Zain's annual profit slumps 39% to $675 million

Kuwait-based Zain has reported a 39 per cent drop in profit at 195 million dinars (about $675 million) for 2009, as the telecom major faced tough business environment in the wake of financial crisis.

The Kuwaiti entity, which sold most of its African operations to Sunil Mittal-led Bharti Airtel in a $10.7-billion deal, however, did not release specific earnings from Africa.

Zain had a profit of 322 million dinars in 2008.

In a statement today, Zain said it recorded a profit of 195 million dinars for the year ended December 31, 2009.

However, last year, revenues jumped 15.7 per cent to 2.32 billion dinars as compared to 2008.

“The 2009 financial year was the toughest in the company's history, with the biggest challenge coming from the sharp volatility in several currencies, which effectively cost the Group 38 million Kuwait dinars ($133 million),” Zain Group Chairman Asaad Al Banwan said.

"The 15.7 per cent increase in consolidated revenues, 24 per cent Ebitda (qarnings before interest, taxes, depreciation and amortisation) and 33 per cent Ebit (qarnings before interest & tax) increase reflect the efficient operational performance of the Group's mobile operations, despite the global financial crisis,” he added.

Zain has proposed to shell out a cash dividend of 170 fils per share. One dinar is 1,000 fils.

“The strength and durability of the financial position of the Group ensures the realisation of such distributions, while the profits from the sale of Zain Africa will be used in support of dividends for the coming financial years, which are expected to be not less than the cash distributions for the current year,” Asaad Al Banwan noted.

Bharti would make an upfront payment of $8.3 billion and another $700 million after a year. Besides, Bharti would assume $1.7 billion of consolidated debt obligations.

The statement said Zain was serving 72.5 million managed active customers as of December 31, 2009. The entity added more than nine million new active customers over the past 12 months.

Meanwhile, Zain expects a profit of $3.3 billion from the sale of its African assets, excluding operations in Sudan and Morocco, to Bharti.

Both companies inked definitive agreements for the $10.7 billion-transaction on March 30.

Zain Group CEO Nabeel Bin Salamah said the outlook for the current fiscal year 2010 was positive.

“The best is yet to come for the Zain Group. We will seek to seize any attractive investment opportunity,” he added.