Hello, and thank you for standing by. Welcome to Vodafone's conference call. Please note that this call is being recorded. You will have the opportunity to ask questions to the speakers later on during the Q&A session. If you would like to ask a question by that time, please press star followed by the number one on your telephone keypad. I will now turn the call over to Bobby Sarkar. Please go ahead.
Thank you, operator. Hi. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Vodafone Qatar's third quarter 2026 and nine months results conference call. On this call from Vodafone Qatar management, we have Sheikh Hamad bin Abdullah Al- Thani, who is the CEO of Vodafone Qatar, and Masroor Anjum, who is the CFO of Vodafone Qatar. As usual, we will conduct this conference with the management first reviewing the company's results, followed by a Q&A session. I would now like to turn the call over to Pauline Saab, who is the Head of Investor Relations at Vodafone Qatar. Pauline, please go ahead.
Thank you, Bobby, and good afternoon, everyone. Welcome to Vodafone Qatar Results conference call for the nine months ended September 30, 2026. Today, the presentation is available in the investor relations section of our website, vodafone.qa, with the usual disclaimer on slide number two. To begin, I will hand over to Sheikh Hamad bin Abdullah Al- Thani, our Chief Executive Officer, who will take you through the commercial and operational highlights for the quarter. Sheikh Hamad, please go ahead.
[Non-English content] everyone. Thanks, Pauline, and thanks to QNB for organizing the call. Good afternoon, all, and thank you for joining our investor call. Would you please turn to page four, titled Key Highlights. We are happy with our overall performance. We see, [Non-English content] all the planning and hard work during the past few years are paying off well now. We now have a state-of-the-art telecom infrastructure, both mobile and fixed, combined with the right innovative solutions, resulted into a noticeable increase in consideration and trust in both consumer and enterprise segments.
In fact, that is clearly reflected into our NPS leadership in the country when it comes to consumer segment and much improved enterprise NPS. Simply for us, increased consideration in NPS equals more customers. All of that, combined with the cost optimization and disciplined CapEx allocation, resulted into 8.1% year-on-year service revenue growth and approximately 24% on net profit growth on a year-to-year basis. As you will see in the CFO section, all the KPIs, [Non-English content] are all in the right direction.
Although we were very cautious in spending, especially on [CapEx] during the first few months of the year due to the geopolitical situation, we started in Q3 to accelerate selectively in our mobile and fixed rollouts [CapEx] We believe we are going to catch up nicely to approximately 90%-92% of the initial plan by December. That should make us ready for our growth plans in 2027. We mentioned earlier that we are in the middle of the biggest transformation plan in the company. We are now almost 60%-65% in completion.
Almost 70 projects are under this transformation program, many of which have been already delivered, and you already see the value in terms of savings, capabilities, and customer experience and satisfaction. We expect those projects, once implemented, to take us to an entirely new level. We have also established a TowerCo company. We are still in talk with the CRA and the other authorities for approval. We believe this step could unlock greater value for our asset infrastructure. Once approved, we are going to share with you in more details the model we are going to follow. However, we can share with you that we have already received few signals from some financial and investment institutions to register their interest to explore.
Last but not least, although that we see positive signs of going back to pre-geopolitical situation, business, we are still taking our business continuity seriously. For example, we have been receiving some requests or some information requests regarding the fiber that goes through Hormuz Strait and how it is going to impact us. We had planned this long back, and I can share with you that the traffic that goes through Hormuz is less than 25% of our total fiber capacity.
Our total fiber capacity is actually over-dimensioned to about two point five times. So even Hormuz is not significant for us. So without even Hormuz Strait, we are at two times our peak capacity. So we have managed, [Non-English content] to secure this, and this is only one example of how we treat our business continuity. We have so many other plans to ensure that business will still continue functioning the same, and we are helping the country during these situations. With that said, I am going to hand over to our CFO, Masroor Anjum, to take you over the financials. Thank you very much.
