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

Q2 2019 Ooredoo QPSC Earnings Call

Aug 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Ooredoo QPSC earnings conference call or presentation Tuesday, July 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

* Sara Al Sayed

Ooredoo Q.P.S.C. - Investor Relation

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Conference Call Participants

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* Dalal Darwich

Arqaam Capital Research Offshore S.A.L. - Research Analyst

* Dilya Ibragimova

Citigroup Inc, Research Division - VP

* Herve Drouet

HSBC, Research Division - Head of EEMEA Telecoms, Media and Technologies Equity Research

* Nishit Lakhotia

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

* Omar Maher

EFG Hermes Holding S.A.E., Research Division - VP of Telecom

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to Ooredoo Group First Half 2019 Financial Results Investor Call and Webcast. I now hand over to your host, Ms. Sara Al Sayed. Madam, please go ahead.

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Sara Al Sayed, Ooredoo Q.P.S.C. - Investor Relation [2]

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Thank you. (foreign language) Hello and welcome to Ooredoo's financial results call. My name is Sara Al Sayed from the Investor Relations team. As part of today's discussion, I am pleased to introduce Ajay Bahri, our Group Chief Financial Officer. We start with an overview of the group results followed by Q&A session. The presentation is available on our website, ooredoo.com as well as the webcast.

Please 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, Sara. And good day to everyone for joining the call today. Thank you, everyone. I will start with the slide pack, Slide #4. During the first half of 2019, we made good progress with our digital transformation program, investing in our network and driving efficiencies across the business. Financially, the industry-wide shift from voice to data services, along with macroeconomic instability, and currency weaknesses in some of our markets played especially on our group performance. And revenues were down 4% to QAR 14.5 billion in H1 2019, compared to the same period last year. Meanwhile, EBITDA grew 2% to QAR 6.3 billion during the first half of 2019, corresponding to an EBITDA margin of 44% compared to 41% for the same period last year. The increase was supported by a positive impact from the adoption of IFRS 16 accounting standard. The favorable FX environment for some of our emerging markets helped drive an increase in the net profit by 22% compared to the same period last year to reach QAR 841 million during the first half of 2019.

Our data played an increasingly crucial role in our industry, so have the need to monetize its usage. With that, I am pleased to share that data revenues now accounted for 52% of our overall group revenues amounting to QAR 7.5 billion for the first half of 2019. We maintained our lead in 5G adoption with the launch of commercial 5G in Kuwait, and demonstrated our 5G capabilities in Qatar at 2019 Emir Cup final, where we achieved data speeds of up to 1.2 gigabits per second on a 5G handset.

Let's move to Slide #5. Revenue and EBITDA. Group revenue for H1 2019 was QAR 14.5 billion, down 4% compared to the same period last year. The reduction in revenues was driven by a combination of currency depreciation, macroeconomic instability, changing product mix as well as intensified competition in some of our regions.

Geographically, we witnessed declines in Qatar, Kuwait, Algeria and Myanmar, which was partially offset by growth in Indonesia. Ooredoo Tunisia grew in local currency terms, but down in riyal terms. The positive momentum in Indonesia continued as our strategy to adapt to new market dynamics following SIM registration issues, begins to produce results. Group EBITDA was up 2% to QAR 6.4 billion as a result of favorable product mix, cost-saving initiatives and the positive impact from the implementation of IFRS 16.

Moving on to the next slide. Net profit rose 22% compared to the same period last year, driven by improvement in EBITDA and supported by net gains in foreign exchange, which helped offset a negative IFRS 16 impact on net profit. The year-on-year comparisons were positively impacted due to the net foreign exchange loss of $150 million in H1 2018 versus a gain of QAR 46 million in 2019.

Next slide, please. Let's look at capital expenditure and free cash flows. CapEx was up 29% to QAR 2.2 billion, representing our commitment to delivering the highest quality of coverage in our markets we operate in, as well as our mission to deploy the latest technologies and standard in connectivity. Our investments have positioned the company for future growth, mainly 5G and 4G deployment and digitalization across our key markets. Furthermore, our global sourcing strategy enabled us to optimize CapEx by taking advantage of the group's scale.

