Thank you for joining us for our Q1 2023 results. As usual, we normally start with a strategy update. Our strategy remains unchanged and fixed around the same five pillars: customer experience, our people, our talent, smart telco, evolving the core, strengthening the core, and a value-focused portfolio. We're still moving ahead on all of these programs, hopefully we'll come with more in-depth presentation in our next quarter. For this slide, I'll skip. It's the key highlights. We'll dive down into more details in the following slides. I'm happy to announce that we're starting the year with the first quarter on a very strong base. All our key KPIs are in the green. Our revenue is up by 2% at QAR 5.6 billion. Our EBITDA is up by 3% at QAR 2.4 billion.
Our EBITDA margin is up by one point at 43%. Our CapEx intensity is stable at 7%. Free cash flows are up by 3% at QAR 2 billion. Our net profit is up by 43% to QAR 1 billion and a normalized basis at 15% or QAR 800 million. Our net debt to EBITDA keeps dropping at 1.1 times, and our customers are also up for 2% at 56.5 million subscribers for our consolidated operations, and up by 3% if we include Indosat with 155 million subscribers. As mentioned previously, our revenue are up by 2% at QAR 5.6 billion. This has been mainly driven by Qatar, Iraq, Algeria, Kuwait, and Oman, which have all experienced very strong revenue growth. We've seen revenue increase across all segments.
Tunisia is down by 3% in the local currency and are further impacted by FX. Myanmar and Palestine are up in local currency but have been negatively impacted by FX, with depreciation of up to 20% for Myanmar and 10% for Palestine. Our EBITDA is up by 3%, mainly driven by top-line growth, but also a strong focus on our cost controls. We have also a very strong contribution from IOH, QAR 67 million for the first quarter. Highest cost of sales and dealer commission, handsets, and interconnect led to a decrease in Oman's EBITDA. Our reported net profit for the first quarter is up by 43% at QAR 961 million. On an adjusted basis, it's up by 15% at QAR 795 million.
I'll go into the detail of the deviation in the next slide. As you can see on this slide, the major differences is negative impacts from FX and an impairment in Tunisia's goodwill. On the positive side, we've recorded a QAR 56 million one-off gain from IOH tower sale and a QAR 446 million gain from the NMTC legal case gain in Kuwait. Our CapEx intensity remains unchanged at 7%. There's a slight increase quarter-on-quarter, +6% versus last year. This has been mainly driven by front-loading a lot of our CapEx program, trying to bring forward the CapEx so we can reap the benefit across the year. We've seen this in Tunisia, Oman, Maldives, Palestine, Kuwait, and Iraq. In Algeria, our CapEx is down, as we had a significant network rollout last year.
In Qatar, our CapEx is down by 40% as we completed the construction of QDC5, which was a data center for Microsoft in 2022. Myanmar, our CapEx is significantly down as we remain focused on managing this investment closely. In line with our top-line growth, and especially our increase in EBITDA, our free cash flow are up by 3% for the first quarter at QAR 2 billion. This increase in free cash flows has driven S&P to upgrade our credit rating from A- to A. One significant contributor to free cash flows, QAR 67 million coming from IOH. As mentioned previously, our total subscriber base has grown in every single operation except for Myanmar. Our total subscriber base, including IOH, is at 155 million subscribers.
IOH customers stood at 98 million subscribers, and the remaining of our consolidated operation at 56.5 million subscribers. That's a growth of 2%. Despite a very strong first quarter, our guidance remains unchanged, with revenue growth flat for the year, EBITDA margin in the low forties, and a CapEx of roughly QAR 3 billion. Our net debt to EBITDA ratio is at 1.1x, below current board guidance of 1.5-2.5. The strong liquidity position with majority of the debt, 93% of the debt is at a fixed rate, created the catalyst for S&P to upgrade our credit rating from A- to A. I now hand to our CFO, Abdulla Al Zaman, for the operational review.
