Zain’s Q2 gross profits up 18%

Zain KSA’s gross profits increased in Q2, 2013 reaching to SR 831 million; 18 percent higher than the corresponding quarter of last year, according to its interim financial results announced on Tuesday. The company also successfully narrowed its net losses during the same period to SR370 million, representing a 6 percent decrease in net losses against the corresponding quarter of last year.
Fraser Curley, Zain KSA’s CEO, pointed out that the company generated gross revenues during this year’s second quarter amounting to SR1.71 billion, an increase of 9 percent compared to SR 1.57 billion during the same quarter of 2012. He explained that this resulted from growth in the revenue per subscriber and overall customer base in both pre- and post-paid subscribers. Moreover, gross revenues increased by 13 percent during the six-month period of 2013 reaching SR3.43 billion from SR3.03 billion during the corresponding period last year.
Curley added that the decline in the company’s net losses during the six-month period of this year compared to the similar period last year, partially resulted from a decrease in the financing costs by 23 percent to SR345 million compared to SR449 million during the same period of 2012.
Furthermore, he stated that during the second quarter, the company achieved 49 percent gross margin compared to 44 percent during the first quarter of 2013 and 45 percent during the same quarter of last year. This was partially due to the new price regulations on international traffic.
Curley pointed out that the 18 percent increase in gross profits achieved during the second quarter compared to the same quarter last year, also reflects the management’s focus on developing and improving its services and products to its customers, both in the Kingdom and while roaming overseas.
In regard to other changes during this quarter, Curley stated that a reduction in cost of revenues during this second quarter compared to the previous quarter of this year was due to reductions in the international interconnection costs.
He also announced that a 20 percent increase in operating losses during the six-month period of this year, which reached SR439 million compared to SR365 million during the same period of 2012, was mainly due to one-off set-up costs associated with long-term operational cost reduction programs. These were mainly attributed to the two new strategic agreements signed with Ericsson and Huawei for first level maintenance and network operational support.
The effect of these long-term savings will result in ongoing reductions in distribution and marketing costs moving forward.
Fahd bin Ibrahim Al-Deghaither, chairman of the board of directors of Zain KSA, referred to the importance of the agreement signed earlier with the Ministry of Finance and stated that this will contribute to a provision of greater liquidity, which will be utilized to reduce a portion of the company’s liabilities, and result in further reductions in the financing costs.
The company will also benefit from utilizing other liquidity portions to continue expanding and developing its network, he said and stressed that Zain KSA is diligently working on developing its products and service portfolio, and expressed his confidence in the company’s ability to succeed in continuing the current growth and financial improvements.
Al-Deghaither also indicated the importance of the current pivotal phase in the company’s development, offering much improved customer-experience and improving the network’s overall resilience and reliability. "Our ongoing success is witnessed by independent awards, such as the best operator in 4G LTE service," through which Zain KSA has covered all the Kingdom’s major metropolitan areas.
Reiterating that the management team is continually improving the performance of the company in all operational areas, including technical, commercial and financial, Al-Deghaither expressed his confidence in the network efficiency, and the quality of its services and innovative commercial offerings that will assist the management in achieving the ambitious operational plans.
Zain KSA has signed an agreement with the Ministry of Finance to postpone payments of the Kingdom's dues for the next seven years, which are estimated to be at SR800 million annually, so those deferred instalments are to be considered as a commercial loan from which the first instalment will be due on June 1, 2021.