Ooredoo Q.P.S.C. ($ORDS)

Good afternoon, everyone. Welcome to Ooredoo Group's financial results call for the first quarter of 2026. My name is Ali Serdar, Head of Treasury and Investor Relations for the group. Thank you for joining us today. I'm joined by our Group CEO, as Aziz Ahmad M. Fakhroo, who will start with our quarterly highlights, strategic progress and group results. After that, our group CFO, Abdulla Al Zaman, will walk you through the performance of our operations. We will keep the presentation short, so we can leave enough time for your questions. You can submit your questions at any time using the Q&A function. The presentation is available on our website and on this platform. Please note that this session is being recorded and transcribed. And finally, please refer to the disclaimer on Slide 2. With that, I will now hand over to Aziz.

Good afternoon, everyone, and welcome to our Q1 results call. Let me start with a brief overview of the quarter before turning to the regional context, our strategic progress and group results in detail. The first quarter marked a strong start to 2026 for Ooredoo. We delivered solid growth in revenue, EBITDA and net profit supported by disciplined execution across the portfolio. What stands out is the quality of the performance. Performance was broad-based with particularly strong contribution from Algeria and Tunisia, alongside resilient trends in Qatar, Iraq and Kuwait. Profitability also improved with EBITDA margin increasing to 43.8%, reflecting an operating leverage and our continued focus on efficiencies. This performance was underpinned by the strength of our diversified footprint, solid demand for connectivity and sustained financial discipline. We also continued to make progress on key strategic priority, including the launch of Ooredoo Fiber Network, further progress at Syntys following the Q Data acquisition and continued preparation for the Qatar TowerCo first close in the first half of 2026. As a result, we entered the year with a good operating momentum, a healthy balance sheet and a business that has proven robust. In late February, developments in the region have increased uncertainty across parts of our footprint. While this has made the operating environment more challenging, telecom demand has remained resilient, and we have seen no material operational disruption across the group. Network and service availability were maintained throughout the period, and core domestic demand continued to hold up well, reflecting the essential nature of the connectivity services. Our focus has been on service continuity, operational resilience and disciplined execution. This has included targeted commercial actions, active cost control and flexibility in CapEx phasing, allowing discretionary investment to be adjusted when needed. Against this backdrop, our full year guidance remains unchanged. This reflects performance to date and the resilience of our business, while assumptions remain under close review as visibility evolves. Now on to our strategic progress across the portfolio, starting with our dedicated data center platform, Syntys. Syntys made good progress in the quarter through the acquisition of Q Data facilities in Qatar. This increased installed capacity and further reinforce the platform's growth trajectory. Importantly, the acquisition is immediately earning accretive and further transcend Syntys position as a carrier-neutral digital infrastructure, sporting hyperscalers, cloud and AI workloads. In Q1, Syntys generated QAR 51 million in revenue and QAR 22 million in EBITDA with hyperscalers accounting for 76% of revenue in Qatar. Looking ahead, we remain focused on scaling capacity in a measured way, aligned with customer demand and value creation. Turning to fintech. Ooredoo fintech continued to scale in Q1 with continued momentum in mobile-led financial services across the footprint. The business remains anchored by Qatar, our most established market, where the platform continues to hold a firm position in international remittances. In Q1, fintech generated QAR 25 million in revenue with transaction volumes continuing to grow, driven primarily by the remittance activity. Outside Qatar, newer markets remain in the investment and build-out phase. Expansion is being pursued selectively with a clear focus on regulatory readiness and execution discipline. Overall, fintech remains a long-term growth opportunity for the group with near-term priority on scaling responsibly, while protecting returns. Turning to the group's performance. We delivered a solid start to the year despite a more uncertain regional backdrop. On a year-on-year basis, revenue increased by 6%, supported by strong performance in Algeria and Tunisia, alongside steady contribution from other core markets. EBITDA grew by 6.9% with margin increasing just under 44%. Net profit increased by 4.7% to QAR 1 billion. Turning to revenue. The group delivered solid revenue growth of 6% year-on-year to QAR 6.2 billion, mainly driven by strong performance across the portfolio. High-growth markets, particularly Algeria, Tunisia and Iraq continued to demonstrate robust momentum supported by customer growth and sustained network investment with additional tailwinds from favorable FX movement in Tunisia, Algeria and Palestine. Meanwhile, Qatar and Kuwait delivered resilient performance despite mature market dynamics. While Oman and Maldives remain broadly stable within their respective market environments. Now turning to EBITDA. EBITDA reached QAR 2.7 billion for the first quarter, reflecting a 6.9% year-on-year increase. EBITDA margin improved by 0.4 percentage points to 43.8%, supported by top line growth, operating leverage and cost discipline across the group. EBITDA expansion was driven by improved performance across key markets, particularly Algeria, Tunisia, Kuwait and Oman. Turning to net profit. Reported net profit attributable to Ooredoo shareholders increased by 4.7% to QAR 1 billion, reflecting solid operational performance across the group. Now looking at CapEx. We deployed over QAR 600 million of CapEx in the quarter, up 13% year-on-year, reflecting targeted investments in network and capacity upgrade across the footprint, led by markets, including Algeria, Iraq and Tunisia, alongside continued investment incentives. We continue to manage CapEx with discipline, retaining flexibility in the phasing of discretionary investments. Moving to free cash flows. It increased to QAR 2.1 billion, supported by improved operational performance and disciplined financial management. The increase was primarily driven by a stronger EBITDA, which translated into cash generations. Now customers. Our consolidated customer base increased by just over 3% year-on-year to nearly 54 million customers. Growth was driven mainly by strong net addition in Algeria and Iraq and continued momentum in Tunisia. This was partially offset by customer base optimization in Oman. Including IOH, total customers stood at just over 147 million. Finally, a quick look at the balance sheet. Our balance sheet remains strong, with net debt-to-EBITDA standing at 0.6x, well below our Board guidance. Liquidity remains solid, supported by total cash of $3.5 billion and undrawn committed facilities of $1.6 billion equivalent. Our debt profile remains balanced, with long maturities and minimal interest rate risk. FX-denominated debt is insignificant outside Qatar. We continue to maintain investment grade rating from both S&P and Moody's. Now I'll leave it to Abdulla to take you through the operational review. Thank you.

