1. Art and Diseño

Business
Greece on European charm
offensive for debt relief
Page 23
World’s central
banks diverge
MONDAY, FEBRUARY 2, 2015
Page 25
KAMCO wins ‘Kuwait
Asset Manager of the
Year’ Award
Page 26
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Middle East leads G 63 AMG 6x6 sales worldwide
ST PETERSBURG: People prepare a sled in the form of the Russian ruble during the Winter Sledge festival in St Petersburg, yesterday. Net capital outflows from Russia more than doubled in 2014 to $151.5 billion, prompted by the
Ukraine crisis and the plunging value of the ruble, according to statistics from the central bank. — AFP
Zain Group generated $4.3bn revenues for 2014
Group recorded net income of $685 million for full-year
KUWAIT: Zain Group, the pioneer of
mobile telecommunications across
the Middle East and Africa,
announces its consolidated financial
results for the year 2014 and fourth
quarter ended 31 December, 2014.
Zain served 44.3 million customers
at the end of the period, reflecting a 4
percent decline year-on-year (Y-o-Y).
Zain is the market leader by customer
base in six of its eight operations.
For the year 2014, Zain Group generated consolidated revenues of $4.3
billion. Consolidated EBITDA for the
period reached $1.8 billion, reflecting
a healthy EBITDA margin of 41.8 percent. Consolidated net income
amounted to $685 million, reflecting
Earnings Per Share of $0.18.
The Board of Directors of Zain
Group recommended a cash dividend
of $0.14 (KD 0.040) per share subject
to the Annual General Assembly and
regulatory approvals. Additionally,
shareholders’ equity stood at $5.6 billion (KD 1.6 billion) as at 31
December, 2014.
Fourth quarter
For the fourth quarter of 2014,
Zain Group recorded consolidated
revenues of $1.0 billion. EBITDA for
the quarter reached $406 million,
reflecting a healthy EBITDA margin of
40.4 percent. Net income for the
quarter reached $115 million.
Key Operational Notes:
1. Group data revenues (excluding
SMS and VAS) witnessed a healthy
13 percent growth during 2014,
accounting for 16 percent of the
Group’s consolidated revenues.
2. The recent appreciation of the US
dollar against the Kuwaiti Dinar,
along with foreign currency revaluation losses predominantly in
the Republic of Sudan and Iraq,
cost the Group $152 million (KD
43 million) in net income for the
full year 2014, substantially higher than $88 million (KD 25 million)
for the full year 2013. Excluding
the currency variance and FX
translation impact, net income
would have been relatively stable
for the full-year 2014.
3. Specifically for the fourth quarter
of 2014, currency variance losses
cost the company USD 41 million
(KD 12 million) in net income,
higher than $34 million (KD 10
million) in the fourth quarter of
2013.
4. Customer base decline is a result of
two major circumstances; one, a
new definition of an “active customer” implemented by the regulator in Iraq and second, due to
the new registration policy implemented by Sudan’s regulator.
5. The escalation of political instability in Iraq during the second half
of 2014 has seen several million
people displaced internally.
Additionally Zain Iraq endured
frequent temporar y network
interruptions and associated
higher network operational costs.
These unavoidable occurrences
had a drastic effect on Zain Iraq’s
and consequently Zain Group’s
overall key financial metrics.
6. Zain Iraq entered into an agreement with Iraq’s Communication
and Media Commission (CMC) on
November 10, 2014, earning the
right to utilize 3G spectrum following an installment payment of
$76.8 million representing 25 percent of the total $307 million
spectrum fee. Zain Iraq made its
first 3G call on New Year’s Eve,
2014.
7. Political unrest in South Sudan also
affected Zain Group’s results as
the country also witnessed significant displacement of its people,
with access to and repair of many
network sites in parts of the country proved to be difficult, causing
frequent interruptions and higher
maintenance costs.
8. As mandated by its mobile operating license, Zain Bahrain completed an Initial Public Offering of 15
percent of its share capital and
listed on the Bahrain bourse on 4
December, 2014. This milestone
was the first IPO in Bahrain since
2010. Additionally Zain Bahrain
completed its $100 million
revamp of the network and now
offers nationwide 4G ser vices
across the Kingdom.
