Good afternoon, everybody, and welcome to Ooredoo Group's Quarter Three Financial Results Call for the period ended 30th September 2023. My name is Luelle Pillay, working with Andreas in the investor relations team. Today, I'm joined by Aziz Aluthman Fakhroo, CEO and Managing Director of the Ooredoo Group, who will kick off our presentation with an update of our strategy and take us through the consolidated results. He will be followed by Abdulla Al -Zaman, our Group CFO, who will walk us through the operations performance. As always, we will keep the presentation brief to allow time for your questions. Please type your questions into the Q&A section of the Zoom webinar at any time.
The presentation is available on the Ooredoo website at ooredoo.com, as well as on this webcast. The recording and transcription of the session has started now, so by attending this session, you consent to being included. Please do note the usual disclaimer on slide number two, and with that, I will hand over to Aziz.
Good afternoon, everyone. Welcome to our Q3 Investor Call. As usual, I'll start with our strategy update. Our strategy remains unchanged and fixed around the same five pillars: customer experience, our people and talent, smart telco, evolving the core, strengthening the core, and a valued focused portfolio. We're strongly moving ahead on all these programs. We're hosting a virtual Capital Markets Day on December the 6th, where we'll provide an update on how we have progressed against our strategy. I'm pleased to report that we've maintained our positive momentum into the third quarter of 2023, with an improvement across all financial metrics.
From an operating standpoint, the negotiation with Zain Group and TASC are progressing. This is a complex transaction, and we expect to sign by the end of this year. On the sale of Myanmar, where there's several required approvals, we're advancing and obtaining these and remain confident that we'll close the sales shortly. I would also like to highlight two new key appointments. In Myanmar, Chris Peirce was appointed as acting CEO. He was previously the Chief Legal and Regulatory Officer in Myanmar.
In Algeria, Ronnie Tohme, previously holding the position of CFO, became the CEO in August. Turning to our key financial highlights for the nine months of 2023, a 2% increase in revenue to QAR 17 billion. Reported EBITDA grew 4%, and reported EBITDA margin improved by 1 percentage point to 43%. Free cash flow was up by 4% to QAR 5.8 billion. Reported net profit was up by 28%, and on a normalized basis, net profit was up by 19%. These are the key highlights for this quarter's.
We'll go into more details in the slide to come. During the third quarter, we grew revenue by 1% to QAR 5.8 billion. Reported EBITDA increased by 12%. Reported EBITDA margin improved by 4 percentage points to 44%. Free cash flow increased 8% to QAR 1.9 billion. Reported net profit was up by 49%. On a normalized basis, net profit was up by 16%.
Let's move on to slide 10 for the revenue bridge. On a year-to-date basis, our revenue are up by 2%. On a quarterly basis, it's up by 1%, mainly driven by Iraq, which grew by 24%, Algeria, which grew by 11%, Kuwait, which grew by 4%, and Maldives, which grew by 11%. Qatar revenue in Q3 2023 declined by 11% on a reported basis. This decline is in large part structural. We have scaled down on low-margin wholesale business.
In addition, Ooredoo Financial Services, also known as Ooredoo Money, was carved out from Ooredoo Qatar. On a normalized basis, revenue in Qatar were actually flat. Revenue in Myanmar and Palestine grew in local currency, but were impacted by a continued FX depreciation. The kyat dropped by 22% against the dollar, and the currency in Palestine slid by 9%. In the bridge, you see others line item. This consists mainly of fintech revenue from Qatar Ooredoo Money, effective January 2023, which is now reported separately from Ooredoo Qatar, and Masarat, an Iraqi ISP, which we just acquired.
On to the next slide for an overview of our EBITDA performance. EBITDA for the first nine months of 2023 increased by 4% to QAR 7.4 billion , while margin improved by one full percentage point to 43%. On a quarterly basis, we have seen double-digit growth. Group EBITDA was up by 12%, thanks to higher revenue-generating customer base, and we are benefiting from stringent cost control across the group. In Oman, profitability remains under pressure, and we continue to monitor its cost structure to improve efficiency.
