Good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vodafone Qatar conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the Star followed by the number one on your telephone keypad. Thank you. Bobby Sarkar at QNB Financial Services, you may begin your conference.
Okay. Thank you, Abby. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Vodafone Qatar's Q3 fiscal year 2022 results conference call. On this call from Vodafone Qatar management, we have Sheikh Hamad bin Abdullah Al Thani who is Vodafone Qatar's CEO, and Masroor Anjum, who is Vodafone Qatar's CFO. We will conduct this conference with management first reviewing the company's results followed by Q&A. I would like to turn the call over now to Pauline Abi Saab, who is the Head of Investor Relations at Vodafone Qatar. Thank you, Pauline. Please go ahead.
Thank you, Bobby. Good afternoon, everyone, and welcome to Vodafone Qatar Q2 2022 financial results call. The investor presentation is available as usual on our website, vodafone.qa. Please note the usual disclaimer on slide number 17. To begin, I now hand over to Sheikh Hamad bin Abdullah Al Thani, Vodafone Qatar CEO.
Thank you, Pauline, and thanks QNB for organizing this call. As-salamu alaykum, and welcome to everyone who are attending with us this afternoon. Would you please turn to the page titled Key Messages. It's number three in our pack. Alhamdulillah, our business performance is at the top compared to its peers regionally. We continued our growth momentum for the 19th consecutive quarter on year-over-year basis. Our total revenue growth reached a record of 24.7% on year-over-year basis, driven by both growth and fixed and mobile. Another pleasing record was the net profit growth of 66.9% on year-over-year basis, reaching to QAR 334 million for the last nine months. That is in comparison to QAR 200 million only for the same period of last year.
In addition to that, we are very pleased with the performance of the rest of the financial and operational KPIs. Almost all of them is beyond our initial forecast. The second point I want to touch on today is that we have continued to invest in all aspects of our network. We have added more than 70% in new radio network sites since 2017. In addition to that, we continue to expand our fiber footprint with the latest technologies in Doha and the rest, and the rest of the cities as well, as is going to be part of our main growth drivers in the future. We are committed to our customer to build a world-class converged networks that they can rely on. The third point I would like to highlight today is that our effort on diversification.
Over the years, we have made strategic investment on our internal capabilities to develop the new platforms as well as entered with partnerships with the world-leading technologies companies to provide best-in-class new services to our customers. In that regard, we believe that IoT and financial services solution are going to be of a great potential to our customers and businesses in Qatar, and we are aiming to be the leading company on our customers' digital transformation journey. Our recent launches is our latest launch of iPay, which is the mobile wallet, and we are one of the first licensed wallets in the country, are a signal on the direction that we are heading to.
The last point I wanted to mention is that the critical focus in the near future for us, as we are counting down to the world's biggest sports event in Qatar in the next couple of weeks. In the past few years, we have made significant investment to enhance our country's telecommunications infrastructure as well as cybersecurity readiness. I'm very happy and pleased with the performance that we have reached thus far, and we are sure that we will be able to handle or to provide our customers and visitors as well with the latest technology with the highest quality possible.
In addition to this, our enterprise segment is going to also be a driving force for our growth in the near future, and that's why we have been investing heavily in the platforms and services that we are sure going to satisfy the needs of the companies and organizations in Qatar that will help them to digitally transform and be ready for the future. With that said, I'm now going to hand over to Masroor to cover the detailed financial performance of the company.
Okay. Thank you, Hamad, and good afternoon, everyone. Let's start the financial review with key highlights on slide number five. The momentum that we saw in H1 is continuing with strong financial performance in Q3 as well. Total turnover is 24.7% higher year-on-year, led by service revenue growth and projects revenue that we discussed in the last few quarters. We have outperformed in all the revenue segments: prepaid, postpaid, enterprise, and also fixed IoT and managed services. Despite higher revenue, subscribers and significant expansion in our mobile and fixed network ahead of the World Cup preparations, OpEx intensity continues to decline with 1.5 percentage points improvement year-on-year. Higher service revenue and optimized cost enabled continuing growth and profitability.
EBITDA is QAR 79 million with an underlying margin of 45.3%, and these led us to report the net profit of QAR 334 million. These are our highest profitability levels. Lastly, as we expand our network, we continue to expand our subscriber base as well, with another 14.9% year-on-year growth in our mobility customers. Now moving to slide number six, our financial performance for the nine months period in comparison to the similar period last year. Total revenue growing by 24.7%, led by continued growth in service revenue of QAR 232 million or 14%. In addition to this, we also have the impact of higher projects revenue this year, as we have explained in the previous quarters. All our revenue segments have registered strong growth year-on-year, with subscriber base expansion being the key driver of this growth.
