Zain Saudi Arabia Q1 loss narrows as customers rise

Zain Saudi Arabia, which started operations in late 2008, saw its net loss narrow in the first quarter to 663m riyals ($177m) and assured investors it was able to meet its obligations.

In January, Zain Saudi said it was in talks with creditors after missing some commitments last year on a $2.5bn Islamic loan.

The firm, 25 per cent-owned by Kuwait's Zain, made a net loss of 765m riyals in the first quarter last year, according to a bourse statement on Tuesday.

EFG-Hermes analysts had expected a loss of 618 million riyals in a Reuters survey.

Zain said the loss had narrowed after it cut costs and increased its customer base by more than 101 percent in the quarter compared to last year, without giving figures.

The auditors of Zain Saudi said in an addendum to the earnings statement that current liabilities exceeded assets but the firm believed it could honour its obligations.

"The firm believes it can fulfill its obligations by continuing to perform normal operations," the statement on the Saudi bourse website said. The auditors did not express any reservations about the financial statement.

A company spokesman could not be immediately reached to clarify the statement when Reuters called.

Zain Saudi, who competes with larger rivals Saudi Telecom and Mobily, said in January its creditors pardoned it under the condition they agree to a financial plan for 2010 which will be presented by the firm.

It said, however, its ability "to ensure a timely delivery on commitments and to continue in its business hinges on the firm's ability to ensure adequate funds on time and also on its success in discussing and changing some of the commitments for the four quarters to end-December, 2010".

The firm announced in August that it secured a $2.5bn Murabaha financing facility.

Under a murabaha deal, an Islamic bank buys an asset from a third party and sells it to its customer at cost plus profit. This allows the bank to extend financing without charging interest, which is forbidden by Islamic law.