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Edited Transcript of ORDS.QA earnings conference call or presentation 30-Oct-19 11:00am GMT

Q3 2019 Ooredoo QPSC Earnings Call

Nov 5, 2019 (Thomson StreetEvents) -- Edited Transcript of Ooredoo QPSC earnings conference call or presentation Wednesday, October 30, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ajay Bahri

Ooredoo Q.P.S.C. - Group CFO

* Andreas Goldau

Ooredoo Q.P.S.C. - Head of IR

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Conference Call Participants

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* Dilya Ibragimova

Citigroup Inc, Research Division - VP

* Jonathan Milan

Al Waha Capital PJSC, Research Division - Analyst

* Nishit Lakhotia

Securities & Investment Company BSC, Research Division - Head of Research

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to Ooredoo Group's Q3 2019 Financial Results Investor Call Webcast. I now hand over to Andreas Goldau from Ooredoo Group. Sir, please go ahead.

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Andreas Goldau, Ooredoo Q.P.S.C. - Head of IR [2]

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(foreign language) Hello, and welcome to Ooredoo's financial results call. My name is Andreas Goldau from the Investor Relations team, and as part of today's discussion, I'm pleased to introduce Ajay Bahri, our group Chief Financial Officer; and Andrew Kvålseth, our Chief Operating Officer.

As always, we will start with an overview of the group results followed by a Q&A session. The presentation is available on our website at ooredoo.com as well as on the webcast. Please do note the usual disclaimer on Slide #2.

So to begin, I will now hand over to Ajay.

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [3]

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Thank you, Andreas, and thanks to everyone for joining today's call. First 9 months of 2019 showed good overall performance with net profit growing by 16% year-on-year. Revenue for the period was QAR 22 billion, lower by 3%, mainly due to reduction in handset sales and partly due to currency weakness in some markets. First 9 months of 2019 were characterized by network expansion, digital transformation and cost optimization across other operating companies.

In Tunisia, Myanmar and Algeria, we continued to roll out 4G network with positive impact on customer service levels. In our more mature markets, we maintained our 5G rollout with live commercial 5G available in Qatar and Kuwait and the successful test of 5G in Oman.

Our efficiency program continues to deliver good results across the group. The reported EBITDA margin increased -- benefits from the implementation of IFRS 16 accounting standard. Excluding this and certain one-off benefits last year from results of associates, the EBITDA margin improved by 1%.

During the period, we prioritized laying the foundation for sustained long-term growth for the future, leveraging our experience in digitalizations to offer our customers seamless user experience whilst developing end-to-end enterprise solutions.

Moving on to Slide #5, revenue and EBITDA. Group revenue for the first 9 months of 2019 was at QAR 22 billion, a slight decrease from QAR 22.5 billion last year. Year-to-date, revenue was mainly impacted by lower handset sales, the combination of currency depreciation and price competition in some of our regions. Quarter-on-quarter, we saw a 1% increase in revenue, which was supported by strong performances in Indonesia, Tunisia and Kuwait.

EBITDA increased 4% and 6%, respectively, for both the 9-month and the 3-month period ended 30th September 2019, compared to the same period last year. The growth was driven by an ongoing implementation of our efficiency program as well as the benefit from the implementation of the IFRS 16 accounting standard.

Moving on to the next slide, net profit. Net profit rose 16% during the first 9 months of 2019 compared to the same period in 2018 to QAR 1.3 billion. Growth was driven by improvements in operational performance and a more positive foreign exchange environment in 2019 compared to last year. Net profit showed good growth after excluding the impact of foreign exchange and certain one-off nonoperational benefit last year.

Slide #7, capital expenditure and free cash flow. CapEx was up 18% to QAR 3.4 billion, which is in line with our annual guidance. During the period, we accelerated our investments in 4G network in our market, supporting the recovery of performance. Capital expenditure represents an essential part of our strategy to deliver long-term growth by deploying the latest technologies in our markets. Free cash flow for the first 9 months of 2019 were lower by 14% impacted by the increased CapEx, which was in line with our expectations.

