Good afternoon, everyone. Welcome to Ooredoo Group's first financial results call for 2025, covering the three-month period ended 31 March. My name is Luelle Pillay, and I'm the Head of Investor Relations for the Group. I'm joined today by Aziz Aluthman Fakhroo , our Group CEO, who will open the session with an update on our strategic progress and a review of our consolidated results. Following that, Abdulla Al-Zaman, our Group CFO, will provide a deeper insight into the performance of our operations across the quarter. As always, we will keep the presentation concise to ensure we leave enough time for your questions at the end. Please feel free to submit your questions at any point using the Q&A function in the Zoom webinar. You can follow along with the presentation, which is available on both our website, ooredoo.com, and the webcast platform.
Please note that the session is being recorded and transcribed. By attending, you are giving your consent to being included. Lastly, I'd like to draw your attention to the disclaimer on slide two, and with that, I'll hand over to Aziz to begin the presentation.
Good afternoon, everyone, and thank you for joining us for our Q1 2025 investor call. Starting with a brief update on our strategic progress, we are advancing steadily across all our verticals. Starting this quarter, we are reporting results separately for our data center and fintech businesses, and I will cover those in more detail in the next slides. On towers, we are focused on completing the closing process across jurisdictions, with regulatory approvals being key to finalizing the consolidation. For our sea cable and fiber vertical, we contracted Alcatel Submarine Networks to build a high-capacity system connecting all GCC countries and beyond. Recent milestones in the quarter include securing Kuwait's first fig landing point through Sitra and finalizing a landing agreement with Iraq's ITPC.
This is the first time we're reporting figures in this way after our data center business entered a new chapter with the rebrand to Syntys, which is well-positioned to accelerate the region's digital transformation. We have 13 active data centers across Qatar, Tunisia, and Kuwait, and an additional data center in construction. In Q1, we have seen revenue at QAR 35.2 million and EBITDA at QAR 13.4 million. Nearly 65% of revenues in Qatar were driven by hyperscaler customers, underscoring our strong positioning in the segment. IT capacity increased by 25%, highlighting strong and growing demand for our data center services. In the quarter, Iron Mountain acquired a minority stake in Syntys, providing expertise to accelerate the company's growth. In the long term, we aim to deploy $1 billion of planned investment and scale our operation to 120 megawatts capacity.
Turning to our fintech vertical, we have generated over QAR 22 million of revenue, largely driven by international remittances. In our home market of Qatar, our most mature and established fintech market, we're performing well, and are processing over $6 billion worth of transactions and holding a market share of 20% in the international remittance. Looking at EBITDA, Qatar's profitability is being offset by losses in other markets, which are still in the build phase, mainly Oman. Our CapEx spend in the fintech vertical was just over QAR 16 million, reflecting our increased investment in our less mature fintech markets. These are currently in the build-up phase and are developing nicely. We are also progressing towards market entry in Tunisia, Iraq, and Kuwait. We have developed partnerships globally, including with household names such as Visa, PayPal, and Qatar National Bank.
Over the long term, we aim to increase our active user base to 3 million- 4 million. We will achieve this by scaling our fintech offering and leveraging existing telco customers, now adopting our services, while also exploring to expand into greenfield opportunities and new markets. We kicked off the year with a solid performance, sustaining operational momentum across our market. On a year-on-year basis, excluding the impact of our exit from Myanmar operation, revenue increased by 3% and EBITDA grew by 2%. EBITDA margin remained strong at 43%. Net profit increased by 5%. We also maintain a healthy balance sheet with a leverage ratio of 0.6 times. Turning to revenue, we delivered revenue of QAR 5.8 billion. Excluding the impact of the Myanmar exit, revenue grew by 3% on the back of strong operational growth in Iraq, Algeria, Tunisia, and Kuwait.