Thank you, Aziz. I'll be covering the OpCo performance, starting with the home country, Qatar. Revenue in Qatar has grew by 3% year-on-year. Country population expanded 6% year-on-year. Healthy EBITDA margin at 51%. Customer base at 3.4 million. Expanded digital channel 50% customer Ooredoo app. Also during January 2023, Ooredoo Qatar has appointed a new CEO, Sheikh Ali bin Jabor Al Thani. I would like to wish him all the best. Oman. Despite the aggressive competitive market in Oman, the revenue in local currency has grown by 2%. EBITDA decreased by 8% year-on-year. During 2023, which is March, Ooredoo Oman has appointed a new CEO, Bassam Al Ibrahim, which he moved from Ooredoo Algeria. Kuwait. Healthy revenue growth up to 3% due to improve of microeconomics environments.
EBITDA increased by 17% in local currency year-on-year. EBITDA margin stood at 32%. Number range case been won by Ooredoo Kuwait, which contributed approximately QAR 510 million. Customer base reach 2.8 million, 8% year-on-year. Won Best Customer Experience in Telecom. First operator also to launch Google Pay in Kuwait. Successful completion trial for advanced 5G. Kuwait been doing very good quarter or year, quarter-versus-quarter and year-versus-year. Next is Iraq. A growth, I would say, solid growth across the board. Revenue by 8%, EBITDA by 12%, and customer base also increased by 6% year-on-year. Next, we're moving to North Africa, OpCos, starting with Algeria. The stable revenue up by 1%. EBITDA margin has stood at 39%. Customer base also increased to 13 million.
Significant, significant growth on data revenue, partially offset by voice. Tunisia. Due to the challenge on macroeconomic environment in Tunisia, revenue and EBITDA are down. Customer base up by 2% year-on-year. Maintain leadership position in mobile market. Myanmar. Myanmar hit by high currency depreciation, while revenue in local currency is up by 2%. EBITDA decreased by 13% local currency year-on-year. Customer base declined to 8.3 million due to SIM card taxes. Maldives. I would say continue impressive performance during the year. Revenue is up by 5%, EBITDA also by 6%, customer base by almost 10% year-on-year. Palestine. Happy to mention that despite the decrease of 4% of revenue, EBITDA margin reached for the first time to 40%.
EBITDA also increased 2% mainly due to disciplined cost control. Last but not least, IOH is no longer being consolidated as they are treated as a joint venture. Nevertheless, the IOH performance has been excellent, with revenue up almost 10% and EBITDA up by 22% in local currency term. This is concluding the OpCo parts. Back to Andreas for Q&A.
Okay. Thank you very much, Abdullah. Before we start with the Q&A part, a few investor relations updates. We would like to request your support for the upcoming Institutional Investor magazine survey. We always appreciate your feedback. On this occasion, we especially appreciate your votes. You got the link on the slide there. We also have a few conferences coming up. We will be attending the Bank of America Emerging Markets conference in the U.S. on the 31st of May with our Group CFO. We are going to be in London at the HSBC Qatar Exchange Conference together with Aziz and Tarek. Group CEO and Group CFO will be there. I also would like to highlight to you that we uploaded some new documents onto our website. You can now enjoy a new refreshed Ooredoo at a glance presentation.
Not only a presentation, but a full video. That's quite helpful, especially for new investors. I encourage you to click on the link and check that out as well. Now we are ready for the Q&A part. As always, please raise your virtual hand, and we're gonna open up your microphone, or just type your question here in the Q&A section. If you're dialing in from the phone, you can also just dial star nine, and we can open up the audio line there. We got the first question here from Cecilia Lundberg. She's asking about the performance in Algeria. Will Ooredoo Algeria invest in the same way as in 2022? Maybe we can show our CapEx slide there.
If we go back to the previous CapEx slide and showing the changes there. That's slide number 12, and as we've mentioned before, there's been some heavy rollout of 4G in the previous year. Slide number 12, please. Oh, 12. 12 please. We get this. Sorry about that. Okay. Can we minimize the Q&A section? Yeah. Who wants to take the CapEx question on Algeria? Abdullah?