Lower revenues impacted EBITDA in Qatar in Q3 2023, as mentioned in the slide before. On a reported basis, net profit for the first nine months of the year increased by 28% to QAR 2.7 billion . On a normalized basis, net profit for the first nine months of the year increased by 19%. In the following slide, you can see the bridge between reported and normalized net profit. This chart is quite self-explanatory. The main adjustments are one-off gains. NMTC won its legal case in Q1 of this year that translated into a QAR 446 million one-off gain.
Then we made a QAR 139 million gain on the MEEZA IPO in Qatar in the third quarter of this year. On a reported basis, Q3 net profit increased by 49% to QAR 869 million. On a normalized basis, Q3 net profit increased 16% to QAR 909 million. In the following slide, you can see the bridge between reported and normalized net profit. The main adjustment for Q3 was QAR 139 million gain on the MEEZA IPO, as just mentioned, in the third quarter, and we recognize additional goodwill impairment in Tunisia. Our CapEx spend for the first nine months of this year is up by 2%.
The CapEx spend is expected to increase in Q4, in line with the historic quarterly trends. In the Maldives, we continue work on strategic projects, such as on the sea cables. Spend in Tunisia and Iraq were driven by further network investment. In Kuwait and Qatar, CapEx spend declined, as most of the network upgrades and 5G's upgrade were done in the previous years. In Myanmar, we continue to manage the operation on a minimal CapEx basis. As a result, free cash flow grew by 4% on a year-to-date basis on improved profitability.
On a quarterly basis, free cash flow increased by 8%, again, on higher EBITDA. On a consolidated basis, we added 2% more customers. Every international OpCo managed to grow their customer base. As previously reported, the definition for prepaid base in Qatar changed to 90 days active base instead of 365 days. This led to a decline in customers in Qatar. On a like-for-like basis, our customer base in Qatar remained unchanged.
If we include Indonesia, we recorded more than 156 million customers across the group. I'm very pleased with our Q3 results. Thanks to our solid performance, we remain on track to meet our guidance. As I've already touched on, our revenue is slightly ahead by 2%. Our EBITDA margin has expanded by one percentage point to 43%. CapEx is up by 2% to QAR 1.6 billion. We're still on track to hit the QAR 3 billion mark by end of year.
To conclude my section, we continue to maintain a very solid balance sheet. I want to reiterate a few points. We have a net gearing of 0.9x net debt to EBITDA, and a very strong investment-grade credit rating. Our debt profile has not changed since the previous quarter. We have ample liquidity to cover our various maturities. We have structurally hedged for interest rates, as 95% of our debt is at fixed rate. Now, I hand over to Abdulla for the operational review. Thank you.
Thank you, Aziz. Good afternoon. As always, I will start the operation review with our home market, Qatar. Revenue declined by 4%. The decline is mainly structured. We have scaled down on the low-margin wholesale business, and Ooredoo Financial Services was carved out from Ooredoo Qatar. On a normalized basis, the revenue was flat. EBITDA declined due to higher bad debt as a part of regular debt review. Our EBITDA margin remains solid at 49%. EBITDA has improved sequential over quarter two.
Next is Kuwait. In Kuwait, we saw a solid commercial performance with customer and revenue both increasing. Happy to report double-digit EBITDA growth of 12%, while the margin expanded by two percentage points, thanks to strong service revenue performance. Turning to Oman. Competition remained intense with a third market entrance. Revenue declined 2%, mainly due to the performance of the mobile prepaid businesses. EBITDA dropped 11% due to lower gross margin and slightly higher operational costs. To offset this impact, we are constantly reviewing additional cost efficiency measures. Customer numbers were up by 6% in Oman.
Moving to Iraq, Asiacell was again our portfolio top performer with a double-digit growth in revenue and EBITDA. Revenue increased by a solid 19% and EBITDA increased by 25% in Qatari riyal. Turning to Algeria, the customer base grew 2% to 13 million. We have a strong momentum in revenue, which increased by 9%, helped also by 5% appreciation of dinar. EBITDA grew by 17% with a strong increase in EBITDA margin, which now stands at 41%. This good performance attests to enhanced efficiency and driving profitability within the organization.