In Oman, we saw a high level of competition from peers in the market. Qatar was impacted by lower device sales, non-recurring revenue from the AFC tournament in Q1 of 2024, and a data center carve-out. In Maldives, there was elevated competition in the prepaid market, and macroeconomic pressure affected Palestine's performance. Turning to EBITDA, EBITDA reached QAR 2.5 billion for the quarter.
Excluding the impact of Myanmar's exit, we delivered a 2% EBITDA uplift. EBITDA margin was maintained at a solid 43%. Kuwait, Algeria, and Iraq increased their contribution towards the group profitability. EBITDA in Oman and Palestine was mainly affected by the softer top-line performance, while Qatar was impacted by non-recurring revenue from the AFC tournament in Q1 of 2024 and the data center carve-out, as mentioned earlier. On the net profit, we delivered a healthy growth for the first quarter of 5%, reaching just shy of QAR 1 billion.
It's important to highlight that net profit now reflects the initial impact of Pillar 2, amounting to QAR 59 million in line with the new global minimum tax requirement. On a normalized basis, net profit decreased by 4%, with Q1 2024 including foreign exchange effects from Myanmar's operation. Looking at CapEx, we continue to invest strategically for strong long-term returns. We deployed QAR 538 million of CapEx in the first quarter. The 41% increase was driven by higher investment in Iraq, Oman, Kuwait, Algeria, and Tunisia to enhance and expand our infrastructure. We added a CapEx by segment chart to the slide, and as you can see, the bulk of our investments continue to be focused on networks to strengthen our capacity and reliability to meet rising demand and support the ongoing digital transformation. The Group's free cash flow was a healthy QAR 2 billion.
The decrease of 8% was mainly due to accelerated CapEx spend on these projects. Excluding the impact of Myanmar exit, group customer base increased by 5%, bringing our total consolidated customer base to QAR 52 million. Including IOH, we recorded 147 million customers. We saw a slight decrease in our customer base across three markets. In Qatar, Q1 of 2024 included AFC tournament-related connections. In Oman, customer levels were impacted by a base cleanup, and in Tunisia, the customer base was impacted by new regulation and improved quality of acquisition.
Now let's discuss the strengths of our balance sheet. The chart shows that we have a healthy financial position with low debt levels. Our gearing is low at 0.6 times and below our board guidance. We maintain a strong liquidity of around QAR 5.5 billion, circa $1.5 billion equivalent in undrawn committed facility, mainly in USD at the group level.
Our debt profile is balanced with long-term maturity and minimal interest rate risk. Both S&P and Moody's affirm our investment-grade rating. Looking at how we are tracking against our four-year guidance, revenue grew by 3%, excluding the impact of the Myanmar exit, putting us on track to meet our guidance of QAR 2 billion-QAR 3 billion revenue uplift. Our EBITDA margin for the first quarter aligns closely with full-year 2025 guidance, highlighting our focus on driving efficiency and maintaining financial discipline. We spend just over QAR 530 million in CapEx and will continue to invest strategically, keeping us on course to meet our guidance range of QAR 4.5 billion-QAR 5 billion. To conclude, Ooredoo delivered solid results over the first quarter of the year, and we are well-positioned to continue our growth. We remain focused on executing our clear strategy and delivering value to our stakeholders.
On this note, I 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 operational performance for the first quarter of 2025. Starting with our home market, Qatar, the operation delivered a solid financial performance despite the competitive market condition. Revenue decreased by 4% due to lower device sales, the impact of the data center carve-out, and the non-recurring revenue from AFC tournament in Q1 2024. Normalizing for the AFC tournament and the data center carve-out impact, revenue decreased by 2%, and EBITDA remained flat year on year. Ongoing operational efficiency led to an improved EBITDA margin of one percentage point, reaching a strong 53%. Customers decreased by 3% to QAR 3 million due to the inclusion of AFC-related connections and the basis in Q1 2024. Moving to Kuwait, the operation continued to deliver a healthy performance across all metrics.
