Oman Telecommunications Company SAOG (OTEL) Earnings Call Transcript & Summary

Good afternoon, and welcome. We are pleased to present to you a summary of Omantel's financial results for the year ending 31st December 2023. As you will see, Omantel Group continues to demonstrate a resilient performance, where the group recorded a rise in 2023 revenues by 9.7%. However, at the level of the domestic operations, Omantel's revenue grew by 7.3%. It is worth noting that net profit of the domestic operations for the year 2023 stands at OMR 63.3 million compared to OMR 85.7 million in the previous period, where on a normalized basis, excluding the capital gain of OMR 28 million from the sale of towers in the year 2022, the net profit for year 2023 shows an increase of 9.7% compared to the previous year. This increase was on account of a stable EBITDA and decrease in finance costs. Finally, before I shall start the presentation. As you are aware, the Board of Directors is recommending to the AGM, a distribution of cash dividends of 55 per share for the period ending 2023. So in addition to this, Aisha will walk you through the presentation, and we'll cover the updates in more details. Aisha, you can take it from here.

Thank you very much, Hashar Ghassan. I would like first to welcome everyone on our call. Welcome to everyone in the 4-year-end 2023 investor session call. It's my pleasure to host our finance senior management and Ghassan Hashar as well. On the call, we have today the Chief Strategist [indiscernible] and General Manager, Strategic Finance, Amal Ojaily, and General Manager, Treasury, Wahbi Al-Riyami, and General Manager, Financial Control, Sudhakar. By now, you should have received the company's presentation and the year-end audited financial statements, which have all been uploaded on Omantel's website. During this call, we will be making forward-looking statements. We will be making forward-looking statements, which are predictions and projections or other statements about future events. These statements are based on current expectations and assumptions that are subject to risk and uncertainties. [Operator Instructions]. Now without any further delay, we will move to the first slide. Today's presentation will highlight Oman's economic development and key indicators, followed by an in-depth review of Omantel's financial and operational performance over the past year. We aim to provide you with a comprehensive understanding of our position and prospects within the context of Oman's economic landscape. Oman's economic landscape is on a robust upward trajectory, underscored by the successful reduction of its debt with a repayment totaling around EUR 4.6 billion from 2020 to the end of 2023. This financial prudence was acknowledged by Moody's through an upgrade in the country's credit rating to BA1, highlighting reduced debt and controlled spending alongside improved revenues. Within this context, Omantel is establishing itself as a vital player in supporting the nation's digital ambitions and sync with the Vision 2040's objective. Adding to this momentum, the Oman Future Fund has been introduced with a substantial capital of EUR 2 billion, aiming to capitalize innovation and economic diversification. Omantel Innovation Lab is set to be a crucial partner in this initiative, managing a joint fund worth OMR 12 million, signifying its strategic commitment to proper digital transformation and long-term growth. And the key target sector for the joint fund will be on the artificial intelligence, Internet of Things, fintech, big data, 5G, and cybersecurity. Moving to the Gear strategy. Our journey thus far has cemented the foundational blocks for our evolution from being a traditional telecommunication provider to becoming a full-spectrum technology entity. This strategic payment has been deliberate and measured aiming to position us at the heart of digital innovation and services. Through this period, we have incrementally infused technology into our core operation, enhancing our service offering and expanding our reach beyond [indiscernible] connectivity with 5G network coverage reached by 88%, an increase in 5G sites by 20%, and 4G LTE coverage is now 95.5% and fixed broadband excess billion of over 92% of the households. We have also invested in the digital infrastructure, such as Marketplace and the experience platform, and ventured into new business areas such as cloud computing and cybersecurity and IoT solution, and fostering strategic partnerships with major hyperscalers that will enhance our technological capabilities and to provide our customer the digital infrastructure they require to continue their success. This was translated into transitioning major enterprise customers to full cloud infrastructure, enabling them to scale and efficiency. In addition, Omantel showcased a strategic insight and financial expertise by successfully launching its Sukuk, attracting significant market interest and achieving competitive returns. This move sets the stage for long-term financial gains. The company has also managed its debt well aiming for a balanced financial structure to stay nimble and stable in a fast-changing market. Through careful cost management and exploring new opportunities, Omantel has built a strong financial base. This foundation supports the company's investment in technology-focused projects and a shift towards becoming a more technology-oriented organization. As we prepare to unveil our next strategic cycle, it's evident that the groundwork we've established is not just a change of direction, but we are evolving into a company that not only connects people, but also empowers them with technology, and computes innovation and drives the digital economy forward. Moving to the key development