Zain announces record financial results for 2008

Mergers, Acquisitions and Financial Results

Zain, the mobile telecommunication operator in the Middle East and Africa present in 22 countries, announced this week its consolidated annual financial results. For the year 2008, Zain Group recorded all time high consolidated revenues of US$ 7.44 billion, an increase of 26% compared to 2007. The company’s consolidated EBITDA increased by 15% for the same period to reach US$ 2.78 billion. Consolidated net profits reached US$ 1.2 billion, an increase of 6% on 2007. The earnings per share was US$0.33 and the shareholders equity was up 36% to US $8.69 billion.

Year on year customer growth across the two continents in which Zain operates was 50% with the Zain Group serving 63.54 million managed active customers at 31 December, 2008.

Chief Executive Officer of Zain, Dr Saad Al Barrak commented: “I am delighted that for the first time we are announcing our financial results under the umbrella of one brand, following the successful rebranding of all our Africa operations to Zain and the successful launch of commercial operations in the Kingdom of Saudi Arabia and Ghana.”

Ancillary to this Dr Al Barrak said, “Despite a very challenging environment on many fronts and huge investments in network expansion, the Group was able to achieve appealing and realistic levels of profitability during 2008, a testament to the sound management practices and excellent operational performance of all 22 operations in the Middle East and Africa.”

He added, “During the year Zain committed over US$ 3 billion in network upgrades and expansion primarily in vast and viable markets such as Ghana, Iraq, Nigeria, Saudi Arabia and Sudan all resulting in robust customer acquisition and revenues. These markets will continue to grow and we expect to further reap further rewards in the years ahead especially since they are all part of our ground-breaking and customer alluring ‘One Network’.”

On this point, Dr Al Barrak noted, “Overall, due to our massive network investment across all operations, we expect and are targeting a 30% increase on many of our financial indicators in 2009.”

On the successful capital increase that raised US$ 4.49 billion in September 2008 whereby 99% of all shareholders subscribed, Dr Al Barrak noted, “this unanimous vote of confidence by our shareholders in Zain's management and strategy will assist the company in meeting financial commitments and support our expansion plans of being a top-ten global mobile operator by 2011.” Further to this he added, “I am pleased to announce that Zain has recently paid back a Murahaba facility of US$ 1.2 billion as well as the first instalment of US$ 525 million for the purchase of Iraqna and several other financial obligations. Also we confidently expect to announce our entry into the Palestinian, and at least one other market, in the very near future.”

Referring to the global financial crisis and volatility that has affected many equity markets, commodities and currencies, Dr Al Barrak said, “Despite the fact that company had to endure higher borrowing rates in the second half of the year and a currency exchange cost of US$ 138 million which was predominantly in Africa, it still performed admirably. Without this currency fluctuation we would have added another 12% to the net profit figure.”

Dr Al Barrak added that, "Zain views this crisis as an opportunity to make further acquisitions given valuations of many prime telecom assets are considerably lower than they were just six months ago and we are actively pursuing such prospects. Going forward in the current economic climate, Zain will adapt its strategy where it makes commercial sense and where it is economically viable to take up an attractive opportunity. This includes share swapping with and acquiring minority stake deals in other telecom operations.”