Next slide, please. Our customer base at the end of Q3 2019 was 116 million, 3% lower than the same period last year. The reduction was primarily a function of our new renewed strategy in Indonesia as explained in earlier quarter results, where we focused on reducing churn and attracting high-value customers.

Next slide, net debt. We continue to maintain a healthy and well-balanced debt profile. Net debt increased 18% to QAR 27 billion impacted by the implementation of the IFRS 16. Excluding the impact of IFRS 16, net debt decreased 5% maintaining, of course, of deleveraging. Our net debt-to-EBITDA ratio is at 2.1x and 1.8x without IFRS 16 impact, which is within our long-term guidance of being between 1.5 and 2.5x. Group debt remains primarily at corporate level in Qatar followed by Indonesia, and then a smaller percentage allocated to the other opcos. Debt at the opco level is kept primarily in local currency.

Next slide, performance summary and 2019 guidance. As you can see, our revenue performance for the first 9 months of 2019 is on the lower end of our guidance for the period. EBITDA adjusted for IFRS 16 would be down 5% and within our full year 2019 guidance range of minus 7% to minus 4%. We maintain a disciplined CapEx approach, a high-performing efficiency program and strict cost management.

Let's turn to Slide #12 for an operational review of our operating companies. Qatar. In our home market in Qatar, we lead on 5G adoption, and we continue to innovate in the consumer and enterprise segments. We demonstrated the power of our network in the International World Athletics Championship in Doha, offering smart stadium solutions at the event. We also premiered the world's first virtual store and online 360-degree retail experience.

Financially, revenue was down slightly due to reduced handset sales. Our EBITDA margin increased to 56% in the 9 months period 2019, up from 51% for the same period last year. EBITDA growth was supported by a favorable mix between service revenue and handset sales as well as IFRS 16 impact and improved efficiencies and cost optimization across the business. Sequentially, revenue and EBITDA was slightly down due to competitive dynamics and timing of certain operating expenses.

Let's move on to Slide 13. Our renewed strategy in Indonesia continues to deliver robust growth, with an 11% increase in revenue during the first 9 months of 2019 compared to the same period last year to QAR 4.8 billion. Higher revenues, coupled with careful cost optimization initiative, grew EBITDA for the 9-month period to QAR 2.1 billion, up 37% compared to the same period last year, including the IFRS 16 impact.

Indosat Ooredoo's customer base grew by 2 million on a quarter-on-quarter basis, supporting sequential growth in revenue and EBITDA. During the third quarter of the year, Indosat Ooredoo successfully negotiated the sale of 3,100 towers, with the potential value of approximately QAR 1.6 billion. The assets will be leased back for a 10-year period at attractive rates.

Next Slide #14, Iraq. In Iraq, despite strong price competition in the market quarter-on-quarter, we grew revenues and EBITDA supported by increased data revenue. The revenue for the 9-month period was flat at QAR 3.3 billion, whilst EBITDA declined to QAR 1.5 billion due to network expansion and leased circuit costs to support the data traffic growth.

Asiacell's customer base increased 6% to 14 million at the end of Q3 2019 compared to the same period last year. Discussions with the regulator are underway for the launch of 4G are showing in a new period of growth for the country. No official time line has yet been finalized.

Slide 15, Oman. On a year-to-date basis, Ooredoo Oman maintained its revenue whilst delivering EBITDA growth of 3% compared to the same period last year. Sequentially, we improved both revenue and EBITDA driven by strong demand of a fixed line offering, offsetting some of the weakness in the mobile market. Ooredoo Oman's customer base increased 2% to 3 million as a result of growth in all segments as we focus our efforts on differentiating ourselves through our digital capabilities and by offering exceptional customer service. Our efforts were recognized by the CX Middle East, which presented Ooredoo Oman the award of the best customer experience in Oman. Sequential quarter revenue increased, supported by fixed revenue in devices sales. As a result, EBITDA also grew sequentially.

