Wataniya profit hit by forex losses in Tunisia and Algeria

DUBAI: Wataniya, Kuwait’s No.2 telecom operator, reported a 26.5 percent fall in fourth-quarter net profit as more customers failed to offset tougher competition at home and foreign exchange losses in Tunisia and Algeria.
The firm, a subsidiary of Qatar Telecom (Qtel), made a net profit of 12.6 million dinars ($ 44.78 million) in the three months to Dec. 31, down from 17.1 million dinars in the year-earlier period, it said in a statement.
EFG Hermes forecast quarterly profit of 18 million dinars.
“Foreign exchange impacts again impacted profitability and competitive dynamics in Kuwait remain challenging,” chairman Sheikh Abdullah bin Mohammed bin Saud Al Thani said.
Wataniya’s annual profit fell to 75.5 million dinars, down from 362.1 million dinars a year earlier.
The firm’s 2011 profit was boosted by a fair value gain of 265.3 million dinars after it upped its stake in Tunisiana to 75 percent from 50 percent. Without this fair value gain, its 2011 net profit would have been 96.8 million dinars.
Wataniya wants to more than double its annual dividend despite the profit slump, proposing a cash pay-out of 125 fils per share for 2012. For the financial years 2007 to 2011, it paid dividends of 50 fils per share, Reuters data showed. There are 1,000 fils in a dinar.
In Kuwait, Wataniya competes with No. 1 operator Zain and Viva, an affiliate of Saudi Telecom Co, while it also has operations in Algeria, Tunisia, the Maldives, Saudi Arabia and the Palestinian Territories.
“It’s hard to see any revenue growth in Kuwait because Zain and Viva are ramping up competition,” said Umar Faruqui, a telecom analyst at Global Investment House in Kuwait.
The company’s full-year domestic revenue slumped by nearly a tenth despite it recruiting more local customers.
Its total consolidated customer base was 19.2 million at the end of December, up 7.8 percent from a year earlier. Algeria and Tunisia accounted for 16.25 million customers combined.
Full-year net profit for 2012 attributable to Wataniya from Tunisiana fell to 35.2 million dinars from 39.6 million dinars in 2011. The 11.1 percent drop was in line with a decrease in the Tunisian dinar against the dollar last year, Wataniya said.
Kuwait’s currency is pegged to a basket of currencies, of which the dollar is thought to be the largest component.
Wataniya’s full-year profit from Algerian unit Nedjma nearly doubled to 19.6 million dinars.
Quarterly revenue was 183.4 million dinars, Reuters’ calculations showed, against 186.5 million dinars a year ago.
Wataniya shares ended 1.7 percent higher on Kuwait’s bourse, outperforming the wider market index, up 0.1 percent.
Zain said earlier foreign exchange losses were to blame for a 32 percent drop in fourth-quarter profit.
Zain made a net profit of 50.47 million Kuwaiti dinars ($ 179.04 million) in the three months to Dec. 31, down from 74.6 million dinars in the year-earlier period.
Analysts polled by Reuters on average forecast a quarterly profit of 63.7 million dinars.
Zain proposed a dividend of 0.05 dinars per share for 2012.
“Last year was difficult for Zain group due to sharp fluctuations in currency rates,” Zain said in a statement, adding these fluctuations led to losses of $ 109 million.
Although Zain did not specify the origin of its foreign exchange losses, these were likely to have come largely from Sudan, where the pound was devalued by 40 percent in July and fell to a near-record low in late January.
Sudan is one of Zain’s key markets, accounting for 30 percent of the group’s 41.3 million subscribers and 20 percent of revenue in the nine-months to Sept. 30, the most recently available figures.
Zain group CEO Scott Gegenheimer, who was appointed in December, said the company faced a number of challenges in Sudan, including fluctuating currency rates and the pound’s low value.
Full-year profit for 2012 was 252.1 million dinars, down from 284.9 million dinars in 2011.