Maravi

Zain’s strong subscriber base pushes up profits

Zain’s strong subscriber base pushes up profits
Written by Chiwoyu Sinyangwe
Monday, August 31, 2009 3:42:50 PM

ZAIN Zambia’s 20 per cent growth in revenueduring the first half of this year was driven by an increase in subscriber base which grew to 2.82 million, investment analysts Pangaea Renaissance have observed.

Commenting on the half-year results which indicated that the revenue earnings for the country’s biggest mobile phone company had grown to K653,199 million compared with K543, 611 million gained during the same period last year, Pangaea Renaissance stated that revenues on a gross basis were one per cent ahead the Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margin of 44.3 per cent, which was in line with the 48 per cent targeted on the net basis.

Pangaea Renaissance Zambia was the sponsoring broker for Celtel (Zain)’s listing on the Lusaka Stock Exchange (LuSE).

According to the analysis made by Pangaea Capital’s head of Telecommunications, Transport and Infrastructure and Equity Research, Ivan Kim, Zain Zambia seemed to be holding up fairly well against the major competitors – MTN Zambia – despite losing four points on a year review.

Kim, however, stated that the increase in subscribers had slowed to six per cent in the first half of this year compared to 16 per cent growth recorded last year.

“The net income of K124 billion is 1.5 per cent ahead. Overall, the numbers are slightly better versus our forecasts which should be neutral given that the preliminary numbers were already out and do not differ materially from these,” Kim stated. “However, we think the market missed preliminary numbers issued by Zain Group and these numbers, issued by Zain Zambia, could be somewhat positive…the slower penetration growth for the first half of this year was due to economic contraction which impacted average revenue per unit (ARPU) as well. We understand the major impact on ARPU is from economic slowdown rather than pricing which remains quite stable.”

Kim also observed that the decrease in operating income before depreciation and amortisation (OIBDA) margin by 2.5 points on year-on-year basis was primarily due to increased administrative costs which increased by 28 per cent, the rise largely attributed to the transition to Zain brand from Celtel.

“However, we believe the economic position of Zambia is likely to improve in the second half of this year, reflecting the surge in copper prices in recent months as well as incremental International Monetary Fund [IMF] support and renewed foreign portfolio investment,” stated Kim. “Zain Zambia holds pretty well against competition… although the risk is the potential privatisation of Zamtel.”

Labels: ITC, PANGAEA RENAISSANCE SECURITIES, ZAIN ZAMBIA LIMITED PLC

posted by MrK @ 2:45 PM