Let's move to Slide 16, Kuwait. In Kuwait, we are seeing the signs of market stabilization, with the containment of value erosion in postpaid voice segment and the improvements in the data segment. EBITDA margin for the first 9 months of 2019 improved to 31%, up from 20% in the same period last year driven by a preferable product mix between handset sales and service revenues as well as improved market pricing. These factors also contributed to the 43% increase in EBITDA during the period despite the reduction in revenue during the 9-month period. Revenue was down due to handset sales, a low-margin business.

Ooredoo Kuwait's customer base increased to 2.6 million in the 9-month period, up by 13% from last year. Sequentially, quarterly revenue declined primarily due to lower handset sales, and EBITDA declined due to timing of certain operating expenses. We remain at the forefront of technology innovation in the country with the launch of 5G plans with handset bundles.

On Slide 17, for Algeria, you will see that the situation in Algeria continues to be challenging with difficult economic conditions and political instability as well as the devaluation of the Algerian dinar, a persistent price war and an overall shrinkage in the market. As a result, Ooredoo Algeria's revenue declined 10% during the first 9 months of 2019 compared to the same period last year. Sequentially, however, we grew both revenue and EBITDA in Q3 2019 compared to Q2 2019. Operationally, we maintained our mobile data leadership by providing the greatest 4G coverage in the country.

Next slide, please. Tunisia. Tunisia delivered another robust set of results despite challenging market conditions and currency depreciation. We grew EBITDA by 10% to QAR 523 million during the first 9 months of 2019 compared to the same period last year due to improved operational efficiencies, careful cost management and digitalization. Revenues increased 10% in local currency terms supported by a strong performance in data and fixed revenues as well as increasing contributions from digital service revenues. In Qatari riyal terms, revenues decreased 5% due to the 15% year-on-year depreciation of the Tunisian dinar. Our customer base grew 3% to 9 million, affirming our position as the #1 telecom player at customer market share supported by our excellent support and service. Sequentially, both revenue and EBITDA increased in Tunisia.

Slide 25, Myanmar. In Myanmar, we focused on our digital distribution strategy, growing our customer base 6% to 10 million at the end of 9 months 2019 compared to the same period last year. Our digital initiatives continues to gain traction with My Ooredoo application. Revenues were down for the 9-month period due to the increased competition from the entry of the fourth operator in the market and the 9% depreciation in the Myanmar kyat. EBITDA increased 30%, mainly due to positive impact from the implementation of the new accounting standard IFRS 16. Customer number stood at 10 million, 1 million lower than Q2. That is due to our focus on acquisition of high-quality customers rather than lower quality with high churn rates. Sequentially, revenue was stable and EBITDA improved due to cost efficiencies.

This concludes the presentation. I now hand you back to the IR team.

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Andreas Goldau, Ooredoo Q.P.S.C. - Head of IR [4]

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Thank you very much, Ajay. And now we are coming to the Q&A part. Questions can be asked over the phone or on the webcast. So if you type your question on the webcast, my colleague, Sara Al Sayed, who also happens to celebrate her birthday today, will readout the question. And [Goyum], can you please explain to the participants how to ask questions on the phone line?

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Questions and Answers

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Operator [1]

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(Operator Instructions) We already have a question from Dilya Ibragimova from Citi.

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Dilya Ibragimova, Citigroup Inc, Research Division - VP [2]

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I had a couple of questions, please. One is on Qatar. I'm just looking at the service revenue performance, and it seems like decline has accelerated in the third quarter driven what seems to be, like, mobile, especially prepaid. If you could comment what is happening on the market, is it just a seasonality, maybe Q3 was particularly weak with high outflow of people like macro level? Or is it the price competition that is driving pressure on service revenue? And also, what your expectations are going forward? And also, it seems like the impact of the negative -- the pressure on revenue had also had negative impact on underlying pre-IFRS 16 EBITDA, which declined around 5% year-on-year despite low device sales this quarter. So it seems like the service revenue pressure is being recycled into EBITDA. What actions do you plan going forward? Yes, if you could comment on Qatar performance, it would be great.