Next, Tunisia. Due to the challenging operating environment, Ooredoo Tunisia revenue dropped 1% in local currency. Revenue and EBITDA improved from quarter two to quarter three in 2023, supported by seasonality. Next, in Myanmar, the customer base has increased by 11% year-on-year to over eight million customer, due to active digitization effort and engagement with consumers. Revenue grew 3% in local currency due to customer growth and pricing optimization. EBITDA remained flat in local currency despite the impact of challenging external environment.
In Maldives, we continue our infrastructure investment that help us gain market share, growing revenue and improving profitability. Our customer base grew by 4%, our revenue grew by 8%, while EBITDA expanded 10% and EBITDA margin expanded to 55%. This was achieved by our strategy of driving higher revenue and optimizing our operational expenses. Next, Palestine. Despite the difficult political and economic environment in Palestine, we have seen an encouraging increase in revenue year-on-year on local currency basis.
On a reported basis, revenue declined 4% due to the 9% depreciation of the local currency against the US dollar, which is our reporting currency. Through strategic cost optimization efforts, we reported EBITDA growth of 5% and margin expansion. Our commitment to delivering superior customer experience and enhancing our offering is paying off. It resulted in a 3% year-on-year growth in our customer base, which now stand at 1.4 million. Next, IOH. Lastly, looking at our joint venture, IOH, which reported a solid result. IOH grew its customer base by 1% to reach almost 100 million customer. In local currency, IOH recorded a 9% growth in revenue.
Normalized EBITDA increased by 22%, with a healthy EBITDA margin of 46%, up by almost six percentage points, which showcase the strong operating leverage. This conclude my operational review. Back to IR team. Thank you.
Thank you very much, Aziz and Abdulla. Before we go into the Q&A session, I'd like to highlight a few events on the slides that are tentatively on the calendar. We are attending the Bank of America MENA Conference in Dubai on the 9th of November. The morning is fully booked, and we have a few slots open in the afternoon. Please contact Bank of America or the Ooredoo IR team if you would like to meet our CEO in Dubai. We are hosting our virtual Capital Markets Day on the sixth of December. The details will be announced shortly.
We now come to the Q&A part of our session. Before we open the floor for questions, a bit of housekeeping. To ask a question, you can raise your hand, and we'll open the audio line when it comes to you. Or you can simply type your question in the Q&A box, and if you dialed in via phone, please push star nine to ask a question. I'm delighted to have the whole team here with me. So we're joined by Aziz, our Group CEO. We also have Deputy CEO, Sheikh Mohammed, with us, Group CFO, Abdulla, Deputy CFO, Eyas, and Head of Strategy, René. So with that, we will start the Q&A session, and I will open the line for our first question from Nishit, who will ask. Go ahead, Nishit.
Yes, thank you for the call. I have a couple of questions. First, on the Qatar operations. I know you mentioned it was flat if you remove the fintech component of the operations. But I just wanted to know what is happening in terms of the population within the country, because if I look at the official stats, it shows that there are more people now in Qatar than they've, or, I mean, year, on a year-on-year basis, and even if I remove the distortion of the two months of FIFA. So is the population actually higher in Qatar? And so why is the subscribers falling? That's my question. Second, on the competition, it seems that you are losing market share to your competitor. So how do you see that?
And also, on how much was the bad debts in Qatar, that for this quarter, and why that is the case? So that's on Qatar, and if you can just add a bit more on the outlook going forward in your home operations, that would be helpful. So that's my first question. Second, on the TowerCo deal, by when do you expect this deal to? So you are, I mean, you mentioned it's gonna be before end of the year, but any color on how much you are expecting that you will get some cash out of this deal, right? So any color on that? Because you'll be contributing towers, more towers to the JV, so you'll expect some cash from the deal. So, anything on, well, on that, and what do you plan to do with that cash? Thank you.
Thank you, Sheikh. We will start with the macro question, Sheikh Mohammed.
So, basically, regarding Qatar, we know that the macroeconomy is still less than expected last year. Regarding the population, we see there's a pickup in the population post-summer. However, when we link it to your question, you link that question to our customer base, there has been a clean fall of our base, and that's where you see some decline. Regarding the competition, it's quite intense and competitive market we are in Qatar. We see how we are responding to more value to our customers. And from financial perspective, yes, it's very obvious, we have some provision that we have done, and that's reflected also in our numbers.