side that have cemented our strategy to move to a tech company, this journey has been characterized by strategic partnerships and innovative investments, ensuring we remain at the forefront of digital infrastructure development. Strategic partnership with hyperscalers or corner store of our strategy has been our collaboration with major hyperscalers such as AWS and Google to enhance our digital infrastructure capabilities. These partnerships are instrumental in our question provides advanced digital solutions and infrastructure to our customers and meet Oman's vision, and digital ambitions. On the server and cloud capability and marketplace, our investments have yielded the developments of suffering cloud capabilities in collaboration with AWS and Google, this initiative enabled us to offer a robust market -- will offer a robust marketplace, providing our enterprise customers with a wide range of cloud services designed to meet their diverse needs. This is a testament of our commitment to empowering businesses with tools they need to succeed in their digital economy. Moving to network modernization. Omantel continues to prioritize network to prioritize network modernization. We are proud to be the first operator in Oman to deploy a cloud-native 5G enterprise core alongside introducing [Audio Gap] ensures that our enterprise customers have access to the latest connectivity solution, empowering them to achieve their business objectives. On VoLTE and telco migration in our ongoing efforts to provide a seamless customer experience, and we have successfully migrated all VoLTE traffic to the cloud. This strategic move not only will enhance the service reliability, but also the quality in streamlining our network infrastructure, achieving greater efficiency unifying our network equipment. Now moving to the summary of Omantel's highlights of the year. The year of 2023 turned out to be yet another challenging year through which we successfully navigated our way towards maintaining Omantel's market share leadership in both mobile business and fixed business. For the year 2023, Omantel's fixed line business posted 1.2% growth supported by growth in fixed internet revenue, including broadband, which registered a growth of 4.2%. On the domestic mobile market, we continue to witness heat and competitive pressure during 2023 as a third mobile operator world out their services into [indiscernible] segment. The management remains focused on enhancing the customer experience service delivery, management, innovative services, packaging, and premium network quality, our mobile service portfolio is built around postpaid and prepaid and other value-added service offerings. During 2023, the mobile business retail revenue as well as mobile blended ARPU posted an increasing growth resulting mainly from healthy growth in Omantel's overall mobile business revenue posted a growth of 1%. And we are witnessing also a constant growth in non-core revenues. ICT business posted a 22% growth year-on-year, including the subsidiaries. In line with our strategy to increase customer stickiness by migrating customers from prepaid to postpaid funded with devices, the device revenue and VAS has also increased by 38% year-on-year. Now moving to the Omantel domestic key financial indicators. Omantel maintained a 7.2% growth at domestic level, indicating a strong resilience towards competitive market condition as well as the operational challenges. Revenue grew from EUR 565 million for year 2022 to EUR 606 million in 2023. For the net profit for the year stands at EUR 63 million compared to $85.7 million in the previous profit. The net profit for the year 2022 includes a capital gain on the sale of towers for $28 million. Excluding the capital gain from the profit for the year 2022, the net profit for the year 2023 showed an increase of 9.7% compared to the previous year. This increase was in account, as Hashar mentioned, of a stable EBITDA and decrease in finance costs. Finance costs decreased by 11.5% year-on-year on the account of over or reduction in borrowing. The free cash flow has decreased in account of increase in working capital. The CapEx increased year-on-year as we continue to invest in 5G network. And the net debt has decreased in line with our bond repayment, and the net leverage has slightly increased in account of Helios to our lease liabilities. For year 2023, the group has recommended a final dividend of 55 share, which corresponds to 55% of the paid-up capital. This is in addition to the interim dividend of SEK 5 per share distributed earlier in 2023, totaling 60 basis per share for the year 2023, reflecting a 60% payout ratio. Omantel's EBITDA posted a marginal decline from OMR 170 million in 2022, OMR 168.5 million in year 2023. Now moving to our key subsidiaries highlights, which Omantel owns 21.9% ownership stake in Zain Group. From an operational standpoint, the group's performance has been outstanding. Our revenue increased 10% year-on-year to reach around USD 6.2 billion. Our data revenue represents 39 million of the consolidated revenue, which also grew by 8% year-on-year, and the consolidated EBITDA for the year increased by 5% year-on-year as well to reach OMR 2.3 billion, with an EBITDA margin of 37%. Consolidated income increased 10% to reach OMR 700 million, reflecting earnings per share of 50, where our current 21.9% market value of Zain shares stands at USD 1.53 billion, and we have received a dividend of USD 108 million. We continue to unlock strategic synergies in procurement, where our savings for 2023 stands at EUR 4 million, and the recent incorporation of Zain Omantel International is one of the major synergies between Omantel and Zain. Lastly, before moving to the financials, I will pick some of