Zain Saudi Arabia posts strong results as it undertakes operational efficiency initiatives

 
James Nickerson
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Zain is expecting demand for data services to grow in 2016 (Source: Getty)

Zain Saudi Arabia has posted growing revenue and record gross profit for the year ending 31 December, with the company breaking even at an operating level for the first time since the company's inception.

The Kuwait-based telecoms operator reported revenues having grown by nine per cent to 6,741m riyals (£1.3bn), with net losses narrowing by 23 per cent.

The company also announced that its gross profit margin had reached 59 per cent, reflecting gross profits of 3,951m riyals for the year.

The company has benefited through undertaking operational efficiency initiatives, as well as improved terms with its vendors.

Due to the transformations, earnings before interest, tax, depreciation and amortisation increased by 48 per cent, while operating losses fell 73 per cent year-on-year.

Read more: Vodafone partners with Zain in Middle East

Hassan Kabbani, chief executive of Zain, said: "2015 was a record-breaking year for Zain Saudi Arabia. For the first time since inception, the company broke-even at an operating level during two quarters, indicating the success of our transformation plan, driven by our 'Winning through Caring' strategy."

The company was positive about prospects for future growth, given the size of the market and the fact that Zain believes "consumers in Saudi Arabia are amongst the most digitally engaged in the world".

Put together, Kabbani said Zain is expecting demand for data services to grow in 2016.

The company also received good news earlier this month when the Saudi telecoms regulator slashed call termination fees by 40 per cent. Zain's shares rose on the news.

Termination fees are those charged by one network to another, when a call originating on one network terminates on another network.

Still, the company is still reporting net losses due to amortisation charges associated with its license and the cost of financing its debt.

And Zain still faces a competitive market environment, up against Saudi Telecom Co and Etihad Etisalat, two larger mobile network operators.

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