(MENAFN- Arab Times) KUWAIT CITY Feb 24: For the full-year 2014 Zain Group generated consolidated revenues of $4.3 Billion down 2 percent from 2013. Consolidated EBITDA for the period reached $1.8 Billion down 6 percent reflecting an EBITDA margin of 41.8 percent.
Consolidated net income amounted to $685 million down 10 percent and reflecting earnings per share of $0.18. The company''s overall twelvemonth financial results were materially affected by currency translation impacts effectively slashing reported net income by $152 million (KD 43 million) substantially higher than $88 million (KD 25 million) for the full year 2013. Excluding the currency variance and FX translation impact net income would have been relatively stable. Our customer base reached 44.3 million at the end of 2014 reflecting a 4 percent reduction year-on-year predominantly due to a change in the definition of an ''active customer'' implemented by Iraq''s regulator and the new SIM registration policy in Sudan which together saw approximately three million customers removed from the base.
The year proved to be challenging on many fronts. How would you say Zain faired in 2014? The global telecom sector during 2014 continued to be impacted by changes in telecom operators'' business models primarily due to the presence of over-the-top services (OTT) which have led to consumers adopting new ways of communicating and running their businesses through smart phones and online services. From a financial standpoint for Zain there is no doubt that 2014 proved to be a challenging year across all our operating companies due to the intensive competition in key markets resulting in lower margins which was further exacerbated given the relatively high penetration rates in many of the markets in which we operate. Adverse currency devaluations for the year did not help matters either as it impacted all our key financials substantially especially the bottom line.
Additionally there were a number of external circumstances beyond our control that hit several of our operations hard and as a result had a negative impact on Zain Group''s overall operational and financial performance. In both Iraq and South Sudan for example the escalation of social instability during the year saw several million people displaced and parts of the network were rendered inaccessible for maintenance at times creating additional operational costs. In addition the recent appreciation of the USD against the KD along with foreign currency revaluation losses predominantly in the Republic of Sudan and in Iraq had a negative impact on Zain Group''s financials. Part of our success over the years is in being able to overcome challenges and we are confident this is precisely what we will do in due course. In other parts of the Group there were a number of positive signs and developments.
Our 4G network in Kuwait has continued to deliver on the promise of offering new and compelling services and our flagship operation in Kuwait witnessed growth in all its key financial indicators which is even more impressive considering the highly penetrated market conditions that exist in the country. Kuwait''s healthy ARPU of $36 and high EBITDA margin of 48 percent vindicates the continual investment in the network. In 2014 the operation in Saudi Arabia continued to show a healthy growth narrowing net losses by 23 percent and significantly increasing its EBITDA by 24 percent to reflect a 17 percent EBITDA margin.
Data consumption and its subsequent revenue growth of 37 percent for the year has also been a source of encouragement in the Kingdom becoming an important contributor to the operator''s overall service revenue. Although the lower growth in key financials was not what we expected our operation in Jordan continues to deliver healthy results and the future looks brighter for that operation given the impending launch of 4G services in early 2015. Despite a difficult year in overall financial terms it is pleasing that we remained the market leader by customer numbers in Kuwait Iraq Jordan Sudan South Sudan and Lebanon.
The Telco industry is changing rapidly. what are the measures Zain is tak-ing to protect its revenue streams and achieve growth? Over our more than 30 years of operation Zain has consistently sustained itself as a pioneer in regional innovative products and services and 2014 was no different as we took immediate action in adapting to market forces. In 2014 we devised a clear strategy that we intend to implement over the next five years that will take advantage of our competencies which include our people networks and geographic coverage while looking to develop new areas and becoming an innovative and diversified operator.
We are looking to evolve from being a mobile operator to becoming an integrated digital life-style company that also has a strong enterprise sector focus. We took this vision further by detailing our five-year transformation agenda based on the adoption of a strategy comprising of fixing the basics within the Group differentiation and revenue diversification on one side and customer experience operational effectiveness business growth and people development on the other.