Free cash flow declined 8% to QAR 3 billion and higher CapEx was partly offset by higher EBITDA.

Next slide, please. Our customer base increased in all of our operating companies with the exception of Algeria and Indonesia. In Indonesia, as we reported earlier, the decline nature when compared to the same period last year was due to the cleanup of our customer base post the introduction of the new SIM regulation. However, on a quarter-on-quarter basis, Indosat Ooredoo added 3 million new customers in Q2 2019 as a result of the new commercial strategy.

Moving on to the next slide, net debt. We continued to maintain healthy and well-balanced debt profile. Net debt increased 12% to QAR 27.6 billion, impacted by the implementation of the IFRS 16 standard. Excluding the IFRS 16 impact, the net debt would have been QAR 22.9 billion, a reduction of 7% year-on-year. Our net debt-to-EBITDA ratio is at 2.2%. Without IFRS 16, it would be 1.9%, which is within our long-term guidance of between 1.5x to 2.5x.

Group debt remains mainly at a corporate level, largely in Qatar followed by Indonesia and then a smaller percentage allocated to the other opcos. As a reminder, debt at the opco level is kept primarily in local currency.

Moving on to the next slide, Slide #10. As you can see, our H1 2019 revenue narrowly missed our full year guidance range of minus 3% to 0%. This is due to a shift towards a more favorable product mix in some of the markets where we sold fewer handsets. EBITDA growth stood at 2%. Adjusted for IFRS 16 benefit, it would be down 6% and within our full year guidance range of minus 7% to minus 4%. We maintained a disciplined CapEx approach, a high-performing efficiency program and strict cost management.

Please turn to Slide 12 for an operational overview of our operating companies. Slide 12 is Qatar. In our home market, Qatar, we maintained our #1 position, supported by our leading network infrastructure, which is ranked amongst the fastest globally. We continue to lead the global race to provide 5G services with around 100 5G sites live across the country. We demonstrated our 5G capabilities at the Emir Cup final, where we achieved data speeds of up to 1.2 Gbps on 5G handsets and delivered more than 6 terabytes of mobile traffic during the event.

Financially, revenue was down slightly due to reduced handset sales and transit revenue decreased as well as local interconnect revenue decreased. Our EBITDA margin increased to 57% later in 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 improved efficiencies and cost optimizations across the business. Sequentially, revenue, EBITDA and EBITDA margin remained flat.

Let's move to Slide 13, Indonesia. With a new strategy to transform Indosat Ooredoo's operations in the wake of the SIM card registration regulation, we continue to see growth accelerating. We're pleased to report revenue grew to QAR 3.2 billion in H1 2019, an increase of 8% compared to the same period last year. In local currency terms, the revenue growth was 11%. EBITDA grew faster than revenue to reach QAR 1.3 billion, an increase of 24% compared to the same period last year, reflecting the ongoing success of our cost optimization initiatives and the positive impact of revenue growth.

Indosat Ooredoo continues to execute on its strategy to enhance customer experience with improved customer loyalty and lower churn rates. On a quarter-on-quarter basis, Indosat Ooredoo added 3 million new subscribers in quarter 2, 2019. A clear indication that the market continues to respond well to our new strategy. This was also reflected in increased revenue and EBITDA compared to Q1 2019. Operationally, we expanded further our 4G+ network.

Next slide, please, Iraq. Due to increased price competition in Iraq, revenues were flat at QAR 2.2 billion, whilst EBITDA decreased 9% due to increased spending on sales and marketing during the quarter, and data and fiber network costs related to higher data revenue growth. Asiacell is making good progress with its network upgrades and expansion to increase its reach and capacity as target is to reach full 3G coverage in Iraq. As a result, the customer base increased 6% to 13.9 million in H1 2019, compared with H1 2018, sequentially revenue, EBITDA and margin improved.

Moving on to Slide 15, Oman. Ooredoo Oman continues to report robust financial results, business was driven by an increase in fixed line revenue, which partially offset declines in mobile revenue. EBITDA grew 3% to QAR 733 million due to the positive impact from the implementation of IFRS 16. Ooredoo Oman customer base increased 5% to 3.1 million, a result of growth in the prepaid segment. Our New Shababiah, all in one digital prepaid service and our New Shahry digital postpaid product continues to receive a positive reception from our customers. This quarter, we also launched new features in Ooredoo Oman's app through its artificial intelligence-powered chatbot. Quarter-on-quarter, revenue increased by 2%, while EBITDA remained flat due to timing of marketing spend.