The next one was about the deal in Qatar. Abdulla?
Yeah, I can answer another question. This is, sort of, I would say, a regular routine now. BAU that we do every quarter, we review our bad debts, and wherever there is a genuine case, we usually provision for it.
Thank you. Aziz, would you like to take the tower deal, please?
So in the tower deals, we've signed exclusivity to an intense final, probably we're in the final mile of negotiations. As you can anticipate, we're talking of long-form agreements, multiple agreements, of shareholder agreements, share purchase agreements, MLAs in every single countries. As usual, in certain countries, there's two sets of MLAs, ours and Zain's. It's quite a complex deal. It's progressing extremely well. We're optimistic that we will reach closure, not a closure, a signing very soon. The end goal is before the end of the year. We have a month and a half left, so we're talking about weeks.
Hopefully, you know, we'll come out with an announcement very soon. When it comes to the cash proceeds, we've already said it's a share and cash deal. Unfortunately, at this time, we can't close the final number. We're looking forward to give you more lights on this transaction as soon as we've inked the deal, and then we can share much more details, and I'm confident you'll find it extremely value accretive.
Thank you. Open the next question from Rami. Rami, please go ahead. Rami?
Hello, is it me?
Yes, it's you. Please go ahead.
Yeah, thank you, gentlemen, for your time and the wonderful presentation. Just to follow up on the tower JV, since we're on the topic. I'm just trying to understand, when you talk about the synergies that these, this tower collaboration is meant to bring to shareholders and the company, is it synergies amongst the participants of this deal, so Zain, Ooredoo, or do you plan on, you know, using these towers to serve other tenants outside of the Ooredoo/Zain umbrella?
So when we talk about tower synergies and the synergies to this transaction, again, I'll try to stay quite high level. There's two sets of synergies. There are underutilized synergies for existing OpCos. As you can imagine, these are infrastructures which were mainly dedicated to one operator. They're non-yielding assets. A lot of the operating costs are the same, whether there is one operator or multiple tenants. So the goal for this TowerCo, as tenants increase, and of course, this TowerCo is meant to serve all operators in each country we operate in.
On the other side, from the TowerCo side, where we remain a very high shareholder, we also extract synergies because we have overlapping footprint with Zain, and therefore, there is probably, over time, a portfolio rationalization of the towers. As you know, one of the biggest cost items for the TowerCo are the land leases. So as you can rationalize the tower portfolio, you then increase the yield per tower.
Excellent. Thank you so much. Okay, on capital allocation, you know, I think in previous calls, the management talked about an M&A kind of forward-looking M&A strategy, and I'm just trying to understand what kind of businesses are you looking to acquire, if any, and what kind of strategy is there for the M&A of the business, which markets, which sectors, which industries and what not?
So again, then that this is where I reiterate. We're looking at inorganic growth, so M&A, on a very disciplined and opportunistic manner. It has to be value accretive for our shareholders and for us. We've learned over time that usually our footprint OpCo transaction generates limited synergies in terms of operation, because each operation needs to have their own framework, infrastructure, et cetera. We'll have a Capital Markets Day. We'll dwell much further into this. We remain extremely disciplined. We keep reviewing opportunity and over opportunity.
What we've seen in the past probably 24 months, is asset prices were still quite high, and the value point of entry was not that attractive. Going forward, we're hoping as markets, you know, we have the impact of interest rates on asset prices, we're hoping to see maybe more attractive opportunities. But our number one driver is that it is value accretive for our shareholders.
Thank you so much. And just the last question from my side, and I'll jump back to the queue. I just wanted to, you know, discuss data centers. I think one of the— In the previous call, you were discussing carving them out. And when you say carve them out, does that mean a spin-off or a financial carve-out in terms of reporting?