Looking at the expenses. Expenses increased by 26.5%, but this is primarily driven by growth in direct costs corresponding to growth in revenue and subscribers, especially the costs related to the projects. Looking at OpEx, the growth is mainly attributable to network expansion and its allied costs to cater for the requirements of the upcoming event. Still, it is notable that our OpEx intensity has declined by 1.5 percentage points to 25% compared to the similar period of last year. With strong growth in top line, our profitability has also increased with EBITDA growing by 22%, while net profit growing by 66.9%. Now moving to the next slide and looking at the financial performance of Q3 specifically.
Top line growth momentum continued during Q3, with total revenue increasing by 27%, strongly supported by growth in service revenue of 14.4%. It is worth mentioning here that in Q3 we have recorded double-digit growth across all our core service revenue segments. Project specific revenue recognized in Q3 amounts to QAR 65 million and is part of our non-service revenue. As explained during previous quarters, this revenue typically carries a margin of 10%-12%. Looking at the expenses, they have increased by 35%, again, mainly due to growth in direct cost corresponding to growth in revenues, especially the projects. Increase in OpEx reflects expansion in network footprint and growth in revenue and subscribers.
With that growth in top line, our profitability continues to grow, with EBITDA growing by 16% to reach QAR 288 million, while net profit growing by 78% to reach QAR 118 million. Turning to the next slide and taking a closer look at the service revenue. Postpaid continuing its growth momentum with 13.9% increase year-on-year. Subscriber growth being the key driver of this increase. However, the key highlight is the fact that with accelerating subscriber growth, our postpaid ARPU has been largely stable. Prepaid has also increased 8.7% year-on-year after declining continuously for seven years till 2021. Again, subscriber growth being the key driver of this increase. In Q3, prepaid revenue recovered after the seasonality impact due to Ramadan and school holidays during Q2.
Overall, total service revenue increased by 14.2% year-on-year, led by growth in all segments including mobility, fixed, managed services, IoT and wholesale. Now moving to the next slide and looking at the efficiency and profitability margin trends. In the first graph, we continue to improve our operational efficiencies, resulting in reduction in OpEx intensity to 25%. That's an improvement of 4 percentage points over the last three years. This reflects the continued success of our cost optimization program by creating efficiency initiatives across the organization, significantly optimizing costs while growing revenue. The next chart shows the growth of our EBITDA margin over the last few years on a comparison basis with the red trend line being the reported EBITDA margin and the gray trend line showing EBITDA margin excluding equipment, business and one-offs.
As explained in previous slides, higher service revenue enabled us to sustain 40%+ reported EBITDA margin. You can see a 0.9 percentage points re-decline in year-on-year, and that is due to higher mix of comparatively low margin projects revenue in the current year. EBITDA margin excluding equipment business, which is a true reflection of our core business, is at 45.3%, growing by another 1.9 percentage points year-on-year. The final graph shows the growth trend of our net profit margin, which has increased by 3.9 percentage points year-on-year to 15.4%. This represents, more than three times growth in our margin since 2018. Moving to the next slide, and looking at CapEx and return on capital employed.
CapEx for the period is QAR 465 million with an intensity of 21.4%. This was primarily focused on capacity expansion and coverage footprint enhancement ahead of the World Cup. CapEx intensity is high in the light of FIFA World Cup preparations. On a full year basis, we expect a CapEx intensity of 20%-23%. Over the last few years, our CapEx intensity has been higher than industry average. However, we have been successful in cautiously allocating CapEx into growth areas at the right time, bringing the best in technology for our customers while continuously controlling our expenses. As a result, we were able to register significant improvement in our return on capital employed, which has reached 8.7% during FY 2022.
That's an increase of roughly 6 percentage points since FY 2018. Now moving to the next slide and looking at cash flows and net debt. The first chart shows cash generated from operations, which grew 44% year-on-year in line with the growth in top line and profitability. Strong cash flow generation enabled us to keep the net debt stable over the last five years, despite significantly higher CapEx of around 21.7% and also consistent payment of dividends that was increased to 6% for the financial year 2021. This resulted in improvement of net debt to EBITDA ratio from 0.89 to 0.48 since 2018. We currently have a borrowing capacity arranged with the banks to avail financing up to 2.5 times of annualized EBITDA. Turning to the full income statement on slide number 11.
We have already covered the major year-on-year movements. You can see that both consumer and enterprise and other revenue segments have grown year-on-year. Earnings per share has also increased in line with the growth in net profit. As usual, the balance sheet, detailed statement of income, ARPU, and subscribers are included in the appendix. That concludes my review, Pauline. Thank you, everyone. Now back to Pauline.
Thank you, Masroor. We can move now to the Q&A session. Operator, can I ask you please to explain to the participants how to ask questions?
Absolutely. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the question and answer roster. Again, if you would like to ask a question, press star then the number one on your telephone keypad.