Revenue increased by 1%, driven by higher service revenue from voice, data, and digital revenue streams. EBITDA increased by 51% with an improved EBITDA margin of 34%, up by 11 percentage points. EBITDA growth was supported by higher service revenue and lower operating expenses. The first quarter of the prior year included one-off bad debt provision. Normalizing for this one-off provision, EBITDA increased by 13%. The customer base increased by 2% to 2.9 million. Turning to Oman operations, we continue to operate in a high-competitive market. Revenue decreased by 3%, mainly due to lower service revenue. Despite the ongoing market competition, Ooredoo Oman sustained mobile service revenue year on year. Pressure on the top line led to a 7% reduction in EBITDA, while the EBITDA margin was solid at 44%. The operation recorded 3 million customers on its network for the quarter.
We expected a new 5G initiative and expanded coverage to help stabilize performance in Oman during year 2025. In Iraq, Asiacell maintained a strong growth moment, driven by an expanding customer base and rising data demand. Revenue increased by a strong 8%. EBITDA grew by 5% with a solid EBITDA margin of 45%. The customer base grew by 9% to 19.7 million. In Algeria, we continue to see double-digit growth as the operation continued to build on a stronger progress made in the previous quarter. Performance was supported by strategic investment in network expansion and digital transformation. Both revenue and EBITDA increased by 12%, with a stable EBITDA margin at 42%. The customer base grew by 7% to 14.5 million.
Moving to Tunisia, in the first quarter after issuance of the 5G license, Ooredoo Tunisia launched its 5G product and services, responding to the strong market demand for 5G fixed wireless access. Revenue increased by 4% in local currency, supported by mobile and fixed segments. EBITDA increased by 1% in local currency as the top-line growth was offset by higher operating expenses. EBITDA margin stood at 39%, and the customer base reached 6.9 million by the end of the first quarter. In Maldives, the business maintained strong cost discipline. Revenue decreased by 1%, impacted by competition on the prepaid market. Operational efficiency contributed to EBITDA increase of 1%, with an EBITDA margin improvement of 1 percentage point to 55%. The customer base expanded by 5%, with the 5G network now reaching 80% of the population.
Moving to Palestine, I want to thank our in-country colleagues again for their ongoing efforts to keep customers connected. The team restored coverage across most densely populated areas in Gaza, increasing the number of active sites by over 50%. Our customer base grew by 6% and stood at 1.5 million customers. On a reported basis, revenue and EBITDA decreased by 3% and 4% respectively due to the impact of macroeconomic pressure. EBITDA margin stood at 38%. Finally, our joint venture, IOH, published their results for the first three months of 2025. The performance was impacted by increasing competition on the market. Revenue declined by 2%, and EBITDA was down by 1%, while EBITDA margin increased slightly by 0.5 percentage point to a solid 47%. This concludes the operational review. Back to Luelle. Thank you very much.
Thank you very much, Aziz and Abdulla. We have now reached the Q&A segment of today's call. Here's how you can participate. Please raise your virtual hand, and I will unmute your line when it comes to your turn. Alternatively, you can type your questions in the Q&A box if you prefer. If you're dialing in via phone line, please press star nine to ask a question. For the Q&A session, I'm joined by the senior leadership team. Together with Aziz and Abdulla, we have Iyas Assaf, our Deputy Group CFO, and Head of Strategy, René Werner . Our first question comes from Maddy Singh. We'll unmute your line shortly. Yeah, Maddy Singh from HSBC. Please go ahead, Maddie.
Yes, hi. Thanks for taking my questions. I have two questions. First is on the margins. In a couple of markets, margins have been quite volatile during the period. Like, if you look at the previous two, three quarters, specifically Iraq and Kuwait, if you could, you know, help us understand how should we think about the normalized run rate of margins in these markets? How should we, you know, think about the Q4 margin as well? Because that has been quite volatile in the past. If you could talk about that, that would be very helpful. The second question is on Iraq. Is there any update on the 5G process? I mean, you have a, I think, dispute between the regulator and the third operator. Is there any resolution in sight?