the major strategic developments at Zain Group, which is the Zain Omantel International is firmly establishing itself in the retail communication wholesale landscape, serving regional operators and international carriers and global hyperscalers through its unique pan-wide Easter network. This is complemented by extensive global assets, including Africa One Cable and Prescale and the Blue Rabin subsea cable as well as the recently announced construction of a 7,000-kilometer fiber network connecting KSA with neighboring countries. Now moving to the financials. Omantel Group, including Zain Group for 2023 performance. The group revenue stands at EUR 2.94 billion, an increase of 9.7%, and EBITDA at EUR 1.1 billion, an increase of 4.1%, and net profit at EUR 315 million, an increase of $13.3 million year-on-year. Zain total subscriber base decreased by $1.8 million compared to year 2022, coming mainly from Sudan, where the total domestic man subscriber base as December of 2023 was EUR 3.1 million compared to EUR 3.2 million in 2022. The shortfall was due to a decrease in prepaid subscriber base, which is significantly offset by growth in the postpaid subscriber base. The net profit increased year-on-year is contributed by tower sale gain in KSA of EUR 68 million. Omantel share is around EUR 9.8 million. The net profit after adjusting for minority interest reduced by 18.1% since profits of the year 2022 include the capital gain from Omantel sale of EUR 28 million. Now moving to the domestic performance overview, where Omantel maintained a revenue growth of 7.3% during 2023. And overall EBITDA declined by 1% year-on-year. However, Omantel's core EBITDA based on conventional business segments has been maintained. And normalized net profit has increased by 9.7% year-on-year as explained earlier in earlier slides. Having a closer look at the revenues. Revenue increase year-on-year is mainly contributed by growth in low-margin trans voice revenue by $17.2 million and device revenue by EUR 19.3 million, where the ATL revenue, excluding the device revenue, increased by $4.4 million, contributed mainly by growth in postpaid mobile revenue by EUR 17.9 million and a growth of 10.2% year-on-year and fixed broadband around EUR 3.9 million, a growth of 4.2% year-on-year, while prepaid revenue decreased by $11.2 million, a degrowth of 15.5% year-on-year. Where we are seeing a positive growth in mobile and fixed broadband revenue and wholesale revenue helped in ensuring that the absolute gross margin increased by 2.8% in spite of the aggressive competition. Overall, EBITDA posted a decline by OMR 1.7 million on an account of reduction in EBITDA coming from domestic subsidiaries. Net profit for the year 2022, again, includes OMR 28 million of capital gain on tower sale, excluding the one-off capital gain, net profit for year 2023 increased by OMR 5.6 million, a growth of 9.7% year-on-year. Looking at Omantel group profitability contributing elements, key contributions to Omantel Group profitability come from a Omantel stand-alone domestic operations and then group profit allocation. Most of Omantel's domestic subsidiaries, except ODP are at their recent development stages and carry promising potential for growth in coming years. Now moving to our main 2 segments, mobile and fixed business. We continue to unlock value to our customers by effective subscriber retention strategy translating to growth despite challenging market conditions with this translated to a resilient performance and leading the market share in both fixed and mobile business, where on mobile, we continue to focus on customer retention through strategic retention management, transitioning users from prepaid to postpaid plans, revitalizing its service portfolio and implementing superior churn management practices. By that, we make sure that the customers' life cycle is longer. On fixed, it continued to be driven by migration of customers from legacy copper technology to 5G and 4G wireless fixed broadband and fiber capturing competition base, which that means that migrating the customers from legacy copper to fiber and 5G will give them a seamless experience as well. As we can see, more than 1000 prepaid to postpaid gross migration happened in 2023 and around 16% is the success rate of retention, both fixed and mobile customers. Now moving on the operating and admin costs have increased by 6.6% year-on-year. CapEx to revenue ratio is at 16.2%. The increase in the cost of sales is driven by higher external admin [ hubbing ] revenue and device costs, which are in line with the increase in revenue. Further charges are payable to OBC increased by EUR 2.9 million on account of increase in fiber base and migrations from wireless fixed broadband and CapEx -- sorry, from a wireless fixed broadband, where the CapEx in investments is increasing on account mainly of 4G upgrades and new network sites across the Sultanate and ongoing 5G rollout and upgrades. Lastly, on the debt profile, the leverage and cash flow position, where we mentioned earlier in the earlier slide, the interest cost savings of 11.5% year-on-year is on account of the completion of deleveraging initiatives in 2022. The group continued to maintain healthy cash flows with a total debt of EUR 720 million and a net debt-to-EBITDA at 3.23x, including lease liabilities. If we exclude the lease liability, we are standing at 2.2 versus 2.4% in year '24. And as well, in line with the [indiscernible] of Omantel cars, a corporate family rating assigned by Moody's Ba2 outlook will be -- outlook is revised to be positive from stable and by Fitch BB+ where the outlook is stable. And by now, this is the end of our presentation. I will open the Q&A floor and any of the analysts are welcome to raise any questions.