And second question is on Myanmar. Yes, it is, of course, encouraging to see the slight improvement in -- especially on the EBITDA line in the quarter, but overall, what is the strategy on this market that -- or maybe, how do you see yourself on this market going forward, like, in the longer term? Do you see these operations -- what will drive the opco onto the path to become free cash flow breakeven at some point? Or if you have visibility when that's likely, maybe you could offer us comment as well. And maybe there are other routes that the company may consider, for example, in-market consolidation or maybe even exit? Yes, if you could comment on what your long-term vision or what options are considered or available for this specific operation, that would be great.

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [3]

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Okay. Great. Thanks for the questions. As far as Qatar is concerned, quarter 3, you've seen the number of customers are down in quarter 3. That is -- seasonally, what happens is a lot of people go on leave during this period. And as a result of that, some of the prepaid customer lines get dormant and not counted as customers. And similarly, some usage, especially on the domestic side and international calls, goes down as a result of that. No other real dynamics, I would say, because you would see a similar trend in the overall market as well where the revenue has gone down.

Outlook for mobile, I think, is similar trends, nothing new in terms of competitive dynamics there. You did talk about the EBITDA margin there. And as some revenue growth comes back, I think that will have a positive impact to EBITDA. Q3 did have certain one-off expenses, which were more of a timing issue. So the decline should not be seen as a permanent decline in the EBITDA margin. It's just about the timing of certain promotional spending.

As far as Myanmar is concerned, of course, we are long-term investors, so we look at every market on a long-term basis. And in Myanmar, the dynamics, which has happened after the fourth player has come, has been negative for the overall market for all the 4 players. So I think as the pricing is stabilized there and the regulator is supportive of getting reasonable price levels and putting some price floors in place, that will help the overall industry there and as some stability comes into pricing levels and the growth is still there in the market as penetration levels are still not as high as the other countries in the region. So long term, we are hopeful about better performance going forward for Myanmar. We are open to options, which are strategic in nature depending on how things happen in the market. But as of now, the focus is to get our own company more efficient and get to a reasonable scale.

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Dilya Ibragimova, Citigroup Inc, Research Division - VP [4]

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And maybe just a follow-up the -- on your comment on Q3 performance, service revenue performance in Qatar. You do mention that Q3 is seasonally weaker, but looking at the year-on-year performance, is this year, Q3, was specifically maybe had higher outflow of people? Is that what you have seen and, which affected the whole of the market, so maybe just exceptional quarter?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [5]

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I think the general trend in the previous market has been a lower revenue trend starting more from the beginning of this year as certain local prices happen in certain commodities. And that has shown weakness in the prepaid market. The postpaid, on the other hand, we can see number of customers going up as well as the revenues. So it's partly offset by that, the prepaid market. If you look at the postpaid, you will see a positive growth there. So maybe if you look at the total market, maybe you should look at both of them together if you want to understand the mobile market dynamics, yes.

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Operator [6]

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(Operator Instructions) We have a question from Jonathan Milan from Waha Capital.

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Jonathan Milan, Al Waha Capital PJSC, Research Division - Analyst [7]

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Congratulations on a very good set of results. I have a few questions, if I may. First of all, on the Qatar operations, I understand that Q3 may be seasonably weak, but we've seen a downtrend in the blended ARPU as is pointed out by the presentation on Slide 25. And especially noting that Qatar has one of the highest ARPUs in the region, to say the least, rivaled only by the U.A.E. Where do you think this ARPUs can settle? And as a result, don't you think it will be extremely difficult to see an improvement in EBITDA over the next 2 or 3 years in Qatar? That is my first question.