Is the 5G license for yourself dependent on such a resolution, or is it, would it be independent of that? Thank you.
Okay. If you want, I was just going to do some general comments. Maybe a couple of comments is Q4 generally has some seasonality towards it. When you look at Iraq in particular, Q1 this quarter, we had a bit of additional OPEX versus regular quarters due to a couple of things. One is especially the shutdown of Korek internet capacity. That shifted quite a lot of volume to our network, which is a positive, but we had to incur some additional OPEX to sustain the traffic flow, and to try to attract as many customers as we could to retain these customers. Also, we're trying to future-proof our network in the event of the launch of the third operator, Vodafone, with 5G.
This is why there's a bit of fluctuation in terms of the margin in Iraq, but I'll leave it to my finance colleagues for more details. Yeah, and from Kuwait, we had also one bad debt one-off in 2024, and as you know, in regards to that, there is about a 13% increase of the EBITDA margins. We are seeing or we are noticing a solid performance in Kuwait, so I don't see any concern on the EBITDA margin for Kuwait. In regard to Iraq update, in terms of the fourth operator in Iraq, I think we have shared the update as we had on the last event or on the last investment calls. We know that there have been awards of a license, and till that day, or till today, we do not have any inside information.
We know that they signed a joint agreement with Vodafone. With Vodafone, the public stance is a launch towards the end of this year. How feasible it is is still uncertain for us, but we're preparing, preparing all mitigation plan, especially given the importance of the Iraq market for us.
Thank you, Aziz and Abdulla. Our next question comes from Nishit Lakhotia from SICO Bank. Go ahead, Nishit.
Yes, thank you for the opportunity. I have a couple of questions. First, on the operations in general, in Qatar, we've, if you look at your competitor, they have been able to grow their revenues and all, and even if you remove the distortion of the data center carve-out, Qatar operations look relatively weaker than what your competitor is being doing. When do we see this thing stabilizing for Ooredoo in terms of we can see some growth in your home market? Secondly, also on the Maldives, we've seen that the operations were weaker than what your competitors have done in terms of growth. First is how, you know, how are you dealing with that competitive situation and how, is there an issue with upstreaming cash from Maldives?
Because it seems like the charges are quite steep to upstream dollars from Maldives. Yeah, are you facing any issues in that aspect? Maybe, yeah, just these two for now.
Maybe touching on Qatar versus our competitor, we try to segregate service revenue market share versus actually mobile market share. In terms of service revenue, where it's hard to segregate what it is, because we know there are wholesale numbers, etc., with extremely low margin. When we look at the mobile market share, we're actually quite stable with our competitor. The market in Qatar is barely growing, if not flat, and on this we're retaining our position. Also, we benefit, as a premium telecom operator, on quite a significant ARPU differential versus our competitor. It's natural, especially when you are in a position like us, where we have close to 70% market share, that there is some slight ARPU dilution for us and some slight ARPU accretion for the competitor.
I think this is where you'll see the difference, versus our competitor in Qatar. When it comes to the Maldives, there's been quite extreme competitive pressures there. Dhiraagu has been quite aggressive. What we prioritize is profitable market share versus absolute market share and EBITDA market share. This has always been the core for the last four years. Our focus is really focusing on EBITDA market share and profitable revenue versus absolute revenue. That's what's also been driving the constant growth in our bottom line, which I think is what matters to our shareholders. Coming to your last question, upstreaming of capital from the Maldives. Yes, upstreaming from the Maldives is quite costly at the current moment as the Maldives is facing some foreign currency issues.
Okay. Sorry, if I can just one more quick one. It's a long shot, but I just want to know, would you be open to sharing at what valuations have Iron Mountain taken stake in your data center spinoff? Because I assume they've not contributed in cash. They're bringing in their own expertise and they've got a stake into that for that. Anything you can share on that?