9. Heavy investment in 3G and 4G
Zain Group Chairman Asaad Al-Banwan
Zain Group CEO Scott Gegenheimer
network upgrades and expansion
across operations sees CAPEX
spend for the year amount to
$730 million (excluding Saudi
Arabia), reflecting 17 percent of
Group revenues.
10. In November 2014, the Board of
Zain Saudi Arabia recommended
a reduction of the company ’s
share capital and awaits final
approval by the general assembly
and respective authorities. This
proposed capital reduction is one
of several positive steps being
taken by the company to improve
its financial position as part of a
comprehensive transformation
plan, which has been ongoing
since the beginning of 2014.
Commenting on the results, the
Chairman of the Board of Directors of
Zain Group, Asaad Al-Banwan said
“Despite geo-political challenges and
unavoidable currency issues in sever-
al markets that have had a dramatic
effect on our 2014 financial results,
the Board remains confident that
management is implementing the
right strategy in driving the business
for ward in this ever- evolving
telecommunications industry. We are
closely aligned with management in
transforming the operating model of
all Zain operations in order to cope
with and overcome increased levels
of competition from rival operators
and OTT players combined, implementing numerous initiatives aimed
at extracting more synergies
between our operations and optimizing efficiency”.
The Chairman continued, “ We
have invested significantly in our
infrastructure, launching state-oft h e - a r t n e t wo r k s a c ro s s a l l o u r
markets in order to improve the
m o b i l e e x p e r i e n c e fo r o u r c u s tomers. Our investment in capital
expenditure reached $730 million
which represents 17 percent of our
revenues, reflecting Zain’s commitment to innovation and quality of
ser vice. I remain proud that we
have been able to maintain our
leadership position in the majority
of the markets we operate in, testament to our valued brand reputation”.
Zain
G ro u p
C E O,
Scott
Gegenheimer said “Due to number
factors beyond Zain’s control, the
year proved to be especially challenging and it is disappointing to
report declining financial results
for the full year considering the
sound operational progress and
transformation we have undertake n a c ro s s a l l o u r m a r k e t s.
Nevertheless we remain focused on
grow i n g t h e b u s i n e s s i n a l l o u r
markets and we are committed to
our strategy that will take advan-
tage of our competencies, which
include our people, brand, quality
networks and geographic coverage, while looking to develop new
areas and becoming a diversified
and innovative digital operator”.
G e g e n h e i m e r re i t e r a t e d t h e
promising growth opportunities in
the mobile broadband area for all
of Zain’s operations. “Our digital
traffic and revenues continue to
a d v a n c e s t ro n g l y, re c o rd i n g a
h e a l t hy 1 3 p e rce n t a n n u a l r i s e,
with data now reflecting 16 percent of all Zain Group’s service revenues. With Zain Iraq rolling out 3G
services in January 2015 and Zain
Jordan rolling out 4G services during the first quarter of 2015, coupled with healthy growth expected
in our other 4G operations in
Bahrain, Kuwait and Saudi Arabia,
the Group will continue to foster
and develop this key area of the
business and expects it to reflect
positively in our future financial
metrics”.
With regard to year-on-year key
operational highlights across Zain’s
footprint, Gegenheimer noted:
Kuwait: The cornerstone of Zain
Group continues to perform exceptionally well with customer growth
of 6 percent to reach 2.7 million at
the end of 2014, maintaining its
market leadership. For the year,
Zain Kuwait revenues rose by 2
percent to $1.2 billion. EBITDA and
net income increased by 1 percent
and 3 percent respec tively. The
operator reported a healthy EBITDA
margin of 48 percent for the year
2014. Notably, with the attraction
of its nationwide 4G LTE network,
data revenues (excluding SMS &
VAS) formed 31 percent of total
re ve n u e s, re f l e c t i n g a n a n n u a l
growth rate of 11 percent.
Group Key Performance Indicators (USD and KD) for the full year 2014