Zain-Sudan is not transferring profits to parent company, earnings projections slashed
January 26, 2012 (KHARTOUM) –Zain’s Sudan Telecommunications Unit has not transferred any the profit it made to the parent company in Kuwait for five years, the unit’s CEO Ibrahim Ahmed El-Hassan revealed this week at a press conference in Khartoum.
El-Hassan said that this “is creating an image problem for the company” since it is listed on stock exchanges around the world.
The unit’s top executive said he hopes this issue can be resolved with Sudanese authorities even though he did not disclose what is the reason behind this situation.
However some analysts point out to restrictions imposed by Sudan’s central bank on expatriating funds in hard currency outside of the country.
In 2010, the United Arab Emirates (UAE) Securities and Commodities Authority (SCA) warned it would halt trading in Sudatel Telecom Company shares over non-payments of dividends to shareholders. Sudatel attributed the delay to regulations of the central bank.
Sudan is facing an acute hard currency shortage particularly after the secession of the oil rich south. Businesses such as Sudatel or Zain are required to get prior approval before making wire transfers abroad in foreign currency.
In a related issue Zain’s Sudan unit said that new taxes imposed by the government as part of the new budget would eat into its earnings.
The company’s CEO said that with deteriorating economic situation in Sudan there is little room for firms to pass on higher costs to customers.
“The resources are limited for the users, so what he [the customer] was paying in the past, he’s going to pay this year. He doesn’t care whether it’s paid to the tax or paid to the company,” El-Hassan told Reuters after an event celebrating Zain Sudan’s 15th year.
“We can’t raise the prices for the consumer because … we have to give competitive prices, and then because the pricing sensitivity is not that flexible. People are very sensitive to any increase of prices” he added.
Sudan has raised sales and services taxes for telecoms firms from 20 percent to 30 percent and a profit tax from 15 percent to 30 percent in a push to make up for diminished oil revenues.
(ST)