Actually, we just are working on a business case also to expand, or to build, 500 more sites.
Yes.
Yes, we are looking to spend or invest more in term of CapEx in Algeria.
Feel free to type any additional questions or raise your hand. We're gonna open up the line now for any raised questions from participants and stakeholders. The first question comes from Nishit Lakhotia from SICO. Nishit, if you could please unmute your microphone.
Yes. Thank you for the call, congratulations for the solid results in 1Q. I have couple of questions. First on the margins front, particularly in Kuwait and Iraq, I mean, both of those did very well in 1Q in terms of margins. For Kuwait, it looks like more came from cost controls. If you can guide us to how this margin will sustain over the next coming quarter, whether there is more cost control initiatives planned in Kuwait. While in Iraq, as far as I understand, the competition is very intense on the 4G side. How is the margin going to evolve again in the next coming...
in the next coming quarter, and whether this is sustainable, the 1Q margins. Second is on the Myanmar transaction. Given that the transaction value were decided in USD and the currency continues to deteriorate, what's the management's outlook regarding this particular transaction? Is there a high likelihood that this transaction may not go through? Is that risk increasing as the permission takes time or the valuations can change? Any feedback on that would be helpful.
Can we take the Myanmar question first, Mr. Aziz?
I'll take both and then maybe finance can complement on the margins. On the Myanmar transaction, the Myanmar transaction is currently on track. We're going through the different regulatory approvals in Myanmar. It's a lengthy process, especially that there's been the Water Festival, which delayed a few approvals. Further, prior to that, the state of emergency, which was supposed to be lifted at the end of February, was reinstated for another 12 to 18 months. We're confident, given our latest discussions with the different stakeholders, that it's a matter of when this transaction to happen.
Great. Then there was a question on the margins for Kuwait and Iraq.
Yeah.
Yes.
I'll make a comment in general, then I'll hand over. In general, we're implementing quite stringent cost controls across the group as a multi-year program. We anticipate margins to remain to sustain at the current levels or actually even improved. Just one comment on Iraq. Iraq's margins are very good. There is one variable which is usually out of our control, which is the cost of fuel. That is the main variable which is out of our control. The other parameters we are working on it. Iraq, I think also looking to make sure that we're improving on this.
Okay.
Well, Aziz, I think you have covered it all.
Great. Nishit, I hope that answers your question.
Yeah, that's fine. Thank you.
Yeah. We're gonna take another audio question. Abdullah Amin, if you could unmute your phone, please.
Hi. Can you hear me, please?
Yes, we can hear you.
Okay. I have two questions. Thanks for the call, congratulations on good set of results, I just want to ask two questions. In the Qatar market, you offer Roam Like Home, where certain postpaid customers can use their local data and call allowance abroad without any additional charges. I think this is continuing for the next two quarters. How do you think this will affect the revenues and the ARPUs? Second question is, how do you recognize IoT SIMs in your customer subscriber numbers? Is it including the subscriber base, or is it how much growth do you see in that going forward?
Sorry, the audio wasn't very clear. Could you just repeat the question on Qatar once more?
Both of them or the first was it?
Both, please.
Okay. In the Qatar market, you offer Roam Like Home with certain postpaid customers.
Okay. Got you.
Can use the local data and call around this abroad without any additional charges. With the roaming season to commence and extend for the next two quarters, how do you see an impact on the postpaid revenues in ARPU? Will you be looking to for-expand this offer to other markets as well? That's question number one. Number two, how do you recognize IoT SIMs in your custom subscriber numbers? Which include in the subscriber base, what is its current number of IoT SIMs, and it's contributing significantly to the subscriber base growth or no?
What kind of SIMs are you referring to?
IoT.
IoT. Internet of things. Got it. Sorry. Yeah. Thank you very much. The first question was with regards to Roam Like Home, which I understood is part of the new Qatarna+ and Shahry+, technically a good question for Abdul to...
Yes, I'm sure now we've been talking on behalf of Ooredoo Qatar there is a solid business case behind these promotions, and I would say this is a positive business case that would add value to the top line. This is to the first question. I wasn't sure about the second question.