My second question is on Indonesia. So the tower sale, will it be -- will they be bundling towers? So will they have more than 1 tower company, 1 telecom company per tower, in which case the leaseback rate would be even more attractive than if it's only Indosat that's leasing back the towers? That's how you generate economies of scale.

And my third question would be that now that the net debt-to-EBITDA pre-IFRS is -- it's below 2x, I believe. It's below 2x, which is quite good for a telecom company. And in terms of the debt profile, you only have QAR 700 million in payments next year, QAR 1 billion the year after. Would you consider increasing your dividends now that you brought your leverage to a far more acceptable level?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [8]

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Okay. Thank you the questions. I think the Qatar ARPU trends have declined. As you can see in the slide that I referred to, it's been a declining trend, which is not dissimilar to a lot of other markets where the industry is under pressure. A dynamic of that really is the voice usage and revenues declining faster than the growth of the data. Data pricing in most markets has been on the lower end as competitors try to grab market share based on data. So that dynamic is playing out to a lot of markets. So although the propensity to pay in all markets by the customers is high, I think the telecom industry hasn't settled the pricing levels for data at the right level.

Another dynamic there is as you roll out new technology like 4G, where the cost of data is cheaper, you can price data cheaper, but the usage growth sometimes is not offset by the increased usage and increased revenue to drive income as anticipated. So that dynamic is an industry issue. That's one of the reasons why you see a declining trend in ARPUs. Having said that, the EBITDA growth, again, I'm not talking only Qatar here, it has to come from cost efficiencies in the industry. The growth levels are very low for the industry. Our forecast, if you saw, was more of a decline in revenue, but that is also because of foreign exchange conversion rates in riyal terms. So a lot of growth in the EBITDA will come with the combination of revenue growth from nontraditional sources, which will be B2B digital and also cost efficiencies.

As far as Indonesia tower leaseback is concerned, these are towers, which we were owning ourselves, that has the combination of the towers where we were the only tenant and also towers where we had other tenants already there. The leaseback -- sale and leaseback process, the sales proceeds that we get upfront takes into account the tenants, which are already there. And similarly, the price of leaseback also takes that into account. So when the companies are buying...

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Jonathan Milan, Al Waha Capital PJSC, Research Division - Analyst [9]

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So the tenants would be more than 1...

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [10]

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Tenants are generally more than 1. On an average, it could be definitely more than 1. So the pricing takes that into account, the leaseback pricing and what you get upfront from the tower company takes that into account.

As far as net debt to EBITDA is concerned, you're right, the trends have been positive, excluding IFRS 16. Of course, IFRS 16, the accounting standard, from just an accounting perspective, increases the leverage. The dividend decisions are taken by the Board on an annual basis after looking at various factors, including debt, cash flow generation, future CapEx requirements, profitability for the period and expected growth in the outer years as well. So all these factors, including debt, will be considered in the dividend decisions by the Board. We don't give guidance on dividend. But I think once we get the results of the full year, you will hear more about it from us.

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Jonathan Milan, Al Waha Capital PJSC, Research Division - Analyst [11]

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Okay. Then may you reiterate the CapEx guidance, say, for next year. I mean there could be 5G in Qatar that could be big, but still. And again, with Indonesia selling these towers, you have enough cash to fund your CapEx for quite some time. Could you please reiterate guidance, CapEx guidance, for next year?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [12]

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For this year, the guidance was QAR 5.5 billion to QAR 6.5 billion. The next year guidance will be given after the full year results call. So I think you'll have to wait for that to happen. That's probably going to be sometime in the Feb...

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Andreas Goldau, Ooredoo Q.P.S.C. - Head of IR [13]

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Middle of February, end of February.

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [14]

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Yes. In the February [guidance].

