per cent over the past year to 35.3 million.
"Several of our key markets are performing extremely well on many levels and are now reaping the rewards of the substantial network investments the company has made over the years," said Asaad al Banwan, the chairman of Zain. The operator highlighted its Saudi Arabian unit, which has become its largest sales earner with US$1.12bn (Dh4.11bn) in revenues for the first nine months of this year. If Zain's shareholders approve Etisalat's bid, the Saudi Arabia unit is likely to be sold off to avoid complications with the kingdom's telecoms regulators because the UAE operator already owns a mobile phone company in the country.
Zain also highlighted its success with its Iraqi unit, which reported revenues of $1.1bn and is the country's leading mobile operator with 11.8 million subscribers. The Iraqi unit is one of Zain's crown jewels and is highly coveted by Etisalat, which has tried unsuccessfully to enter the country's telecoms market several times. Representatives from both Zain and Etisalat declined to comment on the negotiations between the two operators.