Usually, IoT things are not recognized into a subscriber base. They're recognized into the B2B line of business.
Thank you.
Great.
Thank you. Thank you very much.
We're gonna open up the line for Ziad Itani from Aqraam. Ziad, if you could unmute, please.
Yes. Thank you, Andreas, and congratulations on strong result.
Yeah. Sorry. One moment. Let me just connect you again.
Yes. Can you hear me, Andreas?
Sorry. We heard the main thing. You congratulated us.
Yeah. Hopefully the strong performance will persist. Only a few questions from our end. First, on the Qatari market, it seems there's a bit of pressure on the prepaid segment, ARPU specifically. We've seen this with your competitor, also, I mean, we've seen your results. The supplementary schedule shows a almost 25% drop in ARPU year-on-year, sequentially, it's around a 20% drop as well. We're just wondering, what's the reason behind this drop? Is it short-term promotions? Do you think that we're gonna see also a recovery going forward, after these are done and dusted, basically? You think this might persist, the medium run? That's the first question.
Anyone wants to take it or I take it? No. The prepaid, the prepaid segment is the most competitive segment in the market. It's also usually linked to the transient workforce in Qatar. There's fluctuation into the market in terms of volumes and in terms of price. This is probably the most challenging part of the segment in Qatar. That being said, the postpaid segment, and especially the high-value segment, Ooredoo continues its growth and has a strong grip, and this is the biggest value contributor to Qatar.
In addition, also, this Hayya Card, the regulatory ask us to keep it valid beyond the 90 days. Therefore, it's more than 90 days. After mid of grow, the number of subscribers will go down there. This is a one-time impact.
Just for clarification, Hayya Card was a World Cup promotion.
Yes.
Okay. I mean, the subscriber numbers on the prepaid segment are still relatively strong, up 8% year-on-year. I mean, my main question is on the ARPU, specifically the monetization of these subscribers. Are there specific price promotions?
There are price promotions, but the biggest impact, promotion were the World Cup promotion, which are persisting beyond, as Eyas, highlighted, which, should erode starting February. You should see a recovery in the ARPU, hopefully, in the prepaid market as of Q2.
That's very clear. Thank you, Aziz. The second question, specifically on Myanmar, I understand the process might take some time, but, at least versus our numbers, Q1 was disappointing from a loss perspective. We've seen QAR 210 million in FX losses, and overall QAR 267 million in losses before taxes. How should we think about this OpCo if the transaction is delayed further? What's the typical run rate of losses that we can expect?
Two parts. Yes, the FX is a significant concern as devalued. This is putting pressure on Myanmar's operation. With the extension of the state of emergency, there was some partial internet bans in the country which dropped the revenue. Myanmar remains a significant concern. We're still managing the operations. I think the best way to qualify it is in an approach of keeps the lights on, minimizing as much as possible. Any funding to the operation actually is funded mostly out of its own cash generation. We are pushing extremely hard to close this transaction as quickly as possible.
Perfect. The last question is on power sales, and I understand you can't comment much on that front, but are you still looking to close a power deal or a power sale within the next few months, or are we facing any delays?
No, we're not facing any delays. We're proceeding. We're actually quite close to the end of the process right now. It's a complicated process, as you can imagine. We're talking about 22,000 spread out of six geographies with different competitive, but mainly regulatory environments. We're currently in the final round with a very limited number of bidders. Hopefully we will come up with something in the foreseeable future.
Perfect. That's very clear. Thank you.
On the topic of tower sales, we also got a typed question in the Q&A session from Ola El-Adamson, asking, "Are you gonna sell all the towers at once or separately in different markets?
We're looking to announce one holistic transaction, which will be closed separately market by market.
Thank you very much. Next question comes from Egypt, from EFG, Omar Maher. If I could ask you to unmute your connection.