Six strategic initiatives have been defined within Zain Group namely customer experience; cost optimization; talent development; Zain Digital Frontier and Innovation (ZDFI); customer value management and enterprise all with the aim of supporting the company''s target of capturing a significant market share from this new line of business that will substantially lead to generating billions of dollars of additional revenues. We also took proactive steps to future-proof our networks. Our flagship operation in Kuwait continues to push technology innovation of its nationwide 4G service by testing both LTE-Advanced services and VoLTE (Voice over LTE) during the year with plans to launch these state-of-the-art technologies in 2015.
In Saudi Arabia where data usage is already high but growing all the time we took the unprecedented step of signing network expansion and upgrade agreements totaling SAR 4.5 billion ($1.2 billion) with five leading global technology companies. The agreements aim to enhance Zain Saudi Arabia''s customer experience and to improve and expand Zain''s network capacity coverage and speed. The operator aims to provide 4G LTE coverage to over 90 percent of the population providing existing and new customers with real high-speed mobile Internet connectivity. In Bahrain we undertook and completed a $101 million network modernization program with including the launch of 4G services that will support the operator''s aggressive marketing strategy to capture greater market share. In Jordan we announced the commencement of a 4G LTE network deployment following a $270 million investment to acquire an exclusive 4G license and additional 3G spectrum where investments in excess of $100 million will be made towards the rollout of the 4G network. In addition on Dec 31 2014 Zain Iraq made the nation''s first third generation phone call to the Iraqi Minister of Telecommunications marking a new era of enriched communications technology in the country.
The rolling out of the 3.9G service by Zain Iraq will offer the Iraqi people unprecedented access to mobile data and connectivity and will enable the socio-economic progress linked to its provision. Zain''s investments in improving network service are just one aspect of the company''s drive to provide an optimal customer experience. To ensure it is on the right track Zain continuously engages with and listens to its customers in order to measure their satisfaction with the company''s performance and offerings. Could you explain what Zain digital frontier and innovation (ZDFI) involves? The ZDFI business unit was established in 2014 growing the business through new innovative business streams adding to Zain''s financial viability and market capitalization. The unit focuses on the areas of innovation; digital services; corporate venturing; and smart cities with the ultimate aim of transforming Zain into a regional innovation trendsetter. It is estimated that potential revenue streams from such activities are huge with Zain having already identified substantial potential revenues in the smart cities space alone. Zain operates in some pretty diverse markets. What were some of the major highlights positive or challenging in the main markets of operation during 2014? We benefit from having over 30 years of experience in the telecom industry in the Middle East. There is a reason why we have survived through to this day and this is our ability to adapt and extract value from our operations.
There are very definite challenges our industry is moving at a rapid pace and our value chain is becoming more complex; however there are also great opportunities. The progress towards licensing 3G in Iraq in 2014 was momentous given the latent potential for mobile broadband in the country. We have already invested almost $5 billion in our network in Iraq during our time of operation in the country and many of our base stations are 3G-ready. Therefore we expect substantial new revenue streams from the era of 3G in Iraq.
The positive impact of the introduction of high-speed mobile data is evident in Bahrain where the launch of 4GLTE in the Kingdom in 2014 made an immediate positive impact on revenues and data usage. In December 2014 Zain Bahrain also took the significant step of listing 15 percent of its shares on the Bahrain Bourse in fulfilment of its licensing conditions and allowing a wider base of investors to participate in the shareholding. This milestone was the first IPO in Bahrain since 2010. What have been the factors driving the business in 2014 and do you expect them to persist in the year ahead? Zain has been investing heavily in mobile broadband networks having already launched 4G LTE in Saudi Arabia Kuwait and Bahrain as well as advanced 3G networks in Jordan Sudan and South Sudan. Even in countries such as Iraq where the company had not introduced the latest mobile broadband networks in 2014 demand for digital services remained enormous and continues to grow boding well for Zain''s future growth opportunities.
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