Thank you, Aziz. Good afternoon, everyone. I will take you through our OpCo year-on-year operational and financial performance for the first quarter, starting with our home market Qatar. Qatar delivered resilient top line growth underpinned by disciplined execution. Revenue increased by over 3%, driven by solid service revenue performance supported by 4.5% growth on the mobile segment. EBITDA increased by around 1%, while EBITDA margin stood healthy at close to 52%, declining 1 percentage point due to change in revenue mix. Customer base remained at 3 million, reflecting stable market dynamic. Moving to Kuwait. The operation delivered solid performance in a mature market, revenue increased just over 3% in local currency terms, reflecting higher data revenue. EBITDA increased by 8%, supported by improved gross margin of home service revenue. EBITDA margin expanded by over 1 percentage point to above 35%, reflecting operational leverages. Customer base remained stable at nearly 3 million customers. Now on Oman where performance continued to reflect ongoing market dynamics. Revenue was broadly flat as a higher device revenue offset softness in service revenues. EBITDA increased by above 7% in local currency, supported by cost efficiency measures. EBITDA margin improved more than 3 percentage points to over 47% reflecting the benefits of restructuring and more efficiency cost base. Customer base decreased 4% to around 3 million, reflecting portfolio optimization and focus on customer quality. Turning to Iraq, one of our key growth markets. Asiacell continued to deliver a solid growth supported by customer additions and rising data usage. Revenue increased by around 4% in local currency, driven by a strong data and wholesale performance. EBITDA increased by 3%, benefiting from top line growth. EBITDA margin stood at nearly 45%, slightly down compared to last year, reflecting higher operational cost. Customer base grew 2% to over 20 million, supported by ongoing demands. Moving to Algeria, one of our group top performance markets. Algeria sustained strong momentum, delivering double-digit growth for another quarter. Revenue increased almost 13% in local currency driven by mobile data growth. EBITDA grew around 15%, while EBITDA margin improved by almost 1 percentage point to above 43%, reflecting operating leverage. Customer base expanded by more than 7% to reach 15.6 million, supported by sustained net addition. Next, Tunisia. Performance accelerated across both mobile and fixed segments. Revenue increased more than 9% in local currency, driven by strong demand for higher speed fiber and some mobile momentum. EBITDA increased by 17% and EBITDA margin expanded by roughly 3 percentage points to above 41%, reflecting strong operational leverage. Customer base grew 5% to reach over 7 million customers. Turning to Maldives. The business continued to deliver a resilient performance. Revenue remained broadly flat, supported by resilient performance and core service which was offset by lower wholesale revenue. EBITDA increased by 4%, supported by cost optimization and operational efficiency. EBITDA margin expanded around 2 percentage points to nearly 57%, maintaining one of the highest margin on the group. Customer base increased by 1% to over 400,000 driven by growth in the fiber and fixed wireless segments. Moving to Palestine where operations continue with a strong discipline despite a challenging environment. Revenue increased close to 11%, supported by stabilized market condition and favorable currency movement. EBITDA increased broadly by 40% with EBITDA margin expanded by 1 percentage point to just under 39%. Customer base stood at 1.5 million, reflecting ongoing effort to enhance base quality. Turning to IOH. Our joint venture, which delivered a positive start to the year. Revenue increased around 12% while EBITDA grew by over 13%. EBITDA margin improved by around 1 percentage point to 48% reflecting disciplined cost management. Customer base declined by 2%, around 94 million, driven by SIM consolidation in the market. This concludes with the operational review. Now back to Ali. Thank you.

