Kuwait's Zain Q2 net profit soars to $2.95 bln

Kuwait’s Zain Q2 net profit soars to $2.95 bln

Zain meets expectations with $2.95 bln Q2 profit.

August 10, 2010 8:53 by Reuters

Kuwait’s Zain, the Gulf Arab region’s third-largest telecoms group by value, met forecasts with a jump in quarterly earnings to 843.8 million dinars ($2.95 billion), spurred by its sale of African assets.

“With the sale of the Zain Africa assets now concluded, coupled with a healthy cash balance and reduced debt levels, the company is now well positioned to focus on, and further grow, its profitable Middle East operations,” Chairman Asaad al-Banwan said in a statement on Monday.

“Better things are yet to come as we diligently strive to maximise shareholders’ value in this new era,” he said.

Chief Executive Nabeel bin Salama said in June that profits from the $9 billion sale of African operations to Bharti Airtel would be booked in the second quarter. The deal closed in June.

Bin Salama said that an impressive performance in several of Zain’s key markets such as Saudi Arabia, Sudan and Iraq indicated that better financial results were expected.

“We are focused on further increasing our market leadership in all our Middle East operations … We are now more in the flexible position of being able to consider all our options,” Bin Salama said in the statement on Monday.

Simon Simonian, a telecom analyst at Dubai-based Shuaa Capital, said Zain could be open now for any offers.

“The market is aware that Zain is in play, and its management and shareholders are willing to entertain offers,” he said.

MORE CUSTOMERS

In July last year, France’s Vivendi entered talks to buy a majority stake in Zain. After these failed, Kharafi Group, one of the firm’s top shareholders, agreed in September to sell a 46 percent stake to an Asian consortium for 2 dinars per share, but that fell through also.

Net profit in the first half was 895.3 million dinars, Zain said in the statement on Monday.

That meant a second-quarter profit of 843.8 million dinars following one of 51.5 million in the first quarter, Reuters calculations showed.

The result met forecasts in a Reuters poll of analysts, where estimates ranged from 835 million to 844 million dinars.

It posted a net profit of 78.8 million in the second quarter of 2009.

Shareholder equity in the first half grew 16.6 percent to $8.9 billion, the chairman said. Its customer base rose 28 percent from a year earlier to 34.2 million.

Last week, Zain said it received a $295.4 million payment from Bharti as part of the African assets sale and that it would be booked in third-quarter results.

Zain’s shares closed flat at 1.200 dinar on Monday. The results were announced after the bourse closed.

(Reporting by Eman Goma and Diana Elias; Editing by Michael Shields)