Zain's fifth straight quarterly decline blamed on foreign exchange issues
The top telecommunications operator in Kuwait, Zain, had said the plunge in the Sudanese currency as well as other foreign exchange currencies contributed to the company's fifth straight decline in quarterly profit yesterday.
The company currently operates in eight countries in both Africa and the Middle East, earned a net profit of KWD53 million or USD187.2 million in the quarter ending September 30. This was confirmed by a company statement which also compared the company's net profit of USD59.7 million from the previous year.
A number of analysts polled by Reuters projected Zain would have an average quarterly profit of KWD55.1 million. The telecommunucations firm said the bottom line would have increased had it not taken losses amounting to USD28million in foreign exchange losses, mostly from the Sudanese devaluation.
According to Zain Chief Executive Officer Scott Gegenheimer, "Unavoidable foreign currency fluctuations continue to affect us adversely."
The Sudanese pound fell by two thirds its value against the US Dollar as a result of the independence of South Sudan in 2011. Sudan had lost three quarters of its oil reserves because of the creation of the new state. The country had accounted for nearly 15% of Zain's revenue in the first six months of 2013.
Data revenue increased by 22% and accounted for 13% of total company revenue, according to a statement from the telecommunications firm. There was no clarification though as to the specifics of this revenue, if it were for the third quarter of the year or the first nine months of 2013.
Gegenheimer added that the increasing income from data would 'compensate for flat voice revenue growth.' He further said that a large portion of the customer's of Zain do not have smartphones and are living in rural areas, where historically there is low uptake of data services.