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Jonathan Milan, Al Waha Capital PJSC, Research Division - Analyst [15]

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So would it be higher or lower? I mean I'm sure you can get a feeling of whether it's higher or lower?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [16]

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No. I think we'll only give guidance when we give the guidance. But I think I wouldn't want to preempt my guidance comment of February right now. But you correctly pointed out some dynamics, which will play into that, which is 5G in some markets, which is not there today. But at the same time, that means the 4G expansion will not happen in those months. There is a offset where 5G is rolled out. But I think the appropriate time for me to give the guidance would be in February.

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Operator [17]

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We have another question from Nishit Lakhotia from SICO.

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Nishit Lakhotia, Securities & Investment Company BSC, Research Division - Head of Research [18]

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Yes. I have a few questions that I may ask. First one is on the general and admin expenses for this quarter was a bit on the lower end, I believe, because of the cost optimization that's happening at the group level and the operations as well. But if you can just give some guidance as to whether we can expect further material improvement on this particular cost item on the G&A in the coming quarters? Or what should be the run rate? Should it be around QAR 1.4 billion or lower? Anything on that front would be helpful.

The second question I have is on Ooredoo Myanmar. The net finance cost, I see quite high this year versus last year. So any color on the debt at this level of entity? And is there -- I mean, is the leverage increasing? And I also understand that the group was also lent to Myanmar, so there's an intercompany loan given to this entity. So any color on that? And is the future CapEx being funded through leverage and how's the cash flow situation? Any color here would be helpful.

And third, on the competitive environment. In Kuwait, you mentioned a bit on the Kuwait slide in terms of, it continues to be very competitive, but there was a time when the handset-related competition had stabilized. So how is the environment now? Is it again going back to competition, both on the voice as well as handsets or it's not as competitive as what it was, say, in 3Q last year?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [19]

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Okay. Thanks for your question. As far as G&A costs are concerned, you do see that Q3, there is a decline. It's because of partly 2 things. One is a little bit of seasonality, this includes marketing spend as well, which moves seasonally a little bit, a little bit decline there, which may not be sustainable. But it also has cost optimization factored there and a one-off transaction in one of the opcos where certain provisions were reversed, and that piece will not repeat. So in a nutshell, I would say about 1/3 of this could be attributed to sustainable decrease. Some of the others are timing related, like marketing, and others are one-off coming in this quarter.

Myanmar, the funding to the Myanmar, to a large extent, is done through the group itself with the company financing arrangements. Local funding in terms of debt is very limited. So the impact of interest, if you see at the group level, gets nullified and the company's transactions are excluded. So you don't see that impact at a group level. The forecast, of course, is the company, as you can see from the EBITDA margin level, still needs funding to fund its CapEx program, especially when it comes to rolling out 4G network. So at least in the short term, it will lead the funding from the group. But the trending is for it to become sustainable so that the EBITDA it generates should fund its CapEx in the long run.

Competition in Kuwait, we did see some positive trends in the first half of the year, some stability in the market, which in postpaid and the voice segment is sustaining in Q3 as well. The new development in Kuwait is in the 5G side, as you are aware, and that can trigger more competitive dynamics. Some of those can be visible now but not to the level that we've seen earlier. However, we are hopeful that the stability will continue in the coming quarters as well. But we'll have to wait and see.

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Nishit Lakhotia, Securities & Investment Company BSC, Research Division - Head of Research [20]

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Okay. And Ajay one thing quick on the asset held for sale. It has gone up quite significantly this year. I mean relatively speaking, it's above QAR 300 million. So what exactly is this particular asset that Ooredoo is trying to sell?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [21]

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These are basically the towers in Indonesia, which once you'd make a decision to sell them, they get transferred to asset held for sale. So in quarter 4, we hope have this transaction will be closed. So once we close this -- the transaction, you can see -- you'll see that this asset held for sale will also grow after this.

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Operator [22]

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(Operator Instructions) We have another question from Dilya Ibragimova again from Citi.