Yes. Thank you very much. Good afternoon, everyone, and thank you for joining us today. As we look at our performance through the third quarter of 2026, I am pleased to report that Vodafone Qatar has continued to deliver strong, sustained growth, building directly on the strong momentum we established during the last few years. What makes this performance particularly meaningful is the backdrop against which it was achieved.
Despite persistent geopolitical uncertainty, our business has proven not just stable but consistently expansive. Let me start with the key headlines for the period. Service revenue maintained robust growth of 8.1%, supported by sustained momentum across consumer and enterprise, while total revenue registered a growth of 4.7% year-on-year. Our structural cost optimization program continues to pay off. We further improved our operational efficiency, reducing OpEx intensity by 0.6 percentage points to 21.4% versus last year.
Sustained growth and rigorous cost discipline have together delivered an excellent profitability performance. EBITDA grew by 10.9% with a strong margin of 45%, and net profit surged by 23.7%. Lastly, our financial position remains robust. Underlying operating cash flow grew by 4.3% year-on-year, and we closed the quarter with QAR 821 million in cash and investments. These results are a clear demonstration of the strength, resilience, and long-term sustainability of our business. Turning to slide seven. As I mentioned in our last call, and as mentioned by Sheikh Hamad just now, our 2026 year-to-date results are impacted by certain temporary geopolitical and related supply chain challenges.
While these factors are still present, their year-on-year impact has narrowed steadily since the start of the conflict and the trend continues to move in the right direction. Importantly, even with these headwinds, Vodafone Qatar has continued to deliver resilient growth across all our key financial performance metrics. As conditions continue to normalize, we expect these impacts to ease further, providing additional boost to our performance going forward. Let's look at the year-on-year results. First, on top line performance.
Overall revenue grew by QAR 122 million, representing a solid 4.7% year-on-year increase. This growth was anchored by a strong 8.1% increase in our core service revenue, with both our mobility and non-mobility segments contributing positively. We will unpack the specific drivers behind this top-line expansion on the next slide. The equipment and other revenues, however, declined by QAR 56 million. As discussed earlier, this is entirely a reflection of temporary shipping and logistical constraints rather than any weakening in underlying customer demand. On a positive note, for Q3 alone, equipment revenue is up 22% year-on-year.
Now moving to our cost base. Total expenses are broadly stable, up just 0.2% year-on-year. Lower equipment costs largely offset higher revenue-related costs. Operating expenses, however, have increased by QAR 21 million or 4%. This reflects our continued network expansion, investment in growth initiatives, and resilience-related costs incurred to strengthen network redundancy during the period of regional disruption.
Importantly, OpEx intensity continued to improve, declining by 0.6 percentage points to 21.4% versus FY 2025. This demonstrates our ability to scale the business efficiently while continuing to invest in long-term growth. This combination of robust service revenue and tight cost control flow directly to our profitability. EBITDA increased by an impressive 10.9% year-on-year, crossing QAR 1.2 billion, and net profit surged by 23.7% year-on-year, reaching QAR 611 million. Now let's zoom into the key drivers of our service revenue growth on slide eight. Postpaid revenue continued its upward momentum, growing by 6% year-on-year, supported by 7.4% increase in postpaid subscriber base.
This reflects how our enhanced portfolio and continued focus on customer experience are driving both acquisition and retention. In the enterprise segment, however, competitive pricing pressure remains intense as we have highlighted consistently. Together, these factors resulted in 1.9% year-on-year decline in overall postpaid ARPU. Prepaid revenue remained broadly stable at QAR 480 million. As mentioned earlier, this year performance is affected by geopolitical developments, which reduced visitor and transit customer volumes, as well as inflows of new residents into the country. Together with normal summer seasonality, this led to a 1.2% year-on-year and 2% quarter-on-quarter decline in the customer base.
Prepaid ARPU declined by 3.2% year-on-year. This was mainly due to fewer visitor and transit customers who typically generate above-average ARPU. Looking ahead, we expect visitor activity and new to Qatar additions to recover as conditions stabilize, supporting a recovery in customer base while maintaining healthy ARPU levels. Wholesale managed services and fixed continued to deliver strong year-on-year growth of 16%, driven by two main factors. Number one, continued expansion of our fiber footprint, which supported further growth in our fixed customer base and higher fixed and broadband revenues.
