Omani Qatari Telecommunications Company SAOG ($ORDS)

Good afternoon, everyone, and thank you for joining us today for our Q1 2026 earnings call. My name is [indiscernible] presenting Investor Relations Officer at Ooredoo Oman. We are delighted to have all of you as we to review our first quarter performance and provide an update on our strategic initiatives. Joining us today are Mr. Saoud Riyami, our CEO; Nasser Al Yaarubi, our CFO; and Mr. [indiscernible], Acting Director of Business Control. Moving to the next slide to the disclaimer. Before [indiscernible] disclaimer on Slide #2. Kindly note that we may share forward-looking statements based on the information available on us as of today. Please note that our views may change over the time, and we are not required to update you if they do. For further details, we encourage you to visit our public disclosure available on MSX and already on website. Moving to the next slide. This will be the content for the day. For that, I will turn it over to Mr. Saoud Riyami to walk us through the highlights of Q1 2026.

[Foreign Language] Good afternoon, everybody. Let me start by greeting you for Eid al-Adha. I wish you and your families to spend the happy time and you'll be [indiscernible] and also apologies for having this -- the end of the last day of working, but we would also want you to take some few good positive things with you before. That's very evident from the quarter 1 results of Ooredoo Oman, we actually see a strong -- as you have seen in our results, a very good start, both in top line and bottom line. Revenue reached OMR 62 million, and that's in line with the same period of last year. Net profit also is significantly higher than same period last quarter with a 144% increase we will see some of the major causes of this. We also see a strong sign in terms of ARPU with big also initiatives and work from Ooredoo Oman to ensure that there are a few corrective measures to bring the value market to a more I would say, financially stable for the sector. OpEx has improved significantly, supported by Ooredoo Oman among cost efficiency programs that we have spoken about in our previous meetings, and we'd also shed the light on a few today. In terms of investment, Ooredoo Oman continues its committed to invest in the infrastructure, be it on towers, upgrading the network to have a network competency for 5G, and there are plans to also now at planning stage or initial stage of moving to something called 5G SA, which is also a second evolution of network. There are also some investments on the wholesale side, be it on landing stations, data centers and capabilities provided in our data center. If we move on, just a bit of the outlook. We see an economy in a pot trend in spite of oil prices volatility and also the geopolitical situation. GDP is expected to grow between 3.5% to 3.8% in 2026, mainly growth in sectors like tourism, manufacturing, meaning as also is the focus areas and industry on the government plans. The public finance is also moving. If we move to some of the high-level numbers. As you see, we are lower by 125 km, when it comes to the mobile subscribers, mainly those are prepaid customers and also probably not so later on, we'll shed the line on why is this decline? But this is also -- I don't want to say a healthy decline, but it is also a healthy thing looking at the original base versus the interstate base we would like to have, I would call it, into brackets more quality and clean base rather than a rotational base. We continue our efforts to focus on value as we spoke last time. We're not very much keen on the number of subscribers as much as we try to have -- the value is increased by focusing on the value of the customer share, providing different customer experience at all our touch points. Both paid customer base has improved, and that is -- again, we'll have to be very clear here. That is mainly driven by the M2-activations, which is mainly into the national wide project, which is the smart meters and some other IoT opportunities Ooredoo Oman have successfully closed and delivered in Q1. And of course, on the prepaid side, following the cleanup task, the prepaid revenue has grown by around 4% despite we have a decline on the base. That's also a very healthy indicators for a slight increase on ARPU. Fixed in the other side, we see that the previous years trend has reached to the tipping point where we are marking a very good progress and almost 0.4% increase that is supported by strong growth of fiber and 5G home broadband. As you also all know that in previous sessions, we also said that the 4G is also be, if you like, transfer or mobilized to 5G, so that 4G also from an experience and from capacity is going to be utilized for something else, but not for the home broadband. Hence, the focus is to move our customers into 5G. Okay. Here are a few areas where Ooredoo Oman is also committed to the green environment aspects were certified. We already got the certification of ISO for [indiscernible], this is also to do with the green environment and relative to the ISG. We have also collected some global brands Magazine Awards for 2025 last quarter. And we were also proud where the winner for the most trusted brand in 2025. Okay. With that, I will leave you with my dear colleague, Nasser to probably dive further on the numbers. Again, happy to see you all here, and then I'll be more than happy to answer any questions at the end.

