ZAIN Saudi Arabia reported its third consecutive quarterly net profit for the period ending Sept. 30, 2017 reflecting a significant turnaround in the company’s historical performance. Ongoing focus on customer acquisitions, further improvement in quality of service and network reach and performance, focus on growth of data services and prudent management of operational costs were all contributing factors to the positive performance generated by the company in Q3, 2017.
Revenues grew by 11% year-on-year in Q3 2017 reaching SR1,807 million compared with SR1,634 million in Q3 2016. When comparing Q3 2017 revenues to Q2 2017, there was a slight decrease of 3% attributable to seasonal factors including the lengthy school holiday and more expats leaving the country.
The company recorded a significant 29% increase in Ebitda in Q3 2017 to reach SR631 million up from SR488 million a year earlier, recording an Ebitda margin of 35%, up from 30% in Q3 2016. This improvement reflects the positive effects of management’s efforts in driving efficiencies and optimizing the company’s cost structure.
Zain Saudi Arabia also reported a 16% increase in gross profit to reach SR1,231 million in Q3 2017, reflecting a gross margin of 68%, up from SR1,061 million and a 65% gross margin a year earlier. Compared to Q2, 2017, gross profit decreased slightly by 2%.
A much-improved operational income of SR229 million was recorded for Q3 2017, compared to an operational loss of SR2 million in Q3 2016.
For the first time in its history, the company also announced its third sequential quarter of net profit, amounting to SR3 million in Q3, 2017, up substantially from a net loss of SR266 million in Q3, 2016. For the nine-month period of 2017, Zain KSA recorded net profit of SR57 million, up substantially from losses of SR844 million for the 2016 nine-month period.
Furthermore, the Zain Board has resolved to propose the restructuring plan to its shareholders after getting the required approvals.
As part of the restructuring plan the company's capital will be reduced from SR5,837,291,750 to SR3,616,110,783, representing a capital decrease of around 38%. The capital reduction will be effected by cancelling 222,118,097 shares. As a result, the number of shares on issue will be reduced from 583,729,175 shares to 361,611,078 shares. Following the capital reduction, the Company plans to increase its capital from SR3,616,110,783 to SR9,616,110,783 by way of a rights issue with a total value of SR6,000,000,000.
Commenting on these results, Prince Naif Bn Sultan bin Mohammed Bin Saud Al Kabeer, Chairman of the Board of Directors of Zain Saudi Arabia, said “the Board of Directors actively supports the company's transformation plan which has contributed to the 3rd consecutive positive results. The restructuring plan will go a long way in improving the financial performance, profitability and leverage ratios of the company.
He added: “Zain Saudi Arabia is implementing a major expansion plan in its digital infrastructure capabilities to support the Kingdom’s 2030 vision, contributing to the socioeconomic transformation to an economy based on development and digital diversity.”
He further said "the Board is committed to supporting a strategy of growth in data services and delivering innovation and improved customer care whilst facing significant competitive and structural challenges in the telecommunications sector currently.”
Prince Naif moreover said “the Board of Directors are appreciative that such ongoing improvement in Zain’s performance reflects the efforts, dedication and leadership of the entire Zain Saudi Arabia team and the continuous support of Zain Group.”
Peter Kaliaropoulos, Chief Executive Officer of Zain Saudi Arabia, said "Zain’s performance reflects our focus on delivering wider choices to customers in terms of pre- and post-paid offers and better value without compromising quality of service. In addition to this the profitability of the Company will get a boost from the restructuring plan which will lead to reduce debt on the balance sheet and result in significant interest savings”.
Furthermore, Kaliaropoulos said “we delivered improved trading performance driven by growing postpaid, mobile broadband and enterprise activities despite possibly the most challenging operating environment and competitive intensity in the industry ever in Saudi Arabia. We have more customers than previous quarters signing up for higher value plans. We have seen strong network performance and resilience against a backdrop of the highest ever data volumes that continue to increase driven by demand for media and streaming services. Our brand continues to receive improvements in consideration and perception and strong Net Promoter Score.”
The CEO noted “we continue to expand our data services through the Universal Service Fund projects in remote areas and delivering new experiences to customers through data apps and content. The additional spectrum we acquired in the 1800 MHz frequency band and its deployment will have a significant impact on supporting the business of Zain Saudi Arabia and raising the quality of its services.”
“Our focus on productivity benefits and efficiencies also continue to deliver positive results as evidenced by the margins we are delivering and through the reductions in fixed costs.”
Kaliaropoulos further said “our results to date this year reflect, for the first time in Zain Saudi Arabia’s history, a demonstrable and significant turnaround in our performance. Customer centricity, focus on consistent network quality and service, smart value packages, increased offerings and prudent management of costs have all led to such positive developments.”
“It is gratifying for our customers and employees that Zain Saudi Arabia was recognized as the Best Telecommunications Deployment Company of the year in the Middle East by CPI Media Group recently. Such an award endorses our brand and quality of service. We will intensify our efforts to deliver sustained growth next quarter despite tough economic and competitive conditions,” he remarked.