Hello, Andreas. Thank you very much for the presentation, everyone, and congrats on the results. I just had a question on Oman, actually. I wanted to have a, you know, better understanding of, you know, the trend in revenue, which seems a little bit difficult to understand in light of the third player entering the market. If I'm looking at the numbers here, it was a bit strong in the third quarter last year, and then there was a, you know, visible drop at the end of the year in 4Q. Now it's back up again in the first quarter of the year. How does the like, the third player's impact fit into this?
It's a little bit difficult to understand. I mean, I get the seasonality that usually takes place in the fourth quarter. Maybe some of the device sales that affect the margins as well. On the revenue side, it's a little bit difficult to understand the trend. I also wanted to ask about the margin itself. This quarter, 47% EBITDA margin in Oman. Is this something that we should consider as the base for the margins going forward there?
We'll take the first question, one at a time. When we're looking at Oman's revenue, the first drop last year of Oman was actually the starting of the implementation of the wholesale agreement we have with Vodafone, which is the third anchor entrant in the country. Q4 there was a drop in revenue, which was due to deferred revenue adjustment of, if I remember, 24 or 25 million QAR.
That is, ... Huh?
Qatari rial.
Qatari rial. Yeah.
Not Omani, QAR. That's the reason of the drop in Q4. Q1 is adjusted for seasonality. It's business as usual. You should expect revenue as usual. We don't foresee any adjustments. What was the second question?
Thank you. The second one was actually on the EBITDA margin of the operation, given that it dropped to 47% this quarter. I mean, I know that the supply chain disruptions that were, you know, a little bit prevalent since COVID, are starting to normalize and that there isn't any more the issue of, you know, delays in supply of flagship handsets from the likes of Apple and Samsung. I'm guessing your typical seasonality should go back to 4Q because of the shorter delays in shipment arrivals. You know, my question is why is there a drop in EBITDA margin in the first quarter when this should be more felt in the fourth quarter rather than the first one?
How does the third operator's impact fit into this?
Well, I can summarize that. It's due to the cost of sales. If I'm not mistaken, there were a major sales of equipment during the first quarter that with a very low margin that impacted the cost of sales.
Thank you. Thank you, Abdulla. Is it because of the again, you know, a shift in seasonality in the device sales into the first quarter, or was there?
Equipment is on the B2B segment.
Okay. Not consumer.
We had a significant transaction with international oil player in Oman. This long-term contract comes with equipment. The margin on equipment is very low, a bit like devices actually. That is impacting the margin. Back to my previous comment to a previous question on the profitability of Kuwait and Iraq, that applies to Oman. We're putting in place currently this year a multi-year program on op efficiency, so we're hoping to maintain or improve our profitability across all our OpCos going forward.
All right. I hope that answers your question.
Thank you very much. That's very clear.
We're gonna move to HSBC. Maybe if I could ask you to unmute.
Yes. Hi. Thanks, Andreas. Two questions. The first question is on Iraq. As we can see that there is two important events which have happened there. Firstly, the currency is actually appreciating. Local currency has become stronger, 17% as per your own declaration there, and also the removal of 20% VAT. Wondering why is that not reflected in the year-on-year revenue growth trends from Iraq? I mean, local currency growth I'd understand, but why is that not reflected in the Qatari riyal terms? That's the first question. Secondly, on Tunisia, I can see the margins are down quite a lot. I understand your explanation around the 5 percentage points coming from the bad debt side of things, but even adjusting for that, margins are much lower. What is going on there? What...
How should we think about the margin outlook in Tunisia? Thirdly, a quick one on Myanmar. If the deal is so much in the final stages and we're just waiting for regulatory approvals, why is the operation not classified as held for sale or you know, whatever, discontinued, you know, whatever is the appropriate treatment? Those three, you know, and then if I have a follow-up, I will. Thank you.
Thank you very much.
What was the first question about Iraq?
There have been two changes in Iraq with regards to the effects. I think it happened later in the quarter, that's why I was not sure.
Exactly.
Do you want to comment on this one?
Yeah, I can comment on this one. Actually this has happened by the late of the quarter. I'm saying, this is by end of 2022. Let's not also forget that it's been offsetted by higher energy prices. This is where we can get the combination or we cannot see the full, let's say, impact of the currency uplift. I'm not sure what was the second question.