Thank you very much, Aziz and Abdulla. We will now move to the Q&A session.

[Operator Instructions] For the Q&A, I'm joined by Aziz and Abdulla as well as some members of our senior leadership team. Let me open the floor now, and our first question comes from Thando from UBS.

Great. Great. Congratulations on the results. I do have a lot of questions, but I'll keep it to 2 and go back in line. The first one is just I wonder if you could share more details on the impact off the current situation across the region, if maybe you can compare Jan to Feb growth to match growth, just to give a sense and whether you're seeing some improvement at least in the month of April. If you can just comment between your B2B, B2G and B2C segments, please. And then just my second question, Kuwait, it delivered probably your highest EBITDA margin in Q1 in a long time. I just wanted to get a better understanding of how sustainable that 35% margin is? And did you see a lower devices in this quarter?

I'll take the first question. I'll defer the second question to Abdulla. Look, in terms of impact, I think the results speak for themselves. We haven't seen any major impact, especially on a daily operation since the beginning of the event. Actually, what we did see is probably in the first 10 days to 2 weeks of the events in a number of markets, which were directly impacted, Iraq, Kuwait and Qatar, we saw actually increased usage in terms of data and phone, which is normal. And now it's stabilized to normal operations. So we don't see any dramatic drop or anything going forward. We're seeing the same level of performance between March and April. Some areas are slightly impacted, but it's more in the medium term. As you know, certain projects in terms of deployment, especially in CapEx have been put on hold or rephased. Typical example, fixed cable we are still able to do some activity within the Gulf, but other activities due to the blockade, for instance, the major ship, which is there, we had to exit it from the Gulf, and it's now outside of the waters and can't operate. So we are still proceeding with a number of activities, production of cable, some site surveys, et cetera. But that CapEx will be delayed. And as the CapEx is delayed, probably going forward, that's medium term, we are talking about more than 18 to 24 months down the line. Some of the revenue will be impacted, we could just because of the delay. Flip side is we're seeing even more interest on these types of projects from hyperscalers and other operators in the region for redundancy purposes. I think these are the general types of impact. On the enterprise side, for the time being, we haven't seen much impact or cancellation of projects or et cetera. We actually just inked on the Syntys side, a new 4.4-megawatt facility at the end of last week with a major hyperscaler and that is a build in Qatar. So it shows there's still dynamism. So as for the time being, we're not seeing any direct major impact to our activity. A bit of rephasing of CapEx, but we're being very opportunistic. If we're seeing too much CapEx, we will be postponed. We're bringing forward other CapEx elements in other geographic not impacted. In terms of rollout, and if you take the major rollout in Q1 in terms of network, that was Iraq. As of today, it's going as foreseen. We have -- us and the vendors have quite a lot of inventory on the ground. So this is not delayed. Of course, these blockades and logistic routes remain closed for a prolonged amount of time then might start to see lower inventories, but it's not the case as of today. To Abdulla for the current EBITDA margin.