It starts first with a financial carve-out, and that's the first step which we're doing internally. So an asset, a fully asset carve-out, again, on Capital Markets Day, we'll, we'll plan on that. The whole idea is the data center co needs to be a standalone balance sheet for capital efficiencies. It's a different business. It's an annuity business than a general telco business, but also it has to be a carrier-neutral business for it to serve fully, the range of clients and especially the hyperscalers. So the short-term goal is, is for it to be a standalone, fully fledged business as any of our telco OpCo.
Understood.
The only difference, it will be a cross-country OpCo.
Okay, great. And when you discuss these plans for data centers, I think most of the emphasis was on Oman in terms of growth. I'm just trying to understand why did you choose Oman and not Qatar? Is there something special about Oman, or is there more demand there? I mean, just kind of understand, why did you discuss Oman as the kind of center of growth?
So again, for data centers, I highly invite you to attend our Capital Markets Day. We'll build in much more depth into it. I think we're seeing strong growth across the whole footprints. The six countries we're incepting that portfolio with, Oman is one of the initial fast-growing markets, I think predominantly due to its geographic positioning at the entry of the Gulf and one of the high connectivity points in the region. But if you join us for Capital Markets Day, you'll see that Oman is one of the fast-growing markets and not the only fast-growing market.
Great. Thank you so much. I'll jump back in line.
Thank you. Our next question comes from Omar. Omar, I'll unmute your line. Please go ahead.
Thank you. Can you hear me?
Yes, we can hear you.
All right, thanks. Thank you for the presentation, everyone. Just a few questions from my end. Firstly, on the operating performance for Iraq and Algeria, specifically, those two markets have done rather well in the last two quarters, specifically. So, I just wanted to have, like, a perhaps a bit of a deeper dive on what went on on the ground from, you know, from a competition perspective, whether there's been any regulatory changes that we missed maybe or anything, because the performance has been rather exceptional compared to the historical trends in the last two quarters, specifically.
I'm just wondering if this is something that's driven by any change that you've done in the business, in terms of, maybe pricing or, or, structure, the commercial structure of, your... the, the, the proposition to your customers. So that's one. The second one is on the, perhaps the post-transaction future of the TowerCo. So once you're done with the, this transaction, what you have envisaged for the TowerCo later on, is it going to be, you know, something that you could potentially expand into maybe like neighboring markets? I guess the natural extension for this part of the world is the African market. So is this perhaps a geography that you could look at in the future? Then lastly, just wanted, maybe, Aziz, if you could expand a little bit on what you meant by the data center business being an annuity business. Thank you.
Annuity business.
Annuity business. Well, given the last question, I'll answer two of your questions at the same time. I'll pass over then for Algeria and Iraq to my colleagues. In general, if you look at our forward-looking structure, probably you're looking at around 18 months from now, we will have a group which will consist of our existing footprint of OpCos, which I would like to refer as our telco business or our core connectivity business. You'll then have a TowerCo, a data center co, and a mobile financial service co. These four businesses were all on day one, incepted from the same part, which is our TowerCo business. Over time, each one will have a life of their own and will be able to expand in markets which might not overlap.
Ideally, if we can find opportunities, going back to the M&A question, which overlaps with telco, TowerCo , data center co, or TowerCo , data center co, these will be ideal. But each vertical will be, will have its life of its own, a strategy of its own, and its growth. And this is one way of chasing the organic growth outside of our existing footprint, independently of our telco footprint. When I'm talking about data centers more as an annuity business, if you compare it to a telco, a telco. I won't explain the telco business, but annuity are usually you're selling capacity on medium to long-term contract to hyperscaler, and therefore it's more of a, I would say, a very high-tech real estate play than a typical core operational play.
Data center business is we have to identify land, anchor tenants, build, and then, lease and operate. Does that answer your question?
It does. Thank you, Aziz.
For Iraq and, you guys want to take it or?
Yeah, I think so for Iraq, we have very strong performance. We have witnessed few factors for this strong performance, and one of them is the VAT removal in the country, which really helped our operation in Iraq. As well as strong initiatives implementation by our team there. Also the exchange rate that positively impacted the ARPU. So there are many factors behind that strong performance. We see also from the question I think raised for Algeria as well, there has been a quite good proposition by our team in Algeria for their, let's say, premium segment, which played a very big role in higher ARPU and better, let's say, revenue, as well as a better efficiency on the scheme of the commission. That really helped the strong performance in Algeria as well.
