Kuwait’s Zain Posts Flat Q4 Profit, Forex Losses Bite

Zain, Kuwait’s No.1 telecom operator, reported near-flat fourth-quarter profit on Monday, missing analysts’ estimates despite an eight per cent increase in its customer base as foreign exchange losses weighed.

The former monopoly, which operates in eight countries in the Middle East and Africa, made a net profit of KD51 million ($180.6 million) in the three months to Dec. 31, it said in an emailed statement.

This was up from KD50.5 million a year earlier, Reuters data shows.

Two analysts polled by Reuters had forecast between KD52.1 million and KD59.1 million this time.

Zain, which reported declining profits in the previous five quarters, had 46.1 million customers at the end of last year, up eight per cent from a year earlier.

The company’s 2013 full-year profit was KD216.4 million, down from KD252.2 million in 2012.

It has proposed a dividend of KD0.050 per share.

Zain said foreign exchange revaluations wiped $149 million from its full-year profit, of which $6.3 million occurred in the fourth quarter.

This largely relates to Sudan, which devalued its currency by 35 per cent last year. Tax reforms in Khartoum would help offset the company’s foreign exchange hit, Zain said.

Sudan suspended a 30 per cent income tax for telecom firms in mid-2013, replacing it with a 2.5 per cent levy on revenue, Zain said.

“Factors outside of Zain’s control such as an exceptional local currency devaluation in one key market, together with social instability in others continue to adversely affect our financial results,” chief executive Scott Gegenheimer said in the statement.

Zain is the market leader in six of the eight countries in which it operates, including Iraq and South Sudan.

Violence in Iraq climbed back to its highest level in five years in 2013, while a rebellion broke out in South Sudan in December.

Data contributed 14 per cent of Zain’s full-year service revenue.

Annual revenue fell 3.3 per cent to KD1.24 billion.