The way I understand your question as you emphasized on the EBITDA margin, which is 35%. This is sustainable or not sustainable. I just want to bring you a contention that we had less sales of devices during quarter 1 of 2026 in Kuwait. And this has contributed, I would say, positively and increasing the EBITDA margin to 35%. Is it sustainable? I would say, yes, it's sustainable as long as maybe we don't continue selling devices more than what it is today.

And the next question comes from Madhvendra Singh from HSBC.

Congrats on a strong set of numbers. I have a few follow-ups on operational performances. In Iraq, it seems like revenue growth is a bit soft, especially if I compare with the main competitors there. So wondering what is the main reason or driver behind this gap between you and the competitor? And is it likely to be getting better? Or is this the run rate we should be expecting in the medium term? The second question is on the Tower deal. If you could share any update on the closing time line? And what is the latest update on any potential payout you might get or receive from Zain on closing. So that's the second question. And then the third and the final one should be quite quick on the data center outlook given the situation in the region do you see that would impact the potential demand from hyperscalers in the medium to long run. I'm sure that the current projects may go ahead as they are. But any thoughts on the long-term outlook for the sector given the situation?

I'll start from the end of your question because I thought I answered it just before. Look, on data centers, we're still seeing a very strong demand. As I mentioned, we just signed a new build for hyperscaler, 4.4 megawatts. We're still -- we have quite a strong funnel and pipeline where we're hoping to make new announces in the coming months as we go forward. In terms of TowerCo, the asset transfer in Qatar has been finalized. We're finalizing now the share transfer because it has 2 step forward process in Qatar because of regulation. And we're still looking to close as of Q2 of this year during the first close. Going to Iraq...

Going to Iraq -- I can take the first part. I would slightly disagree with you. We have mentioned earlier that we're up double-digit growth that will not be there quarter 1 of 2026 toward 2026, but we still have a very solid growth in Iraq. And the conversion that you are talking about, or you're comparing our competitor to our competitor do consolidations [indiscernible] while we are a solo company that we are competing against are competitor with consolidation. I have next to me [ Faadi ]. [ Faadi ] was previously from Iraq. He can elaborate a little bit more on just on this point.

At this point I think we need to be careful to compare like-for-like. The announced statements for our competitors have basically consolidated statements, which includes the ISP and recently, the mobile world as well, while in Asiacell it's only the mobile business. So we just need to be mindful of that.

Understood. And do you think -- I mean, are you also planning to have your own fintech and other comparable businesses then to bridge the gap there?

Yes. So look, if you go back to the presentation we did, I think it's the third slide. It's actually the fintech rollout. So we are live in Qatar and Maldives. We are live in Oman. Oman, we launched last year we're ramping up the launch. We're growing. I think, if I remember well, close to 10% every month our customer base. In Iraq, we are -- we finalized the licensing process. We've got the license. We're currently in the build phase, targeting for a soft launch end of this year or very early next year, it depends on the sandboxing with the Central Bank, but internal build, we're looking at end of this year soft launch. Tunisia, we actually soft launched already and looking for a full-blown launch within the months to come in Tunisia. Algeria, we just started the licensing process. In Kuwait, we're looking -- we're still working on the licensing process or potential acquisitions.