Then strong wholesale growth with higher activity across both low and high margin services, reflecting resilience and diversification of our business. Overall, this segment remains the primary driver of service revenue growth for the company. Turning to the key ratios on slide number nine. This slide clearly demonstrates the continued structural improvement in our cost efficiency and profitability margins. Let's start with our OpEx intensity on the left-hand side, where we continue to see highly positive trend.
Despite the ongoing expansion of both our mobile and fixed networks, customer growth initiatives, and overall business scale-up, we have delivered notable efficiency gains. OpEx intensity reduced further to 21.4% this year. This represents an improvement of 0.8 percentage points and is a direct result of our disciplined cost management, tighter controls, and the compounding benefits of our cost optimization initiatives.
Moving to the EBITDA margin on the right-hand side, the trend is equally strong. Our underlying EBITDA margin, which strips out equipment and one-off impacts, improved to 49.5%, up from 48.6% in FY 2025. Equally important, our reported EBITDA margin also improved, rising to 45%, a stellar increase of 1.8 percentage points versus last year. Moving to capital expenditure on slide number 10. This slide highlights how we continue to strategically invest in the business while maintaining a razor-sharp focus on profitable growth and shareholder returns.
First, CapEx for the period stands at QAR 298 million, representing a CapEx intensity of 11%. Importantly, our investment remains tightly focused on areas that directly fuel long-term growth. This includes the expansion of our mobile and fixed infrastructure, proactive capacity enhancements, and ongoing technology modernization. We continue to apply a very strict capital allocation framework, ensuring every single investment decision is fully aligned with long-term value creation and sustainable profitability. The clear benefits of this approach are reflected in our profitability and returns on the right-hand side of the slide.
Our net profit margin increased to 22.6% this year, marking a significant expansion of 2.2 percentage points compared to last year. Similarly, our return on equity rose to 15.1%, up 1.5 percentage points over the same period. These metrics are a powerful proof point that our capital is being deployed efficiently, successfully turning strategic investments into superior shareholder returns. Now turning to cash flow and net debt on slide number 11. This slide shows the continued strength of our cash generation and balance sheet. Starting from the left, reported operating cash flow for the period was QAR 669 million , compared with QAR 679 million in the same period last year.
Excluding a one-off collection last year, underlying operating cash flow grew 4.3% year on year. This reflects strong collections and continued discipline in working capital management. On liquidity, as outlined in Q2, we have started deploying surplus cash into investment opportunities. Total cash and investments now stand at QAR 821 million . Supported by strong cash generation, net debt improved significantly year on year. On a reported basis, net debt was QAR 44 million at the end of the period, a 65% reduction compared with the last year.
Including investments of QAR 173 million , we are in an underlying net cash position of QAR 129 million . This deleveraging is also reflected in our reported net debt to equity ratio, which improved from 2.5% in September 2025 to 0.8% in September 2026, a reduction of 1.7 percentage points. Now turning to slide number 12. This slide provides a broader long-term perspective showcasing the five-year trend of our key financial performance indicators. It demonstrates a consistent compounding strength of Vodafone Qatar across revenue, EBITDA, and profitability. First, let's look at our top-line momentum. Service revenue has reached QAR 2.4 billion this year, representing an impressive CAGR of 6.3% over the last five years.
This steady upward climb reflects sustained growth across our core revenue streams and the continued expansion of our subscriber base. Similarly, total revenue has followed a strong, consistent trajectory, reaching QAR 2.7 billion over the same period, representing a solid CAGR of 5.6%. On profitability metrics, the compounding effect of our efficiency gains really become clear. EBITDA reached QAR 1.2 billion this year, reflecting a five-year CAGR of 8.5%, while net profit has surged over this five-year period, rising from QAR 324 million-QAR 611 million , representing an exceptional CAGR of 16.3%. Finally, turning to the summary income statement on slide number 13.
