Zain Group’s newly elected board appoints Mohannad Al Kharafi as Chairman and Bader Al- Kharafi as Vice-Chairman and CEO Zain Group
Zain Group held its annual Ordinary General Assembly at the company’s headquarters in Shuwaikh, Kuwait, and after satisfying the legal quorum requirements with 66.79%, approved the distribution of a cash dividend of 35 fils (US$0.11) per share for the financial year ended 31 December, 2016. Additionally, after passing a number of items on its agenda, the meeting saw the election of the Group Board of Directors for the next three years.
The incoming Board members now constitute the following:
Mohannad Mohammad Al-Kharafi; Bader Nasser Al-Kharafi; Ahmed Tahous Al-Tahous (the representative of the Kuwait Investment Authority); the corporate entities: Fajer Al Nasim for selling and buying stocks represented by Houssam Fawzi Al-Kharafi; Nasim Al-Delta for selling and buying stocks represented by Khaled Ali Al-Ghanim; Abeer Al-Shorouq for selling and buying stocks represented by Talal Jassem Al-Kharafi; Jawharat Gibla for selling and buying stocks represented by Faisal Nizar Al-Nusif; and Dana Al Qebla for selling and buying stocks represented by Khaled Waleed Al-Falah.
The newly elected board of directors met immediately after the election and appointed Mohannad Mohammed Al-Kharafi as the Chairman of Zain Group, Bader Nasser Al-Kharafi as Vice-Chairman and Chief Executive Officer of Zain Group, and appointed Scott Gegenheimer in a new role as Chief Executive Officer of Operations.
During the General Assembly, Zain Group reported an increase in net profit by 2% year-on-year to reach KWD 157 million (US$519 million), reflecting earnings per share of 40 fils (US$0.13). Total annual consolidated revenue for the year amounted to KWD 1.1 billion (US$3.6 billion), while EBITDA grew 3% to KWD 512 million (US$ 1.7 billion). Zain Group’s customer base grew by 3% during the year, reaching more than 47 million customers.
Also during the General Assembly, Chairman Asaad Ahmed Al Banwan explained that Zain’s financial results were affected by social unrest and security risks in several of the company’s markets, along with fluctuations in currency exchange rates and monetary policies that were imposed in some markets. For the full-year 2016, foreign currency translation impact, driven by the 60% currency devaluation in Sudan from 6.4 to 15.9 (SDG / USD) at the beginning of November 2016, cost Zain Group USD 92 million in revenue, and USD 38 million in EBITDA. Most notably, net income was affected by USD 140 million due to currency variance loss in 2016.
The Chairman commented, “The Group continued its strategy to diversify its business amid large shifts in the telecommunications industry. We also made tremendous progress in focusing on the operational efficiency, strengthening our plans to rationalize costs and capital expenditures. With respect to total capital expenditure, this totaled USD 635 million for the year (excluding Zain Saudi Arabia). “
Al Banwan continued, “Zain has succeeded in building a solid foundation for its strategic business initiatives, ensuring all of our strategic investments are geared towards maximizing shareholder wealth.”
During the annual General Assembly, the Vice Chairman, Bader Al Kharafi said, “The result of several factors beyond our control negatively impacted our overall operational performance in 2016, as we witnessed worsening social economic developments affecting Zain operations in Iraq and Sudan. “
Al Kharafi continued, “Amidst these difficult circumstances, Zain still made strategic and operational progress, and in Saudi Arabia, for example, the decision from the Communications and Information Technology Commission to extend Zain Saudi Arabia’s license for an additional 15 years was a significant boost to the operation there. This decision will have a positive impact on the financial and operational performance of Zain Saudi Arabia, which will contribute in reducing the amortization license charges estimated at approximately SAR 433 million (USD 115 million) a year.”
Al Kharafi explained that Zain Iraq succeeded in reaching a negotiated settlement with the country’s Finance Ministry related to an imposition of a capital gains tax on its acquisition of Iraqna in 2007. This resulted in the lifting of restrictions on the trading of Zain Iraq’s shares, access to the company’s bank deposits, and the waiving of penalties and interest on taxes.
The Vice Chairman revealed that the Group currently enjoys a strong presence geographically, with a balanced range of markets that are at different stages of growth. Zain continues to be a market leader with respect to market share in five of its eight markets of operation.
Al Kharafi added, “Zain Group continues to focus on innovation in digital services, and we expect our investment program to drive us in new areas as we collaborate with innovative technology players.”
Zain has identified service provision in the smart cities space and in B2B/enterprise sector as significant growth areas and has been investing accordingly. Such developments fall under the Zain Digital Frontier and Innovation (ZDFI) business strategy, a unit that was established in 2014, and charged with launching Zain into the digital space with the view to growing the company through new innovative business streams, which add to its financial viability and market capitalization.
Al Kharafi concluded, “We are committed to our strategy to leverage our strengths, including our people, brand, customer experience, cutting edge technology innovations, and geographic coverage in our bid to become a diversified and innovative digital lifestyle operator.”