Yes. The Tower closing, I think we have mentioned clearly that we will be targeting the quarter 2 of 2026. I will start with Qatar first. First of all, focusing on the closing of Qatar then we go to the other markets.

Maddy, are there any follow-up questions or you are done?

Yes. On the data center question, is, I did hear your earlier answer. My question was more on the longer-term outlook. I understand the current projects and whatever was the pipeline may still continue. But when -- what do you think hasn't changed that hyperscalers may continue to come to the region because security of data servers still probably a big deal for them, right? And we did see some of the infrastructure getting targeted during the conflict. So that's the angle I'm coming from.

Look, I think it's a very slight different business model between us and some regional [ players ]. And I would say, hyperscaler activity in Qatar versus certain of our regional neighbors. The demand pipeline, which is still very strong, I'd like to share it with you is all[ predicated ], whatever. On local demand, or from the government, from SMEs, from GREs from large corporation. This is what is fueling the hyperscalers build in Qatar and Oman and in Kuwait as a use. Our neighbors were more building on the model of we will build -- we will build a large facility for local demand but also for export of training models, et cetera. I think this might have been impacted. Local demand is still extremely strong. And that change needs to be fulfilled. So we're not impacted.

And the next question comes from [ Bijoy ].

Thank you, gentlemen, for the call. My name is [Bijoy] from QIC Asset Management. My question is on the current situation. How do you see the local competition, not just in Qatar, but other geographies as well. Given the current environment are other players discounting or trying to tap into the more sticky business like fixed line and enterprise through discounting. How do you see the trends in the coming quarters?

For the time being, I think the first quarter speaks for itself. It's a very strong quarter. One thing we don't do at Ooredoo, whether it's in Qatar and Kuwait and Oman and any geography we operate is underestimate competitors. Where we're very confident is our strategy. One of our key pillar -- pillars is customer centricity, whether it's on the consumer or the enterprise side and is always positioning Ooredoo as the premium provider on the consumer and also on the enterprise side, which is much more sticky. We've invested significantly in our networks and our assets. This is why, for instance, there were a question on Iraq. On Iraq, for many years and still as today, in terms of customer base, we're #2. In terms of revenue market share, we're #1 because we have the premium segment. If you look at Qatar, our competitor is doing a great job, especially on the prepaid segment. On the very high ARPU sticky segment, we own the lion's share of that market. Same in, for instance, Algeria. If you look at some of Algeria's KPI, I think we're growing at 18% for the first quarter. We just launched 5G. We have a disproportionate share of the 5G market versus our competitors in that market. I think it's above 70% of the 5G market share is to Ooredoo Algeria. This has consistently been our strategy, and it's proved to be right. When you translate that for enterprise, a lot of the large enterprises, which we service and government institution, which is also our big area of focus. Of course, SMEs are prioritized resiliency, continuously of service, which are vital for them versus tiny price sensitivity. So I think our commercial strategy has always been very sound and strong.

Understood. But you don't see any local competition just taking advantage of the current situation?

Look, [indiscernible], the local situation impacts all of us equally. I think it's more agility on the way we react in certain commercial offerings, et cetera. But again, right now, we're not seeing any increased competition because of the current situation. By the way, last comment and I salute my competitors across my footprint. I think we're all operating in a very disciplined and rational manner as well.

[Operator Instructions] I think we have one type question, comes from Nikhil. Postpaid subscriber expansion in Algeria has been quite erratic with number of subscribers increasing over 2024 and then declining significantly in 2025. What is the reason for that? Could you throw some light on the pricing dynamics in the market? Algeria, postpaid subscriber expansion?

I -- being frank, I don't know the answer. I can come back to you. But from what I understand, Algeria is a prepaid market, and I will focus a lot on the prepaid market over there. But I'm not sure about where you're getting that information about the subscriber of postpaid. I can always come back with an answer on that.