Hello, Abby. Hey, this is Bobby Sarkar. While we are waiting for other people to ask questions, maybe I can jump in with a couple of my own. Just looking at your CapEx intensity, it would be fair to say that you're gonna spend another QAR 200 million-QAR 250 million in the Q4. Could you know, let us know how that's gonna be deployed if possible, and then how we should think about CapEx intensity post the World Cup? On the topic of the World Cup, you know, we saw a significant increase in population on a month-on-month basis, you know, like roughly 300,000 people. You know, I...
It's not reflected a whole lot in terms of your subscriber additions during the quarter. Maybe you could talk a little bit about that and maybe give us a sense of how you think, you know, the event will, you know, impact Vodafone Qatar, the results in the Q4. Thank you so much.
Okay. Regarding your question number one, deployment of CapEx. Yes, we are gonna invest another roughly QAR 200 million in this quarter, and majority of this deployment will be completed within October or in the first couple of weeks of November. Regarding CapEx intensity for next year, we expect it to come down next year, more in line with the industry average. You can assume mid-teens, around 15, 16%. Coming to your second question regarding the impact of World Cup. It's a bit tricky question actually, because first of its kind in this country. We expect, as you've rightly mentioned, the population to grow. There are different estimates that the visitors will range between 1-1.5 million.
Our objective is to get our fair share from this, from these customers. From our side, our network is ready to accommodate these visitors. Our products are also ready, and we have made sure that we are well prepared to be part of this great event. Overall, for FY 2022, based on our forecast, we are expecting to reach a total revenue of QAR 3 billion, with incremental revenue from World Cup ranging between 2.5%-3.5% of our total revenue. This is still a forecast. That, on a positive note, shows that we have very strong underlying revenue run rates getting into FY 2023.
Okay. Thank you. That's great. Abby, can we open up the Q&A for outside callers, please? Thank you.
Absolutely. Your next question comes from the line of Zohaib Pervez from Al Rayan Investment. Your line is open.
Thank you, Masroor, and for the presentation. My question was regarding, you know, you mentioned that the project revenues were QAR 65 million for the quarter. Could you give us some sense of, you know, the project revenue. You know, what was the growth of this revenue? And was it, you know, equipment sales that led this QAR 65 million, or was it more of a recurring business? Could you give us some sense of that, please? Thank you.
Okay. We have been explaining this part in the previous calls as well. Basically we call these managed services projects, and they are basically divided into two parts. One is the build phase, which is mainly the delivery and installation of equipment, and then starts the managed services part. The projects that we won, we currently in this year were in the part of the build phase. We recognize the revenue, which is mainly related to the sale and installation of equipment, which carries a margin of 10%-12%. Getting into the next year, we expect some of these projects to start the managed services phase, over a period of medium to long term and giving us a stable revenue going forward.
Okay, thank you. Majority of it is basically equipment sales.
Yes. Yes.
Okay. Very good. The ICT business, how is that growing? What is the, I mean, I suppose you don't break that down in the presentation. Could you give us some idea of, you know, what is the growth rates there and what is leading that growth rates?
We definitely don't give that level of breakdown. The revenue, the growth that you're seeing in service revenue includes the traditional streams of the revenue and the non-service revenue is mainly the build phase of the managed services deals that we have backed this year.
Sounds good. Thank you.
Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from the line of Hisham Kabbani from ADIA. Your line is open.
Good afternoon, thanks for the presentation and congratulations on the good results. I just wanted to ask a couple of questions. First, on the depreciation. What I've noticed is over the last few quarters, your depreciation expense has been going down. I'd just like to understand what is happening on that front. Secondly, just on the dividends, last year I believe you increased your dividends and just wanted to get an idea for 2020, for 2022, how should we think about the dividends? Are you looking at sort of payout ratio? How should we as investors think about this? Thank you.
Okay. Regarding your question number one, depreciation. We have been mentioning in the last few quarters that as we were preparing for the World Cup, there were certain elements of our network that we modernized and that resulted in accelerated depreciation in certain assets. That was keeping our depreciation expense high. In this quarter, there is no net incremental accelerated depreciation that was booked. You can assume this is the true underlying depreciation expense for Vodafone Qatar. A part of the CapEx that we've incurred this year still is classified as CIP in our balance sheet, and that will move, will go live in the next quarter. It will grow from here. Regarding your question on dividends. Starting 2018, we are paying a consistent dividend of 5% in line with the approvals of the board of directors.
Last year, BOD approved increase in the dividend. There are certain factors that they consider, including the growth in net profits, reserves, and the requirements of the company to invest further. The decision for this year as well will be taken by the board in light of the profitability of this year.
Thank you.
There are no further questions at this time. Mr. Bobby Sarkar with QNB Financial Services, I turn the call back over to you.
Okay, thank you. If there are no further questions, we can end the call for today. I wanna thank Vodafone Qatar's management for taking the time to answer our questions, and we will pick this up again next quarter. Thank you all.
Thank you, Bobby. Thank you everyone for joining today's call. If you have further questions, feel free to contact the investor relations team. Thank you again for joining.