Congratulations on a good set of numbers despite a challenging operating environment. But my question is on the subscriber numbers that you have reported in this presentation. There has been a decline of around 200,000 prepaid subscribers during 4Q last year. Could you please explain the reasons behind this phenomenon because for most of the year, you had a stable number and suddenly in the fourth quarter, the number came down by almost 12%? And also, what's the trend that you are witnessing in the first quarter of this year?

If you look at the slide first, the reason for the fall in prepaid base partly is because of the fact that we converted around 103,000 subscribers to postpaid. So that is an internal movement one which we need to account for. Besides this also, the way we measure our prepaid base is based on the level of activity which a subscriber has. In Q4, we have seen a little bit increase in the level of inactive subscribers on the prepaid base. So that has led to a drop in subscribers quarter-on-quarter. But coming to the prepaid ARPU numbers, that has not witnessed any major dip. As you see over here, you're talking about a 3.1% average ARPU versus the previous. So when we look at the actual revenue-generating subscriber base, which is a little bit lower numbers compared to this base, we are talking something in the region of $1.2 million on a continuous basis as an active revenue-generating base, which will continue to yield revenue if you remove the inactive base. So in Q4, that level of inactive base has increased. Now as you see, because of competition also, people tend to take multiple senses of different operators and use it for different purposes. So I can see that because of that in activity, the subscriber base has come down, but they didn't have any major impact on our prepaid revenue.

So how is the trend in the first quarter? What number should we be looking at?