Thank you. And just if I may, the VAT in Iraq that you're talking about, this is the same 20% VAT that was implemented some six, seven years ago, correct?
Yes, it was removed December 2022. So that's the same, yeah.
Okay. That's right. Yeah. Thank you.
Thank you. Next question comes from Mari. Mari, please go ahead.
Yes, hi. Thanks for taking my question. Just a couple of questions from my side. The first question is on the dividends. So if I remember correctly, the normalized net income which you report is not really the basis for calculating the dividends. You actually subtract the effects from that to reach the actual net income for the distribution of dividends. So if you could, you know, give that number as well. I mean, I can calculate that it is about 24% higher than last year. So am I doing the calculations right for the first nine months? So that's the first question. And a second question is on the separation of the fintech business in Qatar.
So just wondering, what is the rationale behind it? I mean, is it like part of a bigger overall fintech separation, and this is like the first operation to do that? Or is there something else going on here? And was that the big contributor to EBITDA loss in Qatar? Like, were they making a big EBITDA loss, which has resulted in a much higher EBITDA margin for Qatar during the quarter? So, if you could give some color around what impact that separation actually had in Qatar also would be helpful. Thank you.
I'll take the MFS question, and then I'll let the other questions. When it comes to the MFS, and if you recall last year, Capital Markets Day, we're building, and my comment before, we're really building four verticals across the group. One is the core telco business, TowerCo , data center co, and MFS. If you recall, we do MFS businesses independently. They were all incepted. Each opco has a small MFS business, Qatar being one of the biggest one. Last year, I think, totaled around $6.4 billion of total transaction value.
We believe creating a unified platform, which will serve all six countries, of course, with customization for each country due to regulatory environment, we're able to create a very strong value proposition in terms of MFS, but also we'll be able to optimize the development as by doing a centralized development app and a centralized managed function, we get more synergies than each OpCo developing their independent MFS proposition. When it comes to the impact on Qatar's margin, there's a couple of things. If you look at the margin of Qatar versus last quarter, we had a bad debt provision. I think that's the general improvement to the margin. I'll let my colleagues expand. But if you look quarter to quarter in the last 12 months, you also see a margin expansion.
That, in general, comes from better cost oversight, better operational efficiencies, but also a focus on higher margin products and the reduction of lower, very low margin products, and that's a reduction in wholesale, for instance. But I'll let my colleagues take it.
Yes, Aziz, the EBITDA actually has remained solid at 1,400% versus quarter two this year also has improved. And, to the questions of the dividend also, I think this question was raised in calculating the dividend last quarter, and we have shared it and confirmed it also offline. I'm more than happy to share sort of the calculations with you. So we will take it as offline.
Hi, this calculation about 24, is that accurate?
It's accurate, yes.
Thank you. We have a few questions in the Q&A chat. So from [Sauvage]: Regarding your Kuwait operations, what are the other revenue sources apart from your mobile and broadband? Because your, your customer base and postpaid ARPU both showed an increasing trend in the third quarter of 2023, but overall, revenues were down.
I can, yeah. Yes, this is coming from the outbound roaming, I would say, mainly, and seasonality during the summer.
Thank you. Our next question is from an anonymous attendee. Can you describe the situation in Palestine? How much of your network was damaged? Any insurance there? Do you see any sizable write-off risks in Q4? And why is the network connectivity cut off in Gaza?
Maybe I'll start this question first by expressing, I would say more than our full support, our full admiration from our teams on the ground in Palestine, which are serving day in and day out to the risk of their life, to maintain a basic right of communication. Which you can expect within these circumstances, being able to reach your close one, being able to pass on an alert, to be able to pass information, is something extremely important and vital. And our teams, despite all these risks, are working day in and day out in conditions we cannot even start to imagine. So I want to send from all of us here, our sincere admiration, thanks, respect, I don't know which word to qualify, to our teams in Palestine.