[Foreign Language] to all of you. And these [indiscernible] days, it's always a pleasure to meet you in these events and these calls. So let me shed some light on the -- on some of the key financial measures. On the revenue front, our revenue come to the same period last year is more or less stable, OMR 71,000 less. And if you compare it against quarter 4, as we'll be seeing in the other slides, there's a growth of around 3%. And this growth compared to the quarter 4 is supported by fixed growth as well as the growth in wholesale and device sales. Our success in the revenue growth compared to the previous quarter also supported by movement in gross margin, which has also resulted in an improvement in EBITDA. So the improvement in the product profitability, along with the success of the efficiency program that in savings in multiple areas, network, IT as well as employee-related expense has resulted in an improvement EBITDA by around 7.3% compared to the quarter 1. And there is also a very good improvement compared to quarter 4. We'll see that also in the next slide. And the net profit [indiscernible] the net profit is around OMR 4.6 million. That's around 144% growth compared to the same build in 2025. And this is supported by improvement in EBITDA as well as lower depreciation and amortization. When it comes to the capital expenditure, we will continue on expanding our network infrastructure, building our wholesale capabilities and also our customer experience or digital customer experience through enhancements of our application and our IT infrastructure. So this is actually a slide that shows the development of our revenue. And you can see that since quarter 3 2025, there is an improvement in the revenue and compared to quarter 4, as I said, there's an improvement by 3%. Fixed revenue is doing well. Wholesale revenue was also improving and we are doing also well in others. That's driven mainly by devices sales. Next slide. The EBITDA margin, you can see also the development in the EBITDA margin. It's worth noting that quarter 4 2025, the EBITDA was around OMR 9.9 million. We normalize it here to include the one-off payment or adjustments of around OMR 60 million. That is related to transformation program and restructuring program that we have done late 2025. We saw the improvement, as I said, in the mobile and fixed margins. So the gross margin has improved. The product profitability has improved through focus on quality customers as well as actually value-adding services. The operating expenses, as I mentioned earlier, has also improved significantly in areas like network, IT, bad debt as well as employee-related expenses. All of these has resulted in improvement in EBITDA in both fronts absolute value and margin. The improvement in EBITDA supported also with improvement in -- or a reduction in depreciation and amortization as well as other below the line items has resulted in a significant improvement in our net profit, which has reached in quarter 1 to a figure of OMR 4.6 million. So the investments restructuring program is also paying off, and we do expect the net profit to continue to be strong in the coming periods. When it comes to the capital expenditure, as of now, it's around OMR 6 million, 10% of our revenue. We do expect the capital expenditure to catch up. with more and more projects being executed, and we do expect that the percentage will be closer, if not higher, compared to 2025. because we do have actually lots of plans, as I mentioned, to improve our -- to expand our network as well as building capabilities in both wholesale and digital experience. When it comes to the company's ability to generate cash, [indiscernible] look at our EBITDA minus CapEx shows that there is also a very strong improvement and this indicates that actually the organization is really in a very good position when it comes to its ability to generate cash position. And in the next slide, you'll see that actually the gearing is very low, and the net debt position is also very strong, taking into consideration that the organization not only having loan, but also having very efficient working capital management. With this being said, I'll hand it back over to Saoud to throw some lights on the 2026 priorities. Over to you, Saoud.