In general, major rule of thumb, GCC markets are mostly postpaid markets. Outside GCC, so Iraq, Palestine, Tunisia, Algeria and Indonesia and Maldives are mostly prepaid markets.

And the next question comes from [indiscernible].

Just one quick question on Iraq. What is the impact you guys are seeing from the 20% tax that was introduced in March? If you can just share sort of what you've seen in the last 2 months and what the outlook for the rest of the year is based on that?

Unless mistaken, it's been announced, it hasn't been implemented yet. And this doesn't just impact -- first, it impacts everyone equally. And it doesn't just impact us, it impacts a number of industries. I think there's still quite a bit of debate over it.

I think Maddy has a follow-up question. So Maddy?

So just on Iraq, given the situation on the blockade and so I was wondering what is the FX situation you are facing in Iraq currently? Have you faced any difficulties in procuring dollars? Is that something which is worrying you for the future that there might be some issues in getting cash out of the country? The reason I'm also asking that is from a dividend point of view, if there was any issue in getting cash upstream from Iraq, would that impact the dividend payment from the group side? If you could share some color there.

So as of today, we're not seeing any impact nor on FX nor on currency repatriation. Historically, we're not strangers to that situation. I think when this management team started a bit more than 5 years ago, we had repatriation issues, including in Iraq, we had, I think, over $1.2 billion of dividends, which were still held in Iraq since then, we've completely repatriated them. And we've increased our repatriation efforts and mechanism, et cetera. If in any case or situation, there is a currency issue or repatriation issue, you've seen the strength of our balance sheet at the group and our cash position. We're at 0.4x or 0.6x depending on how you calculate net debt to EBITDA. So we have way sufficient and ample cash reserve to service our debt, pay our dividend and even do some inorganic growth on the side.

Next question, I think Thando has a follow-up question as well.

Great. Yes. I just wanted to just follow up on Qatar, please. Just in terms of the postpaid ARPUs, they've been on a decline now for the last several quarters, if you look on a year-on-year basis. And I was just wondering what you guys are seeing there in terms of -- I don't know, because you said competition seems pretty stable, but anything on pricing discounts or demand that you're seeing in Qatar on the postpaid segment, please?

So in general, on our postpaid segment, the gap is very slowly narrowing. It's sort of a natural point we were above 30% premium above our competitor. There's that natural extremely slow, and this is what we're trying to control as much as possible, convergence of us slightly eroding our ARPU and they're slightly increasing their ARPU. One of the key drivers in ARPU erosion in Qatar is not so much on the postpaid is on the fixed line side, if I'm not mistaken.

Yes, that's true. That's true. And actually, we're seeing this quarter versus last quarter of, let's say, quarter 4 of 2025, we see there is a growth also in terms of postpaid and sustainability and the ARPU. ARPU was marginally below, but in total, postpaid mobile revenue is up, which is a healthy indicator.

Okay, gentlemen. Thank you for your question and answers. So I'll turn to the type questions. We have anonymous attendee asking about the wholesale business in Qatar, Kuwait and Iraq. They were significantly up year-over-year. What's the reason? And the postpaid drop from KWD 15 to KWD 13, I think this is Kuwait.

So wholesale in the region, again, our strategy of becoming a digital infrastructure player, especially also on the connectivity part with the current situation, a number of players in the region, whether it's hyperscalers or other operators has asked us for additional capacity to -- for resiliency and support of their own markets. So we're immediate beneficiary from that. Yes. And on the second part, I'd say, we have focused on doing better on controlling the gross add in terms of in terms of postpaid customer. This is slightly is impacting our customer. But again, on the postpaid part, we're seeing also an overall growth.

[Operator Instructions] All right. I think since there are no further questions, I would like to thank everyone for joining us today. Our next release will be our half year results expected the end of July. If you have any follow-up questions, please feel free to contact the IR team. Thank you again, and we look forward to speaking with you soon again.

Thank you.

Thank you, everyone.