Zain-Sudan is not transferring profits to parent company, earnings
projections slashed
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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)
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