Looking at the summary income statement, and we've already talked about all the major variances year on year. Our EPS for the period stands at AED 14.5 , growing by 23.7% year on year, in line with the profitability growth. Turning now to our full-year guidance on slide number 14. With nine months of strong performance behind us and good visibility on our run rate going into the final quarter, we are in a position to upgrade our FY 2026 outlook. We are raising or narrowing guidance on three of our core metrics.
Let me start with revenue. As you have seen today, our core revenue streams continue to grow steadily. On that basis, we are upgrading our revenue guidance from mid-single digit growth to a range of 6%-8% year- on- year. That revenue growth, combined with our consistent cost discipline and a favorable revenue mix, continues to drive margin expansion. We are therefore raising our EBITDA margin guidance from above 43.5% to a range of 44%-45%. That is 80 basis points- 180 basis points above our underlying FY 2025 margin of 43.3%. This trend carries through to the bottom line. We are narrowing our net profit guidance from mid-teens growth to a range of 15%-17% year-over-year.
Finally, on CapEx, we are maintaining our CapEx intensity guidance at 14.5%-15.5%. Our investment program is on track with our network roadmap, and we continue to expand network capability within the same capital envelope. To summarize, these revised ranges reflect a business that is performing in line with our plan and ahead of it on several metrics. We are confident of delivering a strong close to FY 2026. This concludes my review. As usual, our balance sheet, complete statement of income, subscribers, and ARPU metrics are available for your review in the appendix of this presentation. Thank you very much for your time. With that, I will hand back to Pauline.
Thank you very much, Masroor. We will now move to the Q&A session. Operator, can you please explain to the participants how to ask questions?
Absolutely. Ladies and gentlemen, we will now begin the question- and- answer session. As a reminder, if you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, you can press star one again. We will pause for a moment to compile the Q&A roster. Our first question comes from the line of Yong Wei Lee with Al Rayan Investment. Please go ahead.
Thank you very much. This is Lee from Al Rayan Investment. Firstly, congratulations on your fantastic results and for continuing the trend as seen in the last couple of quarters. The first question I have pertains to the subscriber decline in the prepaid side versus the postpaid side. I notice the decline prepaid was by about 30,000. You explained that was due to foreign tourist arrivals. The increase in postpaid by 10,000, how many of that was due to a conversion from prepaid to postpaid? That is my first question.
The second question I have, not particularly just on this set of results, but if I just look at your past quarters, I noticed that 4Q 2025, there is a decline in depreciation from the trend, by about QAR 10 million. Then at the same time, amortization goes up by about QAR 35 million from the trend. I am just wondering if this will repeat itself for the fourth quarter this year. Is this a seasonality effect that we should expect? Thank you.
Yes. Thank you, Lee. I will leave the second question to Masroor. I am going to answer you the first one. It was part of our introduction to the investor call, but we decided to remove it at the end. We have been seeing a behavior in the market that we do not understand since February or March. We came into conclusion about June, July. I am not sure if he lost the signal. I see the screen is gone. Are you there?
Hello.
Hello, can you hear us?
Yes, I can hear you.
Yeah. Sorry about that. Yeah. I saw the screen gone. Okay. We have seen a behavior that we couldn't explain since February and March. We believe we arrived at a conclusion in July, where basically we found out that some distributors, who are actually partnered with operators, both operators, where usually they have a target. But in order for them to achieve those targets and receive their commission or incentive, they give SIM card pre-cost, preloaded, which is against the CRA regulation. We couldn't understand because this usually affects.
They can play it on both operators. It could affect the ARPU because it could be a decline, but if they fund it from their own money, the distributors, they will maintain the ARPU. However, there will be a big increase into subscriber. However, what we received from the market, they use those freebies, and they throw the SIM card away. Basically, it's not something that generates money or stick. It is not the business that we would like to be in as an industry.
