Kuwait's Wataniya fails to halt profit slump
Kuwait, April 24, 2013
Kuwait's second-biggest telecom firm Wataniya failed to halt a profit slump in the first quarter as rivals stepped up competition in its domestic market and political turmoil hurt business in Tunisia.
Kuwait, Tunisia and Algeria are Wataniya's core markets and only Algeria boosted the bottom line in the first quarter. Tunisian profit was depressed further by a $16 million tax bill.
Wataniya's competitors at home are former monopoly Zain and Viva, an affiliate of the Gulf's No.2 operator Saudi Telecom Co.
Since its launch in 2008, Viva has cut prices aggressively and built a mobile market share of 21 percent by the end of December, according to Zain's annual report.
Wataniya appointed its third CEO in less than a year in March.
"For most Gulf telecom operators, their competitive edge is dependent on their capital expenditure and, in Kuwait, Wataniya is lagging Zain," said Umar Faruqui, a senior analyst at Global Investment House in Kuwait.
"Viva has strong financial backing, which will allow it to keep up the competitive pressure and Wataniya will find it tough to arrest the decline in home revenue," he said.
Wataniya shares fell 1.8 percent on Kuwait's bourse on Wednesday, while the main share index rose 0.8 percent.
The company made a net profit of 19.5 million dinars ($68.4 million) in the three months to March 31, down from 28.3 million dinars a year ago, its fifth straight drop in quarterly profit, despite growing revenue and customer numbers.
Two analysts polled by Reuters had forecast that Wataniya - a unit of Ooredoo (Qatar Telecom) - would make a profit of between 18.8 million and 20 million dinars.
First-quarter profit from its Kuwait operations fell 39 percent to 9.5 million dinars, outpacing a 9 percent drop in revenue to 52.7 million.
Quarterly profit from unit Tunisiana fell by nearly two thirds to 3.8 million dinars after the subsidiary paid 4.7 million dinars in back-taxes.
Tunisiana's quarterly revenue fell 3.1 percent to 47.6 dinars even as its customer base grew 6.3 percent. The Tunisian dinar fell about 6 percent to the dollar in the 12 months to March 31, making Tunisiana's earnings worth less to Wataniya.
"Tunisia earnings are directly related to the economy - there's still a lot of political uncertainty and that is deterring foreign investment as well as hurting tourism," Faruqui said.
Quarterly profit from Nedjma, Wataniya's Algerian subsidiary, rose 14 percent to 7.4 million dinars. -Reuters