Tuesday 18 October 2016
Zain Saudi Arabia reports stable financial performance, 7% decline in revenues while EBITDA increased by 10%
Mobile Telecommunication Company Saudi Arabia (Zain) announced its financial results for the third quarter ending September 30, 2016.
The Company reported revenues of SAR 1,634 million for the third quarter, down by 7% compared with SAR 1,764 million in Q3, 2015. Revenues for the nine months’ period of 2016 were up 1% reflecting a record SAR 5,126 million compared with SAR 5,069 million for the same period last year.
Gross profits reached SAR 1,061 million during the third quarter of 2016 with a gross margin of 65%, up from 60% in Q3, 2015, whilst cash margin remained almost unchanged. The Company reported record gross profits during the nine months’ period to reach SAR 3,259 million increasing by 13% up from SAR 2,886 million during the same period of last year.
The company reported a 10% increase in EBITDA to reach SAR 488 million in Q3, 2016, up from SAR 441 million during the same quarter of 2015, and a 7% increase from SAR 1,305 million in the nine months period compared to SAR 1,224 million in the same period of 2015. EBITDA margin rose in Q3 2016 to 30% compared to 25% in Q3 2015, while reaching 25% in the first nine months of 2016 compared to 24% of 2015.
Net losses for Q3, 2016 were narrowed by 19% to SAR 267 million, down from SAR 329 million during Q2, 2016.
HH Prince Naif bin Sultan bin Mohammed bin Saud Al Kabeer, Chairman of the Board of Directors of Zain Saudi Arabia said, “The High Order announced on 1st October 2016, to extend the Company’s License by 15 years and upgrade it to a Unified License is the most significant development since the inception of the Company. I would like to thank the Custodian of the Two Holy Mosques and the Government for this decision which, in line with Vision 2030, will enhance the competitiveness of the sector and enable the sector to play an important role in the development of the economy.”
HH added, “I look forward to further transformation of the Company, as the impact of the High Order will be reflected in the Company’s financial results from Q4, 2016, onwards. The 15 year extension will decrease the amortization charge by SAR108 million per quarter (SAR433 million per year), hence decreasing the Company’s net losses.”
“The telecoms sector clearly faced various challenges in the third quarter, and I can report that the Board and executive management are sparing no efforts to address these challenges.” Zain Saudi Arabia’s Chairman concluded.
Mr. Hassan Kabbani, Chief Executive Officer of Zain Saudi Arabia said, “Even though the Company faced a drop in in revenues during Q3, as a result of adverse market conditions; generally, we continued to report encouraging results, across all metrics including, gross profit and gross margin during the first nine months.”
Commenting on the High Order to extend the Company’s license and grant it a unified license, Mr. Kabbani offered his gratitude to the leadership, adding, “This is very positive news for the Company and for the telecommunications industry in Saudi Arabia. This decision brings our goal of reaching sustainable net profits closer.”
“The Unified License will enable the Company to offer the full range of telecommunications services, including fixed voice and data services; in time we will introduce a range of new innovative services to the market.” Zain Saudi Arabia CEO continued, “The Company is already working on partnerships to expedite this process. Last week, we signed a Letter of Intent with ‘Dawiyat’ a subsidiary of Saudi Electricity Company (SEC), in order to cooperate in the utilization of the SEC’s fiber-optic network by Zain Saudi Arabia, mutual marketing of both companies’ services, and providing new locations to establish telecommunication towers and infrastructure.”
Mr. Kabbani concluded, “I am confident about the future of the Company and appreciate the continued support of our shareholders, Zain Group, the Board of Directors, as well as the efforts of the Zain team.”