Now, with regard to our Palestinian operation, you have to remember that we have two operations: there's the West Bank and Gaza. Of course, the Gaza operation has been severely impacted. Costs are beyond our control, as you may imagine, as well as when they occur, our teams, again, once again, despite all the risk, do all their possible to be able to put back network online. When it comes to any write-off impact, we can't assess it as of today. It would need a on-the-ground assessment of our operation in Gaza, and as of today, we have incapacity of doing this. But in general, any write-off out of Gaza would be material towards the whole, the totality of the group.
Yes.
Thank you. Our next question is also from anonymous. Can you quantify the size of the ISP acquisition in Iraq? How much of it contributes to the Iraq revenue? Iraq disclosing 43. Yeah?
Masarat is not part of Asiacell. It is a separate entity owned directly by OG. The revenue in the first nine months is only QAR 32 million.
Thank you, Eyas. I don't see any more questions. I see a hand up by Rami again. Rami, please go ahead.
Yeah, sorry. Yeah, just a quick question on the returns on cash. So I realize that your debt is fixed at around 4%, around 4%, and that's, that's great. And, I'm just wondering, why is your return on cash low? Is that linked to the debt in one way or another? Are you, are you doing a deal with the bank where you take cheap debt but keep the cash in Qatar? 'Cause the, the return on cash is around 2% at the moment. So I'm just trying to understand why is it, that much lower than yields in the market?
I think the first part, and then I'll ask my finance team, is yes, most of our debt, I think actually more than 90%, close to 90% of our debt is fixed. We had taken a very early call in 2021 to refinance most of our debt because we anticipated increase of rates, and that was a very savvy call at the time. As you noted, most of our fixed out debt cost is below 4%. One of the big issue of the return on invested equity is, on the flip side of that, we're actually very low. We have a very low gearing ratio, with barely 0.9x net debt to EBITDA, so that usually inhibits higher returns on the equity side. Then for the exact return on cash, I don't know if, Abdullah or Eyas, you want to comment on that?
Actually, on the return of cash, actually, we are continually trying to get a very attractive rate in the market. I will double-check on your comments and come back to you. But, usually, whatever is offered as a very competitive rate in the market, we are taking advantage of it.
Okay, thank you. And one last question on the dividend payout ratio. So I mean, the business at this point in time is generating a lot of cash, and the CapEx requirements are relatively low. Sorry, am I asking too many questions?
No, no, no. It's. I was surprised that till now, we didn't get the dividend question. I was, I was telling myself, "Oh, it's finally..." Before you finish, I'll tell you, like, our current guidance is 60% of normalized net profit. As you may appreciate, the dividend, the management expresses a recommendation to the board, and then it's a board decision. We still haven't come towards the end of the year. We do the recommendation towards the end of the year, and at this stage today, we cannot comment on the dividend apart from our existing policy.
Understood. Okay. Thank you.
Thank you. One last question from the chat: Will you revise your target capital structure? If not, can we expect special dividends to bring another dividend?
So I'll ignore the dividend question. When we look at our capital structure, apart from enhancing our portfolio, crystallizing value to the transaction, and turning idle assets into yielding assets with TowerCo, data center, crystallizing value and creating a new entity of business, part of that exercise is also to readdress our capital structure and to seek more efficient leverage in areas which can sustain better leverage with lower FX volatility, and typically a TowerCo or a data center. So as mentioned previously, their annuity business, they're more correlated to real estate than a typical operational business like our core telco business, which is subject to quite a bit of volatility in terms of FX, operational performance, et cetera, et cetera. Part of that restructuring will move in this vertical, and again, we'll touch on this in Capital Markets Day, is to enhance the capital efficiency of the group.
One last question coming through: What is causing constant impairments in Tunisia, and do you see any improvements going into quarter four?
Well, we being really a proactive and a transparent in term of, you know, going forward the planning and the value, the book value of Ooredoo Tunisia, constantly, we are doing that impairment. If we see the numbers is going up or down in term of the planning, being a proactive on it.
Thank you very much. I don't see any more questions. Thanks to our panel, and thank you to everyone for attending. I'd like to say that we're going to meet again, online for our Capital Markets Day on the 6th of December, and if you have any further opinions or questions, please reach out to the Investor Relations team at any time. This video recording and transcript will be available on our website later today.