See, on prepaid, it has increased marginally if you look at the first 2 months numbers. But more or less, we are looking to retain this kind of number. Our focus has been to increase our postpaid base further. So that in terms of the numbers, what we see in the first 2 months also, postpaid has increased, whereas prepaid we have been maintaining a relatively stable base. You can see the number would be in the region of around 1.5 million kind of number.

One more follow-up on the comment that I have at the numbers that you're reporting. In June and September last year, you reported postpaid subscribers, mobile subscribers of 1 million. And right now, we are talking about around 700,000 subscribers at the end of the year. So can you provide the comparable numbers because last time we talked about multiple sense and everything. So is it possible for you to give us comparable numbers and also maintain consistency in reporting these numbers?

Joyce, actually, it exactly goes back to those questions which were raised in the call. Yes, if you look at the numbers, yes, we have a postpaid subscriber base of close to 1.1 million. But then the M2M machine-to-machine SIMs, which we have been talking in previous quarters, that's a number of close to around 350,000 included in the base. Now that, as I explained in the previous calls also in terms of its contribution to revenue, it's marginal, which is the reason why investors to appreciate our ARPU numbers better, we also adjusted the subscriber base so that you can compare the ARPU and the subscriber base on a like-to-like basis. Now your question in terms of providing the previous quarter's numbers, yes, we can provide that to you so that you can see the numbers on a like-to-like basis.

That will be much appreciated because we can't compare it on a like-to-like basis on.

But we did this. I hope you understand we did this just for you to get a better grip on our ARPU numbers so that you don't see a spike in ARPU because of this M2M SIMS contribution.

Understand that. And see, likewise, when we are reporting the ARPU numbers also because in September, we have reported a fixed line ARPU at 25.7%, which has grown up to 26.1% by end of year. So within the last 3 months, it gives an impression that it has increased significantly during the fourth quarter. I'm not very sure if it's an actual hike in the ARPU or is it because of the number adjustment in terms of number of subscribers. Also, we are seeing in terms of the postpaid ARPU also from September, OMR 17.1 to OMR 16.1 in September. So is it -- are we seeing a structural shift? Or is it because of just the subscriber numbers getting in?

First, on FBB, unlike mobile, there are no adjustments. So what you are seeing is effectively a growth which has happened in the fourth quarter. In FBB, our focus across all the technologies in fiber and in wireless fixed broadband, our focus has been to upgrade the customers from an entry plan of OMR 25 to OMR 30 and OMR 35. So in Q4, in fact, this strategy has been in the work for quite some time. But in Q4, we saw a good amount of shift in subscribers on to the higher-end plans. So that led to a marginal increase in the fixed broadband ARPU. So you can say that that's a good uptick in ARPU on the PB side. And we aspire to ensure that this ARPU is further increased by migrating our existing base towards higher-end plans. Now on mobile, I've already explained to you. If you discount the impact of the M2M SIMs, then the numbers are quite comparable. But what is happening is that right now, most of our acquisitions are on our entry-level plans. It depends on from quarter to quarter where your acquisitions and where your prepaid migrations are getting concentrated, which will have a certain impact on your ARPU. In Q4, a big chunk of our prepaid customers who have migrated to postpaid and our new acquisitions were on the lower end of the postpaid plans. That is our entry-level plans of OMR 10 or OMR 11. That's why you see a marginal drop in ARPU. But otherwise, our strategy is to get them higher up in the value chain to move towards higher ARPU.

Another question, if I may, back on the dividend front. Why did the company cut down on dividends this year? And what are the possibilities of a higher payout in the future?

Yes. Let me get that. Actually, if you look, Joyce, in the past, the dividend we are maintaining is very similar to the previous years, which is a payout of 55%. It's only last year, we added an additional 5%. As you are aware, in 2022, we had lots of initiatives started in monetizing our noncore assets where we sold our passive infrastructure and our HQ building. So as a result of that, the additional 5% dividend was paid out. So we are going back to the earlier years where we are distributing 55 days per share or 55% of our paid-up capital. In addition, you have seen, of course, and you would appreciate Omantel's strategy moving forward in investing into new areas within the ICT value chain, as you can see from our subsidiaries. So this is also an investment in growth for the future. However, if we feel that there are any opportunities in monetizing any of our investments moving forward, there may be a decision then sought to increase the dividend payout. But currently, we are expecting to maintain the same level of dividends, which we are going back to the previous year in 2022 and before that. So I hope this is clear, Joyce.

