Board proposes cash dividend of 35 fils/share
21/02/2017 06:01 AST
Zain Group, a leading mobile telecom innovator in eight markets across the Middle East and Africa, announces its consolidated financial results for the year 2016, and fourth quarter ended Dec 31, 2016. Zain served 47 million customers at the end of 2016, reflecting a 3% increase year-on-year (Y-o-Y).
For the full-year 2016, Zain Group generated consolidated revenues of KD 1.1 billion ($3.6 billion), down 4% Y-o-Y, while consolidated EBITDA for the period grew by 3% Y-oY and reached KD 512 million ($1.7 billion), reflecting a healthy EBITDA margin of 47%.
Consolidated net income reached KD 157 million ($519 million), up 2% and reflecting Earnings Per Share of 40 fils ($0.13).
For the full-year 2016, foreign currency translation impact, predominantly due to the 60% currency devaluation in Sudan from 6.4 to 15.9 (SDG/$) in the beginning of November 2016, cost the company $92 million in revenue, $38 million in EBITDA and $44 million in net income.
The Board of Directors of Zain Group recommended a cash dividend of 35 fils per share subject to the Annual General Assembly and regulatory approvals.
For the fourth quarter of 2016, Zain Group recorded consolidated revenues of KD 261 million ($860 million), a decline of 8% on the same period of the previous year (Q-o-Q). EBITDA for the quarter reached KD 122 million ($400 million), reflecting a healthy EBITDA margin of 47%. Net income for the quarter reached KD 32 million ($106 million), reflecting Earnings Per Share of 8 fils ($0.03).
Specifically, for the fourth quarter of 2016, currency translation impact cost the company $83 million in revenue, $33 million in EBITDA and $42 million in net income, again predominantly due to Sudan currency devaluation from 6.4 to 15.9 (SDG/$), a 60% decrease.
Key Operational Notes for 12 months ended Dec 31, 2016:
Substantial investments in 3G and 4G LTE network expansion and upgrades continue to pay off as Group data revenues (excluding SMS and VAS) increase 6% during 2016, representing 23% of the Group's consolidated revenues.
The 60% currency devaluation impact in Sudan in the beginning of November 2016 affected both Zain Group's full-year and Q4 2016 financial results.
In December 2016, Zain Iraq entered into a negotiated settlement with the country's Finance Ministry for $93 million related to an imposition of a capital gains tax on its acquisition of Iraqna in 2007. This resulted in the lifting of restrictions on the trading of Zain Iraq's shares, access to the company's bank deposits and also waived penalties and interest on taxes.
The continued political instability in Iraq during 2016 saw the operator endure frequent temporary network interruptions and associated higher network operational costs. These unavoidable occurrences coupled with heightened levels of price competition and a 20% sales tax on mobile services hit spending on mobile services. All these factors contributed to a negative impact on Zain Iraq's and consequently Zain Group's overall key financial metrics.
In Saudi Arabia, through a Royal Order on Oct 1, 2016, Zain received an extension of its telecommunications license by 15 Hijri years, effectively extending the license term from 25 Hijri years to 40 Hijri years in total (to expire on Jan 18th 2047). The impact of this extension for the company was the immediate reduction of its license fee amortization, which amounts to approximately SAR 433 million ($115 million) per annum, in effect reducing Zain KSA's net losses by the same amount.
Heavy investment in 3G & 4G network expansion upgrades across operations saw CAPEX spend for the year amount to $635 million (excluding Saudi Arabia), reflecting 18% of Group revenues.
Commenting on the results, the Chairman of the Board of Directors of Zain Group, Asaad Al Banwan said, "The Board is pleased to record relatively stable financial results; an achie
Arab Times
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