Good day and welcome to the Vodafone Qatar Quarter One 2022 call. Today's conference is being recorded. At this time, I would like to turn the conference over to Shahan Keushgerian. Please go ahead, sir.
Thank you very much. Hi. Hello, this is Shahan from QNBFS. I want to welcome everyone to Vodafone Qatar's First Quarter 2022 Results Conference Call. On this call, we have the company CFO, Masroor Anjum, and Diego Camberos, who is the Chief Operating Officer. I will now turn the call over to Pauline Saab, who is the Head of Investor Relations at Vodafone Qatar. Please go ahead, Pauline.
Thank you, Shahan. Good afternoon, everyone, and welcome to Vodafone Qatar Q1 2022 financial results call. Our investor presentation is available on our website, vodafone.qa. Please note the usual disclaimer on slide number two. To begin, I now hand over to Masroor Anjum, our Chief Financial Officer, to present the quarterly highlights and the financial review.
Thank you, Pauline. Thank you, Shahan, and thank you QNB for organizing this call. Hello and welcome to those of you who are listening in, and for those of you who are recording, hello and welcome later. If you go to the next slide, it's the key messages. I'll start by mentioning that our profitable growth has continued for the seventeenth consecutive quarter on a year-on-year basis. The growth in total revenue, coupled with our continued cost discipline, saw us record a 62.7% year-on-year increase in our net profit for the quarter. This is our highest recorded first quarter net profit. The second point I would like to touch on today is that we grew our revenue share year-on-year by 1.6 percentage points in FY2021.
We have closed the last year by capturing more than a quarter of the telecom market revenue for the first time in our history. It shows our strategy is working and our efforts for generating a more diversified and healthier revenue is paying off. The third point I want to highlight is that since 2017, we have focused on enhancing our coverage and capacity. On the radio access network, we grew our base stations by 50% over the years while also upgrading our existing sites with best-in-class 5G network infrastructure. Our investment for building a world-class infrastructure will enable us to provide seamless experience for the visitors and local communities during the World Cup event. On fixed, we continue to grow our network while focusing on providing the best home internet services in the market.
Lastly, I want to mention that we are aspiring to pioneer digitalization journeys of our individual customers as well as enterprise customers. Our dedicated efforts to provide seamless digital customer experiences are easing the life of our customers and transforming our business. As an example, with our digitally enhanced channels, our customers are becoming more and more inclined to self-serve themselves. We are receiving 30% less calls to our call center compared to two years ago, while the number of our customers significantly increased during the same time period. Our investments in digital capabilities and platforms will continue at a pace to respond to our customers' needs. I will now move to financial review slides with key highlights on slide number six.
We had a strong start to the new financial year with continued top-line growth, an increase of 25% driven by a 14.5% increase in service revenue, coupled with revenue from the projects as you have seen in the last quarter. Most importantly, we have year-on-year growth in all the segments, including prepaid, postpaid, enterprise, and fixed. Despite higher revenue, subscribers and significant expansion in mobile and fixed network, OpEx growth remained lower than service revenue growth. This is the benefit of our cost optimization initiatives. Revenue growth, coupled with focus on cost optimization, resulted in continuing growth in our profitability. EBITDA growing by 28.4%, reaching QAR 300 million at a margin of 41.2%, and net profit growing by 62.7% to reach QAR 107 million. We have also seen strong subscriber growth.
Our mobility subscribers grew 18.6% year-on-year, crossing two million customers for the first time. This is the function of strong population inflow during the quarter with highest ever reported number of people in the country. Now moving to slide number seven, our key financial performance metrics for the quarter compared to the similar period of last year. Total revenue grew by 24.8%, led by strong service revenue growth of 14.5% or QAR 77 million. As mentioned earlier, this is driven by growth across all revenue segments. Expenses increased by 22.4% year-on-year, mainly due to growth in direct costs corresponding to growth in revenues. Increase in OpEx is primarily driven by network expansion.
It is notable that growth in OpEx remained lower than the service revenue growth, resulting in OpEx intensity declining by 2.9 percentage points year-on-year to 23.3%. This is the benefit of our cost optimization initiatives. With increased service revenue and cost control, our EBITDA grew by 28.4% to QAR 301 million, translating into margin expansion of 1.2 percentage points year-on-year. Higher depreciation partially diluted the EBITDA gains flowing through to net profit, but nonetheless, net profit grew by 62.7% to reach QAR 107 million. Now, taking a closer look at service revenue on slide eight. Postpaid continuing its growth momentum, increasing by 13% year-on-year. This growth is primarily driven by higher subscribers. We continue to have good traction for our mid-value new plans.