[indiscernible], you may also ask your question.

Just a couple of quick questions. If you could just give us your guidance for CapEx to revenue for 2024? I think on the last call, you had mentioned a 13% to 14% guidance. If you could just sort of confirm that for '24 your outlook.

[indiscernible], can you take this question on the CapEx to revenue ratio.

[indiscernible] So Vishal, I think we continue to maintain that outlook. In 2024, the CapEx to revenue ratio should be around 13% to 13.5%. This is on the backdrop of the fact that a significant chunk in the previous years was spent on 5G rollout. As you have seen in the previous slides, in terms of population coverage in 5G, we have got close to 93% coverage. Now where we are investing, both in 5G and 4G is to increase our capacity on the network to support a significant rise in the data traffic. So most of our investments will now go in building our transmission network to support this growth in traffic. And in addition to that, our investments will also grow in the core traffic. Part of this 13% will also include some of the initiatives which we spoke on the digital front. We have been investing aggressively in the digital space, both to support customer experience and to support our new business ventures. So Vision hope that answers your question on the CapEx outlook.

Yes, it does. Next thing is, if I look at the debt profile, do you have a payable yearly repayment of OMR 227 million within 1 year? And then the next 1 million 53 million and then I get it picked up. If you could just elaborate on that?

Yes. The reason why you see a significant amount sitting within one year is the fact that when our bonds of 2023 came up for repayment, we financed that with a bridge loan. Now that bridge loan got replaced by a Sukuk, which we issued in January. So when we were showing this maturity profile, it is purely based on the contractual repayment of bridge loan, which was due in January, $177 million. But that got replaced by a 5-year Sukuk. So the way you should see it, probably the entire thing changes in 2024, where this $227 million, what you are looking at, a big chunk of it is converted to a 5-year maturity.

Because the one-year part I get it, I am okay with that. I am looking between 1 to 2 years and next year, next year, your repayment is OMR 53 million. But the year after that, for the next 4 years, your annual repayment is OMR 374 million or an average of OMR 94 million per year. So just wanted to understand difference between the OMR 53 million next year and the annual OMR 94 million in the subsequent years.

Yes. So the way it goes is like this, we have built it based on the borrowings, which are standing in our balance sheet as of 31st December. So why OMR 53 million next year? Because if you look at our 2028 bonds, 2028 bonds is in terms of principal, it falls due within that slab of 2 to 5 years, whereas within that 1- to 2-year time frame, what you look at on the bonds and to some extent, on the lease liabilities also is the interest component of the bond portion. So the volume in terms of quantum is only -- it is reflecting the interest part, which is due within that 1 to 2 years, whereas out of this 374 million, you have got the entire bond value sitting over there of 2028, which matures within this 2 to 5-year swap.

All right. The next question would be with regard to Vodafone's current market share. Last year, you had mentioned that by and large, you were able to maintain your market share. Now you've given us a split of others, which I would imagine is Vodafone plus red. But if you can just specifically talk about what market share Vodafone sits that? And sort of how do you see that evolving? Has it matured? Is it still extremely aggressive? How do you see the market dynamics playing out?