We have already escalated this matter to the regulator about a month ago, and hopefully we arrive at something that benefits their distribution. Because we are after revenue, proper revenue. We are after profitable business. We don't do this stuff, and those distributors need to be controlled from both parties. Yeah. We are against this behavior, and I believe the regulator agrees with us, and we are in the process of solving this. Yeah. This is the answer to the first question. I hope I answered it correctly, and feel free to ask me further explanation. For now, I'm going to hand over to Masroor for the second question.
Okay. Regarding the depreciation and amortization, I think we have been highlighting since last year that we are in the process of a major technology transformation. Major IT stack modernization happening, which started last year. As some of these assets, both intangible and tangible side, they reach end of their useful life, or near their end of useful life, we take the accelerated depreciation. Which we have been highlighting consistently all through last year. For this year as well, there might be something in Q4 coming up, but all that is already dialed in to the net profit range that we have given, growth range, as part of the guidance. Nothing out of ordinary is expected in Q4.
Thank you. What about the trend in amortization, the jump in it? Because what you answered was on depreciation.
Sorry, which amortization?
In 4Q 2025, I see a big jump in amortization. Could you just confirm that that is—
Amortization of intangible assets, you mean to say?
Yes. I see an amortization jump in 4Q 2025. Does that trend also feed through for 4Q this year?
Yes, because amortization includes both tangible and intangible assets. Intangible assets, whenever we take an accelerated amortization, rather than calling it accelerated depreciation, you can call it accelerated amortization. Exactly the same reason.
Okay, great. Thank you.
Let me explain this one even further to you. One of our biggest projects is our IT stack modernization, the BSS OSS. This is in our industry is a very big transformation. Part of this, we are doing something, a parallel project, we call it detox. Our industry is very complex and sometimes the easy thing for the product manager is to continue build the products. They usually, after each three to five, four years, you find out that you have built 4,000 or 5,000 products. This actually makes your maintenance of those systems complicated, slows your movement to the market.
If you want to go fast to go to the market, it will take a long time. Testing will take time. We decided as part of the IT stack modernization for BSS OSS, is to do a detox, where we are trying to bring the 4,000 or 5,000 products down to less than 1,000, actually even less than 500. This is an ongoing project. Part of this is basically rewrite of some of those products. Those products have been developed and is being capitalized over a period of time.
This is a software, basically. So we try to clean it up and we go with simpler, easy to configure solution, which is going to give us much more cost-effective system to maintain later, save us more cost, and improve our maintenance cost in the future. So it is part of the investment of the ninety-seven project. So some of those costs relates to this directly or indirectly.
Sure. I presume that going forward, because of all these detox exercises, the depreciation amortization will be a little bit more stable going forward.
Yeah, definitely. Not only this, Lee, what we are doing now is creating governance even going forward. We are not going to allow any of the same things. By the way, it is not like a bad behavior. This is the industry. This is the way they handle it. But we are going to proactively create special new governance. It is not even benchmark, more restrictive in order for us for going forward later. So even later, in two, three, four years time, we will not find us do the same thing again.
Thank you. I just have one follow-on question. I am sorry if I am holding the line. You have mentioned about these increased CapEx you are doing in 3Q to make up for the 1Q, 2Q. In terms of equipment bringing in, has that affected in terms of bringing in what you need and in terms of paying for higher logistic costs?
Can you repeat? Sorry, I couldn't understand you there.
I'm just saying that you've increased CapEx in 3Q to make up for 1Q and 2Q. Have you had difficulty bringing the equipment you need, and has there been higher cost due to logistics, increase in logistics cost?
No, nothing as of now. To be honest, most of the products, most of the equipment we need is actually in our warehouse. We are all set, and we manage our supply chain well, and everything is manageable, let's say.
Perfect. Thank you.
Thank you.
And once again, if you have any further questions, please press star, followed by the number one on your telephone keypad. We have no further questions. I would like to hand the call back over to the Vodafone management team for closing remarks.
Thank you all for joining today's call. We will keep you informed on all our upcoming investor calls. In the meantime, if you have any follow-up questions, please feel free to reach out to our investor relations team. Thank you.
Thanks, everyone.
That's all for today. Have a great day.