Kuwait’s Zain Q3 Net Profit Falls 13%

Zain, Kuwait’s No.1 telecoms firm by subscribers, posted a 13 per cent fall in third-quarter profit on Monday, missing analysts’ estimates due to foreign exchange losses and Iraq’s civil war disrupting its operations in the country.

The former monopoly, which operates in eight countries in the Middle East and Africa, made a net profit of KD46 million ($158 million) in the three months to Sept. 30 versus KD53 million in the prior-year period, it said in a statement.

Analysts polled by Reuters on average forecast Zain would make a quarterly profit of KD60.1 million.

The firm had posted falling profits in six of the preceding eight quarters as tougher competition at home, service interruptions in war-torn Iraq and a steep drop in the value of Sudan’s currency weighed on the bottom line.

Zain suffered foreign exchange losses of $52.4 million in the third quarter versus foreign exchange losses of $21.4 million in the prior-year period.

The company’s nine-month net profit fell two per cent to KD161 million, while revenue was flat at KD921 million.

Iraq is Zain’s most important unit, accounting for 30 per cent of the company’s customers and 38 per cent of revenue in the first nine months of 2014.

The Iraqi unit’s nine-month net profit fell 14 per cent to $224 million, outpacing a four per cent drop in revenue to $1.24 billion, as it suffered from temporary network shutdowns and higher network operating costs due to the civil war engulfing much of the country.

Zain’s nine-month domestic profit rose four per cent to $289 million as data income climbed 14 per cent year-on-year to account for nearly a third of revenue, which totalled $935 million.

In Kuwait, Zain competes with Wataniya, a unit of Qatar’s Ooredoo, and Viva, an affiliate of Saudi Telecom Co (STC).

Third-quarter revenue was KD294 million. This compares with KD313 million a year ago.