Thank you, Nasser. I'll just try to make this insightful but short. In terms of the priorities, probably Nasser also in our previous sessions, we have shed the lights. This sits on 3 billers. Looking at the organization fit for future, the organizational structure that fits the future of this organization have already taken place. We're also seeing the efficiencies around or across all the levels. and across all the business units internally. And that has a very good impact on not only in terms of the OpEx, but also from an efficiency and killing the redundancy in barriers. We have made a few initiatives. Some have already been executed in the first quarter. This is more to do for internal and external, which is red among scholarship. Most of you have seen the scholarship of Ooredoo Oman, signing ceremony with the Ministry of Education, and this is to support the education sector, 14 scholarships over the coming 5 years with very selective criteria of some of those individuals, specifically the first patch in terms of the specializations for what the industry, not only Ooredoo Oman, the industry and the market of Oman requires. And those guys are also going to be given priorities for specific jobs here in ride. With that also, we are trying to move the trend in a different way with Ooredoo Academy. So we are getting into a partnership with an institutional house of expert, if you like, on the training and the technological trends in Iran. And exploring the opportunity to ensure that it's not only done in-house, but also with an expertise and then try to position Ooredoo Oman Academy, not only for Ooredoo but for the entire nation and eventually contributes to the growth idea both probably commercially financially and as well as having a pool of talent that Ooredoo Oman and the sector. And probably the nation can actually benefit from all of those. In terms of growth, the focus is very much into the ICT and some of the AI solutions provided our B2B customers, the enterprise with some cutting-edge solutions specifically, things like for those who understand technology terms, the SD-1 and the GPUs as a service. And those are actually to cutting-edge technologies that will provide some seamless solutions for business customers. On the wholesale front, we continue winning landing stations with some consortium of cables. And there is a very good lucrative pipeline on this domain. And we will continue our focus on this, trying also to establish an infrastructure in these with the support also of Ooredoo Group being at different opcos that we actually can connect and reconnect with some of the pubs internationally. That will also give us diversity when it comes to the infrastructure globally. We will continue scaling our capabilities when it comes to network, not only by adding the number of sites, but also trying to look for latest solutions that provides capacity and also more efficient solution when it comes to the cost of managing the network. With that also, we have a few initiatives to hopefully reach to a 0 touch process procedures to ensure that there is the highest level of efficiencies to do business and take decisions, capitalizing on an initiative called the Big Data initiatives that would ensure us taking decisions based on data. So it's fast and accurate. With that, I will leave now the floor to you, and I will be more than happy to answer any query that you may have.

[Operator Instructions] [indiscernible].

I guess my first question is on the 2026 efficiency program. There are 25 program that you guys announced you managed to deliver on the first quarter savings on salaries costs. So what's the 2026 efficiency program that you're specifically referring to? Is it around manpower? Is it around any other items on the cost side? That's my first question.

Thanks a lot. Yes, we do have multiple initiatives. As you know, that actually our expenses is not only centered around employee-related expenses. But we do also have initiatives in employee-related expenses. We are reviewing all our operating model in the network, the outsourced activities and we are looking at various ways to optimize and to use what you call it the best practices that deliver efficiencies. We are carrying also a benchmark exercise to identify more and more initiatives. We work closely with the group to continue to drive efficiency through bringing also best practices. When we -- when it comes actually to categorizing them, there are initiatives in the technology front that relates to savings from the outsourced activities, the managed service as well as the initiatives control the electricity consumptions and what we call the usual fuel. When it comes to other than technical we do have initiatives to reduce -- to control, again, our staff cost. We do have also some initiatives to control our bad debts and improve the working capital. And all these things eventually attribute to the picture that you have seen here and also to the improvements and the targets that we are setting for ourselves for the future.

Is there a number? Is there a KPI internal number that you can share with us?

Not a number that I can share right now. But we do have very, very optimistic target.

So [indiscernible] look, what -- probably the biggest is what we did last year, okay? As Nasser said, we will continue monitoring that, and we are and on top of that, we do have some initiatives specifically on the, let's say, the workforce costs, but that does not necessarily mean only it is the only one, okay? On the other side, it's -- we have reviewed and assessed all our cost when it comes to any managed service, be it on the IT side or on the network side. And we have identified some -- to a certain extent, some significant areas that can give us remarkable savings. Probably numbers -- when you bring them all together, they are significant. But as of now, we are still on some of the negotiations, if you like, with some of the workarounds that we do. profit towards H1 or Q3 end, we would be able to have few numbers freezed. We also need to make sure that -- and this is where I said, probably cost efficiency is important, but what is also more important in a market that is almost not growing but growing probably in this sector, I would say, very slow. We will need to diversify and look for some higher margin top lines. And this is where I actually kept repeating that since the 3 years, we are now monetizing all those data centers, wholesale capacities circuits. And the lending station. So there is a continuation in this horizon to maximize the revenue with higher margin as opposed to only work on efficiency.