At the same time, our unlimited plans are selling well, helping us to increase our penetration into the high-value segment. This enabled us to maintain our 20% postpaid. Prepaid has also increased 7% year-on-year, resulting from growth in the subscriber base. The quarterly decline in prepaid is mainly due to lower number of days in this quarter and the impact of Arab Cup during Q4. Overall, total service revenue increased 14.5% year-on-year, led by mobility and increasing contributions from fixed managed services and IoT. Now EBITDA margin on slide nine. The first bar chart on the left shows steady growth in our absolute EBITDA over the last five years. Our EBITDA has more than doubled during this period. This is the result of steady growth in our top line, coupled with the rationalization of our cost base.
Line graph to the right shows the growth of our EBITDA margin over the last few years, with gray trend line being the reported EBITDA margin excluding equipment business, while the red trend line showing the reported EBITDA margin. As explained in previous slides, higher service revenue enabled us to reach EBITDA margin of 41.2% with 1.2 percentage points year-on-year growth. A better growth is reflected in our EBITDA margin excluding equipment business, which is a true reflection of our core business at 47.3%, growing 4.2 percentage points year-on-year. Moving to net profit margins on slide number 10. Again, the bar chart on the left shows the growth trend of our net profit. Since FY2018, our profit has increased at a CAGR of 57%.
On year-on-year basis, net profit has increased by 63% to reach QAR 107 million. These results are reflected in net profit margin as well, which has increased by 3.4 percentage points since last year to reach 14.7%. Now, CapEx on slide number 11. CapEx for the quarter is QAR 110 million with an intensity of 15%. This was focused primarily on investment for capacity expansion and coverage footprint enhancement. As mentioned earlier, we have significantly expanded network, giving better coverage and also enhanced our digital capabilities for a superior customer experience. The CapEx is expected to remain high, specifically during next couple of quarters as we make our network and IT infrastructure ready for upcoming FIFA World Cup. Turning to full income statement. We have already covered major year-on-year movements.
Both consumer and enterprise and other revenue segments increased year-on-year. Increase in interconnection and other direct expenses is driven by growth in non-service revenue. Higher depreciation charge is a result of elevated CapEx incurred in prior year. The investment in fixed, 5G and growth in sites, coupled with accelerated depreciation following modernization of assets. As usual, the balance sheet, ARPU, subscribers and net debt is included in the appendix. Now, this concludes my review. Thank you. Now back to Pauline.
Thank you, Masroor. We can start now with the Q&A session. Operator, can you kindly explain to the participants how to ask questions?
Thank you. If you would like to ask a telephone question, please signal by pressing star one on your telephone keypad. That is the star or asterisks key followed by the number one to pose a question. Please ensure that your mute function is turned on.
Hi, this is Bobby Sarkar. Sorry, before we get started with outside Q&A, I would like to ask a question of my own, if I could, please. Just had a question on the projects revenue. I see that it's up nicely year-over-year, QAR 120 million. It was close to QAR 180 million in the fourth quarter of last year. This is a significant jump versus, you know, previous trend. Could you talk a little bit about that and how we as analysts should think about that going forward? Is this the new normal in terms of this revenue line? I know it's lumpy, but any color in that would be most appreciated. Thank you very much.
Thank you for the question, Bobby. We talked about this last quarter as well, so I'll give more flavor, a bit more flavor this time. Basically this project revenue is driven by projects in government and semi-government organizations, where we are able to integrate our core telecom services with equipment installation and managed services. Some of these projects can be divided into two parts. The first part relates to delivery and installation of equipment, which is a typically low margin business, and the second part relates to managed services, which carry slightly better margins. In case of large or multi-year contracts, we have also financed parts of the projects whereby revenue is received in cash over a period of time and interest is charged to the customers at prevailing market rates. Correspondingly, you will also see an increase in our long-term receivables as well.
Okay. Yeah, I just to follow up. Given that, is this the bump in this revenue? Is this because of the one-time installation revenue, or is this something that will persist in the future? Is this a level that we should consider as analysts in terms of our models?
I will not call it a one-off bump because as we continue to expand and diversify our business, we expect more and more of these projects to come. The bump that you see in this quarter and the last quarter definitely is the equipment and installation part, which I have explained earlier.
Okay, great. Thank you. Operator, can we open up for outside questions, please? Thanks.
Thank you. As a reminder, it is star one to queue for a question. We'll take our question from Ziad Itani of Arqaam Capital. Please go ahead. Your line is open.
Hi. Thank you for the presentation, and congratulations on strong results. Just a few questions from our end. You mentioned that population in Qatar is at a record high number, but when you look at the prepaid revenues, sequentially, it's down 2%. There is no recovery. What's the reason? I know year-on-year naturally there's a recovery, but sequentially there isn't. What's the reason behind that, specifically that the prepaid does not have any handset associated with it, so it's purely service revenues? What's your outlook on that segment? That's the first question.