So Vishal, in terms of market share, on the subscriber market share, I see the numbers are published by the regulator, and we see how the numbers of other operators are. We have a 37% market share, whereas the rest of the operators own collectively the rest of the share. In terms of revenue market share, the way we see -- and actually this is something Vodafone also has declared in the public domain. They are looking at -- we are looking at a market share of Vodafone of close to around 10%, 10% to 11%. And we believe most of their acquisitions are still in the prepaid space and to some extent on the postpaid space. So bulk of their acquisitions, forming part of this 10% market share should be on the prepaid market space. Now coming to their offerings in terms of price aggressiveness, right from inception on the prepaid side, the pricing was quite aggressive. On the postpaid side also, when you look at the price points, most of the price points of both Ooredoo, Omantel, and Vodafone tend to have similar price points. But it is the offerings which are a little bit different when it comes to Omantel versus Ooredoo. Ooredoo you would -- sorry, Vodafone, you would see that they're a bit aggressive on the roaming front. And there are features like where they say that their data can be rolled over from 1 month to another month, whereas we have a completely different feature in terms of what we offer to our postpaid subscribers. So it's the value proposition, what the operators are taking into the market with a slight variation in postpaid plants. But when you look at the price points to a great extent, they are similar, although I would say that Omantel being the leading incumbent has got a price advantage compared to other operators, which is reflected in our higher ARPUs also. So I would say that the pricing still remains quite aggressive in the market. Even in 2024, we have seen some changes happening in the prepaid offerings. Ooredoo has come out with a completely revamped prepaid portfolio, where in terms of price aggression or in terms of the data loans, which we're providing as part of their offerings that has increased. Overall, the market is quite challenging on the price front. But as you see, 2023, we have been able to maintain that. And we believe that with our strategy of engaging the customer, particularly on a lot of other fronts. You have seen Aisha explaining our VAS revenue has increased significantly. This is a way of engaging with the customer. Our device revenue has increased substantially. This is a way of ensuring that our customers stay with us on a contractual plan for a significantly longer period. So there are different ways of engaging the customer, not just merely by the price perspective.

And if I may add on Sudhakar's point, that most of the customers at this stage are having deletes. So they have multiple operators. And so eventually, we will see on the longer and the impact of the customers' preference, either the competitor or Omantel as well.

The next question is in regard to your receivables. I think on the last call, you had mentioned that your revenue was increasing in the enterprise segment, and hence, the receivables were increasing, even though it wasn't an alarming situation as well as there were some government accounts, everyone have a discussion. Now we've seen an increase if I look at your stand-alone balance sheet. So if you could just comment on sort of this receivable aging and if there's any concern over there? Is it just normal business?

I think, yes, on the enterprise side, particularly on the government side. In quarter 4, there were some good improvements where we managed to recover some of our prior year receivables in some of the accounts. Whereas with respect to some of the accounts, we are still in discussions with the units. We don't see a major concern as such in terms of the realizability of the juice, but it has taken some amount, some amount of time to recover these receivables. But we believe that in 2024, most of these prior year receivables, a significant chunk of it should be collected in 2024. As we speak, as of 31st December, out of our total receivables, government receivables is around $36 million out of the total receivables. So it's a jump of close to 4 million compared to 2022. We believe that we can bring that down substantially in the first half of 2024.

And last question, if I may, is what would be the future deleveraging sort of strategies that the company might deploy going forward?

So we explained last time, Q2 and Q3 that we have done whatever we need to do on deleveraging. So I think we -- and we said last time that we think this is the appropriate capital structure. So there are no further plans to monetize the assets and further deleveraging. Obviously, if we have cash, we will try to do some, but there are no certain plans on.

No it makes sense. And just last, sorry, just a follow-up on the debt repayment for the next year of OMR 53 million, that would be significantly lower than what you are reaping in the subsequent year. So with that excess cash balance sort of lead to any sort of payout to shareholders? Or it's just part of your regular financial planning?

I'm not sure I got your question right. So you will have -- so you're talking about dividend policy. So it will come out of the net profit. Obviously, we said last time, we will continue to maintain the existing dividend.

Buly, you were unable to unmute yourself. Are you able to meet yourself now? Okay. Good. Josh, you may ask you a question.

This is on our margins. So how are we seeing the margin volatility? And where do we see these margins getting stabilized because we are coming from 3 years ago, we were at 38% and now we are at 27%. So where should we be looking at in terms of EBITDA margins?