Sure. Understood. My next -- actually, it's not a question, it's a comment and I'll come to my second question, and then I'll see the floor to other participants. Every now and then, as these on Twitter, we announced that the primary could have rejected or accepted the appeal of some employees and -- of the guys who were given the golden handshakes, then there's a lot of [indiscernible] in the market. And I've noticed Ooredoo has not come with an official comment either accepting it, denying it, giving clarification. And from the market's perspective, it just disturbs the market. My point is if there's any litigation-related news, even if it's, for example, by the primary code, from a stock market perspective, it makes sense for the company to comment on it and just inform us, right? Because otherwise, the source we get is Twitter, which I'm not sure how reliable it is. And then there's questions and rumors circulating. So I don't know. This is just something that I wanted to bring to your attention, especially for something as important as the optimization program and this news around that because clearly, that has led to a big increase in your bottom line, right, and what shareholders are looking at and the stock has gone up is because we believe this is a new sort of run rate of profitability. So anything that poses a challenge that I think needs to be addressed by the management. This is just my comment. I don't know if you want to comment on that or I can go to my second question.

No, no. Look, I will not keep this open up. But thank you for raising it. I would say we are closely monitoring what's happening. However, you would also agree that we wouldn't be in a position to entertain any social media news that are not coming from an official source, right? We are closely monitoring what's happening and the company has taken the program that you have all seen with extreme cautious and with a good success rate. We are monitoring closely all the news around what's happening for the cases. When the time comes and there is close final, I would say, decision over today and the company would like to comment on that, we would actually have that offer disclosed. For now, you would need to trust us, we are monitoring closely this, and we are actually taking our steps carefully with the advice of our legal and people -- the expert of the domain.

But sir, so just one question on this, then for the people who accepted the golden handshake, this case that you're referring to how many of them are still in dispute, just from us to understand that what percentage of it can be reversed case scenario.

Mr. Abbas, the number of court cases that had primary judgment is around 6%.

Okay. So that's not much at all. Okay. Okay. Okay. See, that's the thing, right? That's not a big number at all compared to what you guys had announced originally.

But what we want actually to highlight here is actually we are also monitoring the interest of the shareholders who are taking care of that. And rest assured, the moment that actually there is something that we need to inform our shareholders, we will definitely disclose it. The thing which is actually in social media and all these sort of things as [indiscernible] mentioned, is the fact that there will be lots of things in the social media. And some of it might be true. Some of it might not be 100% true. What I can tell you, there is no final judgment yet in this particular topic.

Sure. Yes. And even if there was just 6 people out of -- I don't know how many you accept it. So I mean from a materiality point of view, I don't think it's too material anyway. I guess my second question comes to how you look at cash flows, EBITDA, CapEx and I know you mentioned that the first quarter CapEx is not the fair run rate for the year, and you see CapEx picking up? But I guess if I have to link your cash flows to the debt level that you had, and you commented that your net debt levels are extremely low. Gearing is very, very low, especially if you compare yourself to, let's say, Omantel, who's your competitor. So from that perspective, given what the CapEx run rate that we've seen over the last few years, how are you choosing -- how do you propose you're going to use this excess cash? Because clearly, in the past, you've not sort of given the cash as dividends. You're also working on making your working capital cycle more efficient. So then if I link everything together, you're going to be sitting on a big cash pile, even after taking our CapEx into account unless there's a big increase in CapEx going forward, how do you propose to use this cash, especially when you're not very indebted. You have a long way to go when it comes to what you can do with your valuation. So for me, just to understand how you're looking at cash flows that the company generates. And then I'll go back in queue to ask my other questions.

