Kuwait's Wataniya resumes profit growth

Qatar Telecom unit Q2 profits surge to $99.7mn on one-off gain, more subscribers.

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By  Rania El-Gamal Published  July 30, 2008

Kuwait's National Mobile Telecommunications Co (Wataniya) on Wednesday posted its first growth in quarterly profit in a year, topping two forecasts, after it booked an exceptional gain and boosted subscribers.

Wataniya shares jumped as much as 4.7 percent after the unit of Qatar Telecommunications Co said second-quarter profit surged 47.4 percent to 26.5 million dinars ($99.70 million).

The quarterly earnings beat two forecasts of analysts in a Reuters net profit survey last month of 21 million dinars and 25.5 million dinars.

Wataniya gave no reason for the profit jump in a statement.

In its first-quarter financial statements, Wataniya said it would book interest in the second quarter made from a $90 million gain in April related to the shutdown of Iraq operator Asiacell Telecommunication Co., in which it owned a stake.

Wataniya did not mention any exceptional gain in Wednesday's statement, but Jithesh Gopi, head of research at Bahrain's SICO investment bank, said proceeds from the Asiacell liquidation were likely behind the profit jump.

"We do not see any fundamental change in the performance of the company, which would lead to such an increase in profits during the quarter," Gopi said.

Chief Executive Scott Gegenheimer declined to comment when newswire Reuters called.

Kuwait's second-largest mobile provider said it had seen double-digit subscriber growth in all markets, particularly North Africa where its Algerian operator almost broke even, narrowing its net loss to 100,000 dinars in the first half from 4.7 million dinars a year earlier.

A 39.3-percent rise in subscribers to 10.37 million helped Wataniya boost revenues by 19.7 percent to 230 million dinars in the six months to June 30, it said.

Kuwait subscribers grew 15 percent to 1.27 million, Algeria customers surged 65 percent to 4.9 million and users in Tunisia advanced 23 percent to 3.9 million, it said.

"They have strong operations in Kuwait with high margins and (average revenues per user) ARPU," said Chandresh Bhatt, assistant vice-president of research at Global Investment House.

Wataniya, which competes with larger local rival Mobile Telecommunications Co (Zain), has been expanding to offset rising competition at home, where Saudi Telecom is to start a third operator later this year.

The mobile provider plans to start operating in the Palestinian territories this year, would likely bid for a majority stake in one of Lebanon's two state-owned mobile phone operators and is interested in Syria, executives said this year.

Its Tunisian operator's first-half net profit soared 68.4 percent to 9.6 million dinars, Wataniya said.

Wataniya's total first-half profit fell 2.7 percent to 42.6 million dinars, or 85 fils. In the first quarter, earnings had plunged 38 percent following a one-off gain a year earlier.

EBITDA, or earnings before interest, tax, depreciation and amortisation, rose 25.5 percent to 97 million dinars.

Wataniya stock ended up 2.8 percent at 2.18 dinars - below the 2.4-dinar price target of Morgan Stanley. The shares are down 10 percent this year.

Shares of Zain, which posted a 3.6 percent decline in second quarter profit earlier this week, have fallen almost 17 percent this year. Wataniya said earlier this month it plans to list its shares on the Doha stock exchange, home of its parent firm. (Reuters)

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