No, so actually, Iron Mountain valuation, Iron, Iron Mountain's investment is a cash investment. It's not a sweat equity or contribution in equity. They actually bought a stake. It's a two-stage, as you know, it's a two-stage deal. There's the entry point and for regulatory purposes. Now they're coming just in a ServC o, which manages the data centers, manages the commercialization, the design and build, but actually doesn't have a direct stake in the assets. We're trying to learn our lessons from the regulatory environment with the Tower Co. Trying to build a buffer into this. Once we get all the regulatory approvals for the roll-up of the assets, Iron Mountain has then the option to convert into the asset levels. If you look at the blended multiple, we're looking for both tranches. We're looking at mid to high 20s multiple.
Wonderful. Thank you so much.
Thank you, Nishit. We have a few typed questions. Our first question is from Rawan Shaker. Are we expecting a decline in free cash flow for the year 2025 due to increasing CapEx? Is the guided CapEx the new run rate going forward for FY 2026 and 2027?
In terms of guided CapEx, the guidance we gave at the beginning of the year is the same one we're sustaining right now. If you break up our CapEx into two buckets, you have the core telecom operation. What you're seeing is that our run rate CapEx is actually stable on the core telecom, and we're running at, I think, correct me if I'm wrong, 14% CapEx to sale ratio, something like four, between 13-16%. I'll let my colleagues correct me, but this is our main point of guidance. Despite having certain markets like Tunisia where we just launched 5G, which will drive a slight peak of CapEx for that market at the beginning, for the beginning of this year, the bulk of the additional CapEx is coming from our adjacencies.
As you know, we announced on the FIC cable and the buildup of our international connectivity with the on-the-seat cables. Most of the CapEx will be spent towards the end of 2025 and beginning of 2026. Also, on the data center side, we're building an additional data center as we speak. We're working on expansion of existing facilities because we're running at 99% occupancy, and this will have some CapEx, but just attributable to the data center business for which we actually raised the $500,000,000 on the facility around eight months ago.
Thank you, Aziz. I think you've touched a bit on the CapEx, but anonymous is asking how is, how is the remaining CapEx plan to be spent? How are you planning on financing the remaining QAR 4 billion-QAR 4.5 billion? Any plans for new bonds issuance?
I'm sorry, I didn't listen to.
Sorry.
Okay. Yes. In terms of financing, I think we are in a very good positioning and cash positioning. We already have made the financing at the beginning or late last year of $500 million. Our priority today and how we're going to spend the CapEx, I believe Aziz has mentioned that already. There is on our core and the rest of it, approximately, let's say $1.6 billion will be part of it in the data center and the rest of the expansion in terms of the sea cable and FinTech. This is covering, I hope, the questions.
Thank you, Abdulla. Our next question comes from Alexander Davey from Ashmore. Hi, thank you for the presentation. Two questions from me. Number one, can you talk a bit more about the consumer landscape in Qatar in terms of what you are seeing in customer growth? I'll ask the first part. The second one is, can you talk about competition in the Qatar market? You have spoken about targeting value market share. What is your strategy here?
In terms of Qatar, I think, and my colleagues in Qatar, we're seeing moderate growth versus other markets like Iraq, Nigeria, Tunisia, or even Kuwait where we're seeing double-digit growth, or in the case of Kuwait, we're seeing very high single-digit growth. Qatar, we're seeing very moderate growth in terms of the general market. We're seeing, I think, 1.1% or something like this in terms of general growth of the market. Of course, we're trying to capture the lion's share of the market. The positioning of Ooredoo has been to focus on the high-value customers. This has always been our positioning, and we're a clear leader in that market. We're also a premier provider in the B2B space and in the premium segment. That's our core positioning in Qatar, to be the premium quality provider of the market.
