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Kuwait’s Zain net profit rise sharply on Africa unit sale

KUWAIT CITY — Kuwaiti telecommunications giant Zain on Monday announced an almost five-fold rise in first half net profit mainly due to the sale of its African operations for 10.7 billion dollars.

Zain posted 895.3 million dinars (3.085 billion dollars) in net income in the first six months of 2010, compared to just 533.5 million dollars in the same period last year, a jump of 480 percent, the company said in a statement.

It said the net profit includes 2.653 billion dollars of capital gain from the sale of its operations in 15 African nations to India’s giant mobile operator Bharti Airtel.

Without including the capital gain from the African unit sale, completed in June, Zain’s net profit to June 30 would have been only 432 million dollars, a 19 percent decline from the same period of 2009.

In the first quarter of the year, net profit of Kuwait’s largest telecom firm dropped by 31.7 percent.

Chairman Asaad al-Banwan said the company achieved the results despite challenging global economic conditions and competitive markets.

“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,” he said.

Zain’s clients stood at 34.2 million on June 30, a sharp drop from over 70 million subscribers, due to the African sale. Net profit in 2009 slumped by 39 percent to 677 million dollars, from 1.11 billion dollars the previous year.

Shareholders’ equity on June 30 increased by 16.6 percent to 8.9 billion dollars, while capitalisation dropped to about 18 billion dollars from 20 billion dollars at the end of the first quarter.

Zain, in which the state owns a 24.6-percent stake, is one of three mobile operators in Kuwait, along with the National Telecommunications Co (Wataniya) and Kuwait Telecommunications Co (VIVA).