All right. When it comes actually to the operating cash flow, of course, looking at it from one quarter perspective, it can be misleading. I assume you have seen the cash flow statement obviously, there's cash outflow in quarter 1. And this is driven by the fact that actually there is massive payments that we need to make in quarter 1. And then there's a cash inflow coming in the remainder of the year. In terms of actually our cash management and are we considering multiple options to look or to change the gearing level and all these things. I want to assure you that we are looking at all options and along with our shareholders, we are looking at all opportunities and all possibilities that maximize the total shareholder return. So in case there's actually an opportunity to improve the dividend or the payout, we will definitely go for it. For the time being, we are basically maintaining this low gearing, but we are also looking at various investment opportunities that probably will change also the gearing percentage.

Since we don't have any further questions, going to end the session.

No, no, no. Yes, please.

Yes, Abbas.

I was restricting myself.because you said someone else might ask a question. Can you comment on the nature of the service fee that you pay [indiscernible] of last year? Is there any conversation to cut it in a way it off given that the company has not really been [indiscernible] company over the last few years given the challenge in the telecom market? You're having with the sponsor in regards to the service fee.

This is a technical service management agreement between Ooredoo Oman and the group, where the group provide services and support in the risk to means procurement in the technical elements and also the admin part. So in terms of the benefit or the cost benefit analysis that have been done some sort of study previously. And this has been actually also giving to the Board. In terms of last year, it was part of the structuring programs and the arrangement that the group has supported Ooredoo Oman to reduce the implication of the one-off adjustments because there was a massive investments in the restructuring that exceeded OMR 60 million. So the group basically with the service fees for the full year of 2025, which was around 3% of the total revenue.

Okay. And see [indiscernible] at this stage.

No.

Okay. My next question is, I was looking at the management report, and you mentioned that the postpaid number of customers have gone up, but the revenue has come down. So I mean, what happened -- why are the postpaid ARPUs fall in? Because I think in Saoud's comment, he said that he see trends in ARPU. Is it a technical aspect of postpaid that I'm missing? Because you categorically mentioned this in your not just the presentation in the management note.

Absolutely. What has driven the postpaid numbers, which has reached around 950, almost 1 million customer is the M2M and the ICT customers, which is actually in line with the company direction to diverse its revenue streams. So we have actually gained lots more customers in the machine to machine. And in terms of the high end, the whole mobile is under when it comes to ARPU. And there are multiple, again, multiple initiatives, as Saoud has mentioned, to improve the ARPU. We've actually -- we've been very successful in improving the prepaid, and we are very optimistic about the postpaid to follow, which will -- the moment actually, that happens, we'll definitely have a very positive effect on our financials.

Is there a reason you guys don't categorically share ARPU in these presentations? Is it -- because I mean, I can calculate it, but is there a specific reason you guys don't share it? Is it...

We used to share it. There's a few remarks related to it. We thought that actually we will not continue in that particular slide, but we might add it back at some stage in the future.

And if that is something that you would want us to do, Abbas, I think we'll be more than happy to do. But as I also said -- and I see your point as I see your point, because this is now when you look at the postpaid, it is blended with the M2M. So when you bring the M2M, which is to the normal postpaid and then it is in one base. The ARPU goes down, although we are growing in the postpaid. So you see a conflicting trend unless someone actually understand the underlining case, which we just need to explain. This is blended with the M2M, which is barely of really a few hundred base ARPU. That actually impacts the total ARPU of the mobile. But a good point. I think moving forward, we would put this.

And I think I wonder...

[indiscernible] would there have been also some miscomparison of the result, we'll see basically explore what is the best way on how to present it.

I wanted to ask you, how do you benchmark your KPI regarding wholesale revenues, specifically these data centers? Because when I see your wholesale revenue share, it seems to be consistent over last year. But then, of course, you spoke about it and you're saying there have been good sort of there have been good progress. So how are you guys benchmarking it? How should we look at it the success of these initiatives because something is changing in the mix, right, which maybe I'm not privy to right now?

