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Zain Group Operational Report March 2016: Civil Unrest in Iraq Has Severely Affected Economy

Socio-Economic Circumstances in Iraq Have Affected Revenue

 

Zain group has reported a loss in Iraq for the third month in a row, the following is an excerpt from the company's operational report:

The Group incurred foreign currency losses amounting to USD 35 million for the three-month period, a substantial USD 28 million increase from a USD 7 million impact for the same period in 2015, predominantly in Sudan and Iraq.  


Key Operational Notes for the three months ended 31 March 2016: 

1. Substantial investments in 3G and 4G LTE network expansion and upgrades continue to pay off as Group data revenues (excluding SMS and VAS) grow 8% Y-o-Y, representing 21% of the Group’s consolidated revenues.

2. The continued social unrest in Iraq coupled with heightened levels of price competition and implementation of a new 20% sales tax on mobile services, as well as wide-ranging tax increases on other sectors in Iraq that hit spending on mobile services, all contributed to a negative effect on Zain Iraq’s and consequently Zain Group’s overall key financial metrics.

7nSxry1V.dpufCommenting on the results, the Chairman of the Board of Directors of Zain Group, Mr. Asaad Al Banwan said, "The Board and executive management are content with our stable consolidated revenues and higher EBITDA results given the many challenging socio-economic circumstances we are dealing with in a number of our key markets of operation. We are managing the highly changeable environments we face particularly with regard to the social unrest and hefty tax increases in Iraq that has impacted mobile consumption, as well as the intense price competition in our home market of Kuwait in a pragmatic manner, and we remain hopeful of the improving conditions across all our markets.”

Operational review of key markets for the three months ended 31 March, 2016:


Iraq: The exceptional socio-economic circumstances facing the operation saw Zain Iraq’s financial performance severely affected, with revenues for the quarter reaching USD 270 million, a decrease of 11% Y-o-Y, and EBITDA reaching USD 96 million, down 13%. Currency variance loss severely impacted net income which amounted to USD 3 million. The operation’s EBITDA margin stood at 35%, with data related revenues forming 8% of total revenues for the first quarter of 2016.

Source: Zain Group

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