African sale helps Kuwait's Zain profit to soar fivefold

Kuwait City: Kuwaiti telecom Zain said yesterday its 2010 net profit soared more than fivefold to $3.82 billion (Dh14 billion) on year, largely due to the sale of its African operations to India's Bharti Airtel.

Zain's net profit came in at 1.06 billion dinars ($3.82 billion, Dh 14 billion), but it said excluding the one-off gain, net profit still rose a healthy 50 per cent to $1.05 billion for the full year compared with 2009.

The company — also known at Mobile Telecommunications — sold its African units to Bharti Airtel for $10.7 billion a year ago.

Zain chairman Assad Al Banwan said 2010 was a record year, and that the disposal of the African operations helped Zain invest in profitable units in the Middle East.

"2010 was both a crucial and record year for the company as it represented a turning point in the group's operational and strategic plans," said Al Banwan.

"This decision of divesting the African assets has helped the group settle its financial obligations and invest a large part of the financial gains in its main and cash generative Middle East markets where the focus will be going forward," he said.

Strategy

Zain said in a statement that its active customers in the Middle East grew 22 per cent in 2010 to 37.24 million from the year before. Besides Kuwait, Zain has operations in Bahrain, Iraq, Jordan, Lebanon, Saudi Arabia and Sudan.

It also manages a unit in Morocco.

Chief executive Nabeel Bin Salamah said Zain's strategy through to 2014 was doubling net profit and increasing its subscriber numbers in the Middle East to 51 million from the current level.

Zain's consolidated revenues in 2010 rose seven per cent to $4.86 billion after excluding revenue from African units.

The company's capitalisation increased to about $22 billion at the end of last year compared with $20 billion 12 months earlier.

On Tuesday, Al Khorafi Group, the largest private shareholder in the company, terminated a preliminary agreement with United Arab Emirates' etisalat telecom to sell a majority stake in Zain for $12 billion.

Stakes

The move came after etisalat failed to complete due diligence studies on Zain by a February 28 deadline.

Zain, in which the Kuwaiti government holds a stake of almost 25 per cent, is one of three mobile operators in the Gulf emirate, along with the National Telecommunications Co. (Wataniya) and Kuwait Telecommunications Co. (Viva).