KUWAIT CITY, Aug 9, (Agencies): Zain today announces its consolidated financial results for the half-year, ending June 30, 2010. The results showed a healthy growth in several key performance indicators:

For the first half of 2010, the Zain GroupZain GroupMobile Telecommunications Company
Zain Group recorded consolidated revenues of KD 672.6 million ($2.33 billion), an increase of 10 percent compared to the same period of 2009. The company’s consolidated EBITDA reached KD 287.2 million ($ 995 million) with EBIT reaching KD 206.8 million ($716 million). Net Income soars 488 percent to reach KD 895.3 million ($3.085 billion). This includes the capital gain of KD 770.3 million ($2.653 billion) from the sale of Zain Africa assets on June 8, 2010. The earnings per share reached 232 fils ($0.80).

It is important to note that with the conclusion of the sale of Zain Africa on June 8, 2010, the company received cash proceeds of $7.868 billion, of which proportionate capital gain profit is reflected in the H1, 2010 Net Income results. “Despite the challenging global economic conditions and the competitive markets in which we operate, we are extremely pleased with the 10 percent revenue increase which is in line with our expectations as well as the record profit that is the largest in the company’s history,” commented Asaad Al Banwan, Chairman of the Board of Directors of Zain. “With the sale of the Zain Africa assets now concluded, coupled with a healthy cash balance and reduced debt levels, the company is now well positioned to focus on, and further grow, its profitable Middle East operations. Better things are yet to come as we diligently strive to maximise shareholders’ value in this new era.”

He further stated, “The H1 2010 Net Income (excluding the capital gain) and EBITDA results is all the more impressive when one takes into account that in the same period last year (H1-2009), where we had several reversals of provisions, including a favorable ruling resulting in an extraordinary net income gain of KD 63 million ($218 million) and EBITDA gain of KD 44.8 million ($155 million). This is an indication that EBITDA and Net Income growth for the first half of 2010 would have been much higher than stated, as without such provision reversals, the company would have had a respective growth of 7 percent in EBITDA and 41 percent in Net Income.” Al Banwan also revealed that the half year period witnessed an increase in total shareholders’ equity of approximately 16.6 percent, reaching $8.9 billion, compared with $7.7 billion at the end of the first half of 2009.

Also commenting on the results, Zain Group CEO Mr Nabeel Bin Salamah said: “The company has reengineering itself with a new and dynamic management team both at Group and in several country operations. We are focused on further increasing our market leadership in all our Middle East operations, offering customers the latest technologies and quality mobile services. We are now in the flexible position of being able to consider all our options.” Mr Bin Salamah further added that the impressive performance of several key markets is an indication that better financial results are expected in the near future. “With our Saudi Arabia operation achieving breakeven EBITDA and 7 million customers in only 22 months of operation, coupled with the impressive customer and revenue growth in our Sudan and Iraq operations, and Kuwait maintaining its market share despite the entry of a third operator, we are confident these impressive results will continue.”

In recent years, Zain has invested heavily in network expansion in the region, especially in vast countries such as Iraq, Jordan, Saudi Arabia and Sudan, as well as technology upgrades in Bahrain and Kuwait. “These have all been translated into robust customer acquisition and healthy revenues,” said Bin Salamah. “We expect to reap further financial rewards of these strategic and capital intensive investments in the years ahead,” he concluded. Most recently in June 2010, ZainZ Jordan acquired a 15-year licence for $70.4 million to establish and operate HSPA+ and LTE technology (3G) that is expected to be commercially launched in the first quarter of 2011. Zain’s clients stood at 34.2 million on June 30, a sharp drop from over 70 million subscribers, due to the African sale. Net profit in 2009 slumped by 39 percent to 677 million dollars, from $1.11 billion the previous year.

Shareholders’ equity on June 30 increased by 16.6 percent to $8.9 billion, while capitalisation dropped to about $18 billion from $20 billion at the end of the first quarter. Zain, in which the state owns a 24.6-percent stake, is one of three mobile operators in Kuwait, along with the National Telecommunications Co (Wataniya) and Kuwait Telecommunications Co (VIVA). The second-quarter profit rose to KD 843.8 million following one of 51.5 million in the first quarter, Reuters calculations showed. The result met forecasts in a Reuters poll of analysts where estimates ranged from KD 835 million to KD 844 million. It posted a net profit of KD 78.8 million in the second quarter of 2009.