Thanks, Aziz. The next question comes from Pradyumna Mishra from HSBC. It's four questions. I'll ask them one by one. When do you expect to receive cash proceeds from Zain Group for asset equalization process related to the Tower JV? Earlier estimates were circa $500 million, but revised after IHS Kuwait transaction. Can you give any idea about the revised amount to be received?
For the Tower transaction, it's a bit like for those that have been following us for a while, it's a bit like the Myanmar closing of the transaction, which we kept pushing back, but we got done on time and we received the proceeds. This is the same thing. We're waiting for regulatory approvals. These are very lengthy processes in the jurisdictions we operate as, the core jurisdiction, which is Qatar, has never had a Tower transaction before. We would be the first Tower company with Zain, and therefore there's quite a few regulatory hurdles we're passing through. We're going through that process methodically. As soon as we're able to clear that process, we will then close Qatar and the subsequent markets, then after. In terms of the proceed waterfall, it hasn't changed. The waterfall itself hasn't changed.
Of course, the value and the equalization payments do value, because our network does not stand still. We're building additional capacity as our market grows, and therefore the equalization takes into account all the additional buildup.
Okay. On IOH, what are the key drivers behind weakness at IOH? Do you still expect the same synergies as guided earlier?
In terms of IOH, first, I think they had their call?
They had their call.
They had it. There's no restrictions. Okay. Just trying to make sure we're not talking in terms of disclosures. In terms of recurrent synergies, we've achieved around $400 million of run rate recurrent synergies, nearly a year and a half ahead of schedule. We were at the top range of our synergy benchmark and at the lower range in terms of timing. We're extremely happy. These synergies are not eroding or disappearing. What we are seeing is quite more aggressiveness in the market in terms of customer acquisition, which usually drives ARPU prices down and cost of acquisition up. This is what has been driving the softness for the last two quarters. We're starting to see some stabilization, and we're monitoring this very carefully.
I think you've touched on DC, but I'll ask the question. Can you give some idea about minority stake sale of data center unit to Iron Mountain? How much stake sold and valuation, et cetera?
I think I already answered that.
The CapEx guidance, DC expansion, we've already covered. From Nikhil Bhutani, I'd like to know why there's been a reduction in prepaid segment in terms of customer base in Qatar, given that Q1 2025 is usually associated with the tourist season.
Yes and no. It's usually associated with the tourist season. What we had last year in Q1 of 2024 was the AFC, the Arab Football Cup, which drew, which drove, as you can imagine, as it's tourist, it's mostly prepaid, growth in Q1, which we clearly know, we clearly explained in our numbers were part of the reasons why Q1 of this year was slightly weaker than last year. That being said, I think actually the AFC this year is in,
Arabic game, yes, is January 26th.
Yeah. It's next year.
Okay. From Moaid. Hi, team. Thanks for the presentation. My question is with respect to data center revenue growth. How does the growth look versus Q1 2024? Also going forward, how much revenue could grow in the medium term two to three years?
Look, this is the first time we're showing the standalone numbers, so I think you should take it as a benchmark. In terms of revenue growth, as a rule of thumb, right now we're really operating at close to, if not maximum capacity, we're at 99% utilization rate. There is very little room to grow without adding any additional capacity. We are working on plans to add some capacity during this year, especially in Qatar. To witness significant revenue growth, you first need to wait for usually what is a 18-24 month buildup period. We're currently working on plans to add some incremental capacity during this year and early next year so that we can fulfill the demand in the local market. We have the same problematic in Kuwait, by the way.
Thank you, Aziz. I think we've covered all the questions. I don't see any more questions. Okay. Since there are no further questions, I'd like to thank you for joining today's call. Ooredoo Group's next results release, which is our half-year results, will be expected at the end of July, early August. If you have any follow-up questions, please reach out to the investor relations team. Thank you once again for joining our call. We look forward to connecting with you soon. Thank you.