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Dilya Ibragimova, Citigroup Inc, Research Division - VP [23]

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Just a quick follow-up, please. You've mentioned the one-off. I just want -- I was wondering whether there are any one-offs in Myanmar this quarter? One of the competitors, Telenor, has made reversal of the provisions related to the network rollout because the obligations have been met. I was just wondering whether you had similar thing happening in this quarter?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [24]

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So we don't have any one-off reversals during the quarter in Myanmar. We also have met other obligations for rollout, but we didn't have any reversals of provisions coming out of that.

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Operator [25]

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We have another question from Jonathan Milan from Waha Capital, again.

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Jonathan Milan, Al Waha Capital PJSC, Research Division - Analyst [26]

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Would you ever consider exiting one of these countries? I mean I understand a lot of progress has been done in all 10 countries in which you operate. But further consolidated business, would you consider exiting 1 or 2 or more of these countries if you are given a proper offer to focus more on certain key markets, especially since -- I mean, across these 10 countries, it does create a bit of noise, might be -- let you lose a bit of focus from some of the core markets? I mean would you consider that? That's one question.

And another question is on the ARPU in Indonesia. I mean we've seen a bit of a weakness in Q3, although year-on-year, it's still going up. But what do you think is the trend? What do you expect is the trend in terms of ARPU in Indonesia? Is it still extremely competitive, where there'll be a ceiling for the ARPU pretty soon? Or do you see -- still see some upside for ARPUs in Indonesia, which, so far, has done a fantastic job so far this year?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [27]

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Okay. As far as the first question is concerned about the exit, I think, as a management, we're not focused on exit of any market. Our focus is to make sure our operations are run efficiently and provide good returns for the shareholders. Having said that, we do look at in-market consolidation as an opportunity where it is available. But as far as exit is concerned, if an offer comes on the table, we'll have an obligation to look at it for the benefit of the shareholders. We don't have any such options right now. But these things will be really different on a hypothetical situation we get something here.

Indosat ARPU decline, it is a slight decline as you see. Part of that is because of the increased customer base as well during the quarter, about 2 million customers were added to the base, which are contributing in revenue only for part of the period. So part of the decline is as a result of the increase in customer base as well. Overall, we expect stability in this. The growth that you saw in ARPU is also a reflection of the cleanup of the customer base, which you will recall last -- from last 1 year, a large number of customers had to be cleaned up because of the SIM registration requirement. A lot of these customers were not getting much of ARPU. So they were just going out without taking revenue out. So part of the increase is a mathematical implication, but the other part, which is, for this quarter, is because of a turnaround in customer numbers, which has some impact on the average revenue per user.

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Jonathan Milan, Al Waha Capital PJSC, Research Division - Analyst [28]

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Okay. And any update on the fourth entrant in the Iraqi market? And how sizable can be the cost for renewing the mobile license in Iraq?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [29]

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I think the fourth entrant, no official feedback in recent times on that. That was something which was quite active some time back but not much update since then. The license renewal, of course, depends on the discussions with the government. We don't have an indication of that as of yet. And as and when there is certainty of that, it will be in public domain. But we are hopeful it will all be in reasonable terms because there are 3 operators in the market providing good service. And -- but some fee, license fee have implication on pricing for the customers as well. So we expect it to be reasonably priced.

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Operator [30]

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(Operator Instructions)

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Andreas Goldau, Ooredoo Q.P.S.C. - Head of IR [31]

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Okay, [Goyum]. It looks like there are no more questions. So just one announcement from Investor Relations at Ooredoo. We're going to attend the Qatar Exchange London roadshow next week on Thursday, and we still have some slots available on the day before, on Wednesday. So if you're interested in meeting with Ooredoo in London, contact the Investor Relations team here. I would like to thank you all for joining today's call. Please refer to the Ooredoo Investor Relations website for additional update or follow us on Twitter@ooredooIR and feel free to contact the Investor Relations team if you need any further information. We look forward to your future participation. Our next update is probably due sometime in the middle of February with the full year results. Meanwhile, thank you again for your continued interest in Ooredoo.

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Operator [32]

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Ladies and gentlemen, thank you all for your participation. You may now disconnect.