Let's move to Slide 16, Kuwait. Year-on-year, revenue declined by 12% due to lower handset sales. We reported significant EBITDA growth of 47% to QAR 432 million, margin improvement from 19% to 32%. EBITDA margin growth was driven by lower handset sales, a positive IFRS 16 impact as well as improved efficiencies and cost optimizations across the business. Ooredoo Kuwait customer base increased 2.5 million in H1 2019, up by 6% compared to H1 2018. We remain at the forefront of technology in the country with the launch of commercial 5G. Kuwait is now the second market in our group, which offers a commercial first solution network. Quarter-on-quarter revenue, EBITDA and margins increased.

On Slide 17, Algeria. You will see that the situation in Algeria continues to be challenging, with difficult economic conditions and politically -- political instability as well as the devaluation of the Algerian dinar, persistent price war and overall shrinkage in the market size. As a result, the Algeria's total revenue in local currency declined 7% year-on-year. Operationally we maintained our mobile data leadership by providing the greatest 4G coverage in the country, reaching 58% of the population in all 48 wilayas, enabling us to more than double our data traffic on a year-on-year basis. In the absence of improvement in the economic and competitive market conditions and partly due to seasonality, the performance of Q2 continued to be negatively impacted. EBITDA was also impacted by one-off marketing costs in quarter 2.

Slide 18, Tunisia. Tunisia has delivered another robust set of results. Despite challenging market conditions and currency depreciation, we grew EBITDA by 10% to QAR 321 million due to improving operational efficiencies, careful cost management and positive impact of implementing IFRS 16. Revenues increased 9% in local currency terms. However, in Qatari riyal terms, revenues decreased 11% to QAR 689 million, due to 18% year-on-year depreciation of the Tunisian dinar. Our customer base grew 5% to 8.8 million, affirming our position as the #1 telecom player by customer market share, supported by our excellent support and service. Consequently, we were recognized for providing the best customer service in Tunisia.

Moving on to Slide 19, Myanmar. In Myanmar, we continued to face stiff competition from the fourth operator. Despite this, our customer base increased 19% to 11.1 million. In local currency terms, revenues were down 14%. However, due to depreciation in the Myanmar kyat, the Qatari Riyal terms revenue decline was 24% to QAR 535 million. EBITDA increased 3% to QAR 134 million, mainly due to the impact of the IFRS 16 implementation. Following the intervention of the regulator who stopped very aggressive price promotions in the market in middle of February, you could see an improvement of our business in Q2 over Q1. Revenue increased by 6% and EBITDA improved by 27%.

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

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Questions and Answers

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Sara Al Sayed, Ooredoo Q.P.S.C. - Investor Relation [1]

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Thank you, Ajay. Now we can start the Q&A part. Questions can be asked on the webcast or over the phone. Operator, will you now please explain to the participants how to ask questions?

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Operator [2]

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(Operator Instructions) Our first question comes from Herve Drouet from HSBC.

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Herve Drouet, HSBC, Research Division - Head of EEMEA Telecoms, Media and Technologies Equity Research [3]

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My first question was, firstly, on Algeria. Obviously, I mean the -- your KPI shows that it's still very challenging there. I was wondering, on the top of the current macroeconomic environment, do you perceive the competitive pressure increasing in Algeria? And do you think with the market still being very challenging for all players, there could be potentially some hope on some stabilization of the operations of the financials looking forward? And maybe follow-up questions on the Tunisian strong numbers, especially you have a really good EBITDA and EBITDA margin. I was wondering, do you think that current EBITDA margin in Tunisia is sustainable at the current Q2 level? And do you think -- were there some potential one-off that may have helped Tunisian margin?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [4]

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Thank you for the question. I think as far as Algeria is concerned, I think the political situation, as you all know, is still not stabilized as yet. The macroeconomic conditions also are not good. On the other hand, the competition has been quite stiff and has not shown any signs of abatement as yet. Logically speaking, if everything is logical, then this should