The wholesale revenues, we have actually to highlight that the fact that actually, there are multiple revenue streams in the wholesale some coming actually from national operation and some of it might be international and in recent years, Ooredoo Oman wholesale, especially the National Board has declined significantly as Vodafone a few years ago, Vodafone was actually contributing big time to the wholesale national revenue through the national roaming agreement and also the mobile virtual network operator, which has also moved largely to other operator has also contributed negatively in that front. This has been compensated even actually if you look at quarter-on-quarter on wholesale revenue has declined, has reduced. But we are focusing on the greenfields and the growing areas when it comes to the capacity when it comes to international transmission. And we are very optimistic about the size of the opportunity in the wholesale front. Of course, this regards also lots of investments. It's very CapEx sensitive. It requires lots of investments in building the infrastructure that can support for this. And I can assure you, we are investing good portion of our operating expenses in enhancing of our capital expenditure in enhancing the wholesale capabilities.

Okay. If I were to ask you and Saoud, if there were a merger between Vodafone and Ooredoo, would you be the acquirer or the target I'm just asking you a senior executive is someone who experienced in the country, not necessarily as do management. Would Ooredoo in your opinion, be the acquirer or the target, if there were ever a merger between Vodafone and Ooredoo in the talks?

Abbas, if you are asking me out of my Ooredoo management had, I would actually give you up as myself and give you my personal view, okay? I wouldn't be able to give you my personal view on this, and I would really appreciate you understand the sensitivity of this specifically in a forum like that. However, I would actually love also to meet with you, probably, it has been really, really a very long time. I'm trying to get met to give you a call because I would really like to meet with you. I like your comments and probably we can exchange a few inputs but I would also appreciate you understand, I wouldn't be able to give you this answer. I have the answer personally, if you ask me out of my current acquisition capacity but happy to actually discuss this over a cup of coffee.

Incidentally, this is just a comment. I'm actually on a slide or a holiday on Qatar Airways and I'm using the Starlink right now, and I can see you every micro movement, I've been watching movies. And now, of course, with the [indiscernible] announced, do you see this as a threat to you guys in the next 2 to 5 years? I'm talking about the Omani operator. The kind of Internet that I'm getting now without lag. So just wanted your view on the satellite sort of Internet providers. Do you see that as a threat? And if you don't, why not?

Thank you, Abbas. Look, I'll give you the high level and then we go to I would actually still stress on the point that the -- I wouldn't call the original objective, but the objective of getting Starlink into this market was to cater for the areas where operators need to spend or where it is not visible through the normal technology because it is financially not viable. And I think the government, specifically through are getting this to cater for those areas because it is -- it is not an addressable market, if you like, by the operators being for the reason I said. However, do we see that this is now being extended beyond that? And we've actually raised this that this is already extended to everyone else. Do we see that a threat? I would say not only a threat, but it is an increase of this verse competition that is in this market, which is not something too high, it is an evident to everybody. To what extent that this is now an apple-to-apple comparison when it comes to service level agreement, network competency, the performance of the Internet. Probably, it is just at the very initial stages of its base. But we also have monitored this through our Ooredoo Group in different markets, specifically in Doha. We also did not see that the uptick is -- at the beginning, people are trying to test [indiscernible]. But then as it matures, we don't see -- the uptick is actually -- is high. The threat or, if you like, the potential were competition might actually be a concern. But so far, it's just at the very initial on the consumer, on the business side is what is more concerned because there are technically can actually be an option for the remote areas, specifically in the oil and gas solutions. This is where we actually have also raised the concern of Starlink being providing the service. However, now I have also to make this very clear. They are also a licensed service provider for that specific solution. Hence, I believe they have the right to actually maximize their potential from this market.

[Foreign Language], and thank you very much, everyone. If we have any further questions, again, I'll be more than happy to answer. If not, I will give this to Amit to close, but before we close, I also would like to wish you all [indiscernible] with your family. Enjoy the holidays, and we shall see you very soon in [indiscernible].

Thank you, sir. Since there is no questions, we reach to the closing session. Thank you all for joining today's call. For additional update and detail disclosures, please visit Ooredoo Oman and MSX website for any further disclosure. Also, you can [indiscernible] our Investor Relation application. If you have any question, or any more information, free to reach out at any time. We are pleased to be happy to assist. Meanwhile, thank you for interest for Ooredoo Oman, and have a good day and Eid Mubarak to all of you. Thank you.

Thanks a lot. Thank you very much.