Zain records net income drop in Q2. Hits 50 million subscribers

Zain Group’s quarterly net profit reached US$281 million at end-June, a quarter-on-quarter increase of 3.9 per cent in dollar terms, but a 3.6 per cent quarterly decline in Kuwaiti dinars.

The dinar has appreciated by nine per cent to the dollar since Kuwait dropped the dollar peg in May 2007.

Zain CEO Saad Al-Barrak said the upcoming US$4.4 billion capital raising exercise will assist the company’s expansion strategy.

The operator reported 50.74 million active subscribers at the end of June, with subscriber gains amounting to 11 per cent quarter-on-quarter. Subscribers in Nigeria, Iraq and Sudan accounted for more than half the group’s subscriber base and the remainder spread across 19 countries in Africa and the Middle East.

Consolidated H1 revenues stood at US$3.488 billion while EBITDA for the period came in at US$1.305 billion.

Net income in Q2 rose to US$281 million from US$270.5 million in Q1, with EBITDA rising by only 1.2 per cent quarter-on-quarter to US$656.3 million.

Zain’s CEO Saad Al-Barrak said the operator had started to reap the rewards of its recent large investments in Iraq, Nigeria and Sudan and that he expected similar results when commercial operations start in Saudi Arabia and Ghana.

Zain has previously announced its capital increase subscription period for raising US$4.4 billion will take place between August 17 and September 18, 2008.

“Increasing the company’s capital will provide the liquidity necessary to continue its ambitious expansion strategy, while reducing the borrowing costs of the company’s operations and increasing shareholder value in the long term,” Al-Barrak commented.

Shares of Zain, which have fallen almost 20 per cent this year, were up 2.6 percent on July 24 upon the release of the latest results.  Zain’s stock market valuation currently stands at around US$25 billion.