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Zain Group posts record results for 2008

Strong full year results dented by decline in fourth quarter profits

Zain Group has posted record results for the financial year ended December 31, 2008, with revenues increasing by 26% to reach $7.441 billion, although fourth quarter results were hit by currency fluctuations, according to an unnamed company official.

Zain, which has operations in 22 countries across the Middle East and Africa, increased its customer base by 50% to reach 63.5 million subscribers, while net profit increased by 6% compared with 2007 to reach $1.2 billion.

“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,” said Dr. Saad Al Barrak, CEO, Zain.

He added that Zain committed more than $3 billion in network upgrades and expansion in 2008, mainly in Ghana, Iraq, Nigeria, Saudi Arabia and Sudan, which contributed to the company’s customer acquisition and revenue growth.

“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’,” he added.

But even these developments were not enough to completely shelter Zain from the global economic downturn, which dented growth in the fourth quarter, according to a report from Zawya Dow Jones.

“Results would have been much better if it wasn’t for the depreciating currencies in the Middle East and Africa. Year-on-year we are expecting an increase but it will be limited as currencies in Kuwait and Africa have depreciated against the dollar,” an unnamed Zain official was quoted as saying on Zawya Dow Jones’ website.

Zain is not alone among Middle East operators in feeling the affects of the financial crisis. In January, UAE operator Etisalat reported that its fourth-quarter net profit fell 19.3% to AED 1.42 billion ($386.6 million), missing analysts’ forecasts. Meanwhile, Saudi Arabia’s STC, reported a 62% fall in fourth quarter profits in January, which it also blamed on foreign currency fluctuations.