You would see in 2023, it is 27.8%. But if you look at our revenue growth, revenue growth has come from 2 low-margin segments. As you see over there, the growth has come from transit voice and device revenue. Now if we adjust both these revenues, and then look at our margin from our core telco revenues, that stands at around 34%, right? So one, in terms of core revenue, we believe that we can maintain our core revenue. You may not see that kind of growth rate in postpaid, what you have seen in the past 2 years. But our focus is to maintain our existing base, grow to some extent on the subscriber base, and have an increase in ARPU. So our focus has been to go towards a 60% value market share, which currently stands at around 53%, but that will happen over some amount of time. So while on core revenues, we aspire to maintain that at 34%. But you have seen our now focus is also shifting towards various initiatives, particularly on the ICT side. And that's where most of the operators in the mature jurisdictions have been focusing on. Unlike your core telco revenues on the ICT side, typically, the margins are lower. We are talking about margins of anywhere -- on that segment of the business, we are talking margins for around 6% to sometimes to 12% to 13%. It all depends upon what application or solution we are bringing. If we focus on cloud solutions, we are talking something like 7% to 8% margin as an operator because the partner solution also will take a substantial amount of margin. So going forward, with this focus on digital initiatives, what will happen is the growth in revenue coming from those initiatives, while it will add to your absolute EBITDA. In terms of margin, it will be lower compared to the core telco revenues. So 34% on core telco revenues, noncore, it can vary depending upon how we maintain the business in this, how we're growing our business, which areas will add to our profits. So that margin is typically lower compared to core telco revenue. So you should get an idea of how the margin is going to evolve for Omantel going forward.

Got it. Just to confirm, you're planning for a core segment revenue share to be around 60%, which is 46% right now. Did I hear it correct?

So our revenue market share on mobile is around 53% to 54%. So as part of our strategy, our objective is to grow towards that 60% market share. It's a challenge, but that's the key thing for us to aspire in this market. And that is possible, not just straight away in the next year, but probably in the next 2 to 3 years, that's what we are targeting, by both growth in ARPU and, to some extent, even subscribers.

And on the ICT side, we are seeing consistent growth. So what kind of growth opportunities are we seeing there over the medium term?

So Joyce, you have seen some of the strategic partnerships which we are trying to build. Some key initiatives have been to partner with Amazon Web Services to build a crowd center of excellence. That is to bring the cloud solutions into the market. That's one area which we are focusing on. Another area where we are trying to invest is in building a market space. We are collaborating with Amazon again, who is helping us build this platform. So that's another area which would tend to grow. Another area which we are again focusing is on the fintech space. Our subsidiary Lama has a license from Central Bank. They're working on payment gateway solutions to offer to the customers. So fintech space is another area. And you have already -- we already explained to you about ZOE, which is probably the next step in furthering our wholesale capabilities beyond the Oman's geographies into geographies where Zain operates. So these are some of the key areas, both on the ICT space and on the wholesale space, which should build the momentum of what we set up so far.

And we also recently have announced the launch of the national cloud in partnership with [indiscernible]. That's also will break opportunities, as we mentioned in the slides, to transitioning major entities to cloud. There is a major transitioning that happened also last year with the Bank of [indiscernible] and the housing bank as well and the Oman airports. So these are the 4 major clients over the past year, and we anticipate to more clients in the upcoming years to transition from cloud to cloud premise.

Just again to add, we are also positioning our subsidiaries at the heart of this strategy, both our subsidiaries, Oman Data Park and Equinix, which is an associate. Through that, we are trying to work out on data center solutions also both for the local customers and the international operators.

So Equinix has started generating -- started operations.

Has already started operations. It has a positive EBITDA, and it supports our growth on both international connectivity revenues and data center revenues.

There are no further questions from the analysts.

Thank you, everyone, for joining us here today. And thank you, Aisha, and thanks for all the team for answering all the questions. [Foreign Language] looking forward to meet again when we cover Q1 results and wishing everyone all the best. Thank you very much.

Thank you, Ghassan.