Kuwait's Zain committed to Sudan, eyes Libya growth
Currency fluctuations in Sudan have not deterred Kuwaiti telco, says board member
Zain, Kuwait's biggest telecommunications provider, has no intentions of exiting its operations in Sudan and is planning to push ahead with plans to launch into Libya, a company board member told Arabian Business.
The conglomerate, which is present in eight countries, reported a 27% fall in first-quarter net profit, mainly due to a steep devaluation in the Sudanese pound.
Sudan accounted for nearly a third of Zain's customer base and a fifth of group revenue last year, but the country has been mired in economic turmoil following South Sudan's succession in 2011.
In July, Sudan devalued its currency to 4.4 pounds to the dollar from 2.6, while the black market rate hit a record low of 7.1 in December. The slump cost Zain the equivalent of $179m in revenue and $44m in profit in the first quarter.
Set against the background of toughening competition, political turmoil, a struggling economy and high costs, some analysts said Zain may cut its losses and quit its last remaining sub-Saharan operation - it sold its assets in 15 other African states to India's Bharti Airtel in 2010 to focus on the more lucrative Middle East.
However, board member Bader Nasser Al-Kharafi said the Kuwaiti telecoms giant is committed to Sudan and has no intension of pulling out.
“We exist in eight markets and in Iraq and Sudan we have huge potential from those two. We will definitely hold onto Sudan. I mean the numbers are good, but [for] the fluctuation in currency.
“We believe things will be solved in Sudan soon. On the long-term I think Sudan will settle down and I see it as a great opportunity. We will keep that,” he said in an interview in his office in Kuwait City.
Another African market Zain is looking to enter is Libya, Al Kharafi confirmed. “We don’t have a number [of target markets] but whenever there is an opportunity we will invest. We were targeting Libya and they stopped the process there but Libya is one of the countries we would like to be in.”
Libya's telecom sector remains in state hands. Government-controlled Libyan Post, Telecommunication and Information Technology Co (LIPTIC) owns the country's two mobile operators Al Madar and Libyana as well as Libya's main internet provider, with the telecoms sector isolated from much foreign competition during Muammar Gaddafi's 42-year rule.
Libya had planned to tender a management contract for LIPTIC, which is seen as a prelude to privatisation by analysts, but this tender has been put on hold.