The second question was on the margins in Tunisia.
Yeah.
Oh.
actually for the currency, the change happened in middle of the quarter.
Yeah.
This year. Sorry.
Tunisia, there was a drop in EBITDA margin due to.
Bad debts.
bad debts. Mm-hmm.
Purely bad debts. It's purely bad, purely bad debt, plus a bit of economic deterioration. If you've been following, what is happening in Tunisia, the country or the government, general economic state is slightly deteriorating.
How should we think about the ongoing margin run rate? Is like 40% is the right number or 35% is the right number to look for moving forward?
For which operation?
Tunisia.
Tunisia. Tunisia, we're trying to anchor. Again, I'll say this comment. We're trying to anchor all our margins in each of our operations at the current level and actually improve them over the next year or two.
Mm-hmm. Thank you. Myanmar.
The last question. Yeah, the last question on Myanmar, why is it not classified as an asset for sale? That's due to the regulatory process. We need to get the regulatory approval first before we can change the classification there.
Okay, got it. Thank you.
Yep. I don't see any more hands raised at the moment. I'm just gonna check the typed Q&A part. There's a question here from Abdullah Hakami. How is the management currently looking at its current asset portfolio? Any optimization in the pipeline through divestment or M&A? If yes, what's the management plan for the collected cash from such transactions?
Well, I think in terms of portfolio optimization, we have our hands full currently with... We've touched on two out of three process. We have the disposal of Myanmar, we have the carve-out of towers, and also, slightly follow them in the middle of that process as well of data centers. I think in terms of M&A activity and transformational transactions, this is sort of the maximum we can do all at once by executing them properly and ensuring the best return for our shareholders. What we intend to do with the proceeds, let's close the transaction, get the proceeds, and then we determine, how to spend the proceed or actually I prefer how to invest the proceeds.
Excellent. Thank you very much, Aziz. I don't see any more questions at the moment. Again, if you have any questions, type them in the Q&A section or raise your hand there. Clarification about the accounting treatment of IOH.
IOH is no more consolidated. It's held, joint control, so it's equity.
This is the same accounting treatment since January 2022. Nothing has changed. The same accounting treatment within since January 2022.
No more a subsidiary. It's a JV.
There's a question coming in from Omar Maher from EFG. What is the QAR 93 million impairment loss on financial assets related to? Should we expect more impairments for Tunisia and/or Algeria in 2023? Pierre, do you want to take that one?
The main increase from last year is almost QAR 40 million-QAR 50 million. The main reason for this increase is coming from Tunisia, as we highlighted. We went more conservative on specific contract. We are still doing our efforts collected, but being conservative, we book this QAR 40 million in Tunisia. Nothing specific on Algeria.
Okay. It seems like... There's a follow-up question from Omar Maher on Tunisia again. Tunisia was QAR 103 million, then there's another QAR 93 million. What is that related to?
No. Yeah. There is two impairments. We have impairment at group level, which is QAR 100 million impairment on the goodwill, and the impairment on the financial assets, which has happened in Tunisia books, which is related to the receivables. Ninety-three, if they're consolidated, QAR 40 of the QAR 93 is related to Tunisia. It's not the full QAR 93 is for Tunisia. I'm saying the main increase is Tunisia, which has contributed QAR 40 million of the QAR 93. There is two different transactions. One, impairment of goodwill, and the provision for the receivables and for the consolidation, which is QAR 93. I hope it's clear.
Yep.
Just right. Very clear.
Okay. Omar just confirmed that's very clear. It looks like we covered all your questions, but if you have any follow-up, items or questions, feel free to reach out to the investor relations team. Again, I encourage you to check out our new Ooredoo advanced presentation on the website. Hopefully, we're gonna see you at one of the conferences in the U.S. or in London. Our next quarter results for the first half are tentatively scheduled for July the 30th, with the investor call tentatively on August 3rd. Thank you very much for joining this session.