Hello. This is Diego Camberos. The drop on prepaid revenue quarter on quarter is directly related to number of days on the quarter. That's it. The impact of the Arab Cup that we have a lot of inflow in the past quarter. Next, what is the outcome and what we expect coming forward? This is. We have been working in strategy to really stabilize and grow that part of the business, and you see this is the second quarter that we have grown. Now, it's hard to tell at this moment because these external factors are gonna be highly dependent. We're gonna be highly dependent on the external factors like more population, how many people are gonna come for FIFA, et cetera.
However, in our strategy, we're very concentrated on, first, as you've seen, improving our technology and our network on coverage and quality. All the simplification we have done in the market on prepaid and being very mindful also on the pricing. I think all those factors that are under control are helping on this stability. For the future, hard to tell according to what's gonna be happening with the market, with especially the FIFA World Cup.
Okay, perfect. That's very clear. The second question is looking at slide number 12. There's, as you mentioned, strong growth on the enterprise equipment and other revenues with government-associated projects. Are these also partially subject to industry fees? To royalties basically?
Yeah.
The 12.5% .
The equipment part is not subject to the industry fee. The managed services part, yes, is subject to the industry fee.
Okay, got it. Lastly, a question on depreciation. It seems that the depreciation specifically on property, plant, and equipment spiked 30% year-on-year and 20% sequentially. Was there any associated impairment? I know you mentioned accelerated depreciation. Was there a change in accounting methodology, for example, to the sum of the digits on specific data centers or, I mean, what's going on there?
There is no change in the methodology. Yes, we have higher depreciation, and this is basically as we are modernizing our network to provide high-quality services and cater for the demands of upcoming World Cup, there is a need to re-estimate useful lives of certain parts of our fixed assets. Based on that re-estimation, accelerated depreciation is charged to P&L in line with the requirements of IFRS. As the modernization process continues, you can expect as a normal part of our business actually.
Perfect. That's very clear. Thank you.
As a reminder, it's star one to queue for a question. We will take our next question from Ejayan Al-ahbabi of Al Rayan Investment. Please go ahead.
Thank you gentlemen for the presentation. This is Ejayan from Al Rayan Investment. Nearly all of my questions were answered. Just, what will be your CapEx requirements for 2021? Sorry, twenty-
I think we commented. Sorry. Yes, I covered that as part of. Yeah, can you hear me? Hello?
Yes, I can.
I covered that as part of my presentation as well. Our CapEx intensity for Q1 was around 15%. You can expect Q2 and Q3 specifically to be higher, in higher teens actually, during next couple of quarters as we continue to deliver on the requirements for the FIFA World Cup.
One other question. What is the reason for the decline on sequential basis for the ARPU?
Decline in ARPU is mainly the overall decline that you see is because of the increase in the mix of prepaid in the overall mobility base. However, prepaid ARPU has also declined quarter-on-quarter. As Diego explained, one of the factors is that we had Arab Cup in the last quarter, and that definitely impacted positively our ARPU and the revenue. We had lower number of days in this quarter as compared to the last quarter. Thirdly, the mix of low-value customers within prepaid base has also slightly increased. These three factors have impacted prepaid ARPU, but overall, postpaid and other ARPUs are stable from quarter-on-quarter.
Sounds good. Thank you.
As a quick reminder, please press star one to queue for a question. We will take our next question from Bijoy Joy of QIC. Please go ahead.
Hello. Hi. Thank you, gentlemen, for the call. My question is on the home broadband. Can you give us some idea as to how much of Qatar have you covered in terms of fixed fiber network?
Yes. At this moment, we're not not commenting on anything on broadband on our coverage yet. It's a business that we started and at this moment we're not giving that level of details yet.
Okay. At least if you can give us some idea as to how the growth prospects in that particular segment. How do you see the growth prospects, and how much is it as a percentage of the revenue?
As Diego mentioned, we definitely cannot give specifics as of now, but from growth perspective, I mean, fixed is a segment that we started getting into three, four years back, and still I think there is a lot of potential to grow in that area. We definitely cannot, at this point of time, go into specifics of our revenue and coverage for competitive reasons.
Perfect. No worries. Thanks. That's it from my side.
Thank you. At this time, we have not received any further telephone questions. I would like to now hand the conference back for any additional or closing remarks.
Pauline, yeah, you can go ahead now if you want.
Thank you, Shahan. Thank you everyone for joining today's call. We would like to inform you that we'll resume attending few roadshows in person. The details of the roadshows will be available later on our investor relations website under Calendar. Please also feel free to contact the investor relations team for further information or any other updates. Thank you for joining.
Okay. Yeah, we can conclude the call. I would like to thank Vodafone Qatar's management for giving us an update on the quarter, and we will pick this up again next quarter. Thank you.
This will conclude today's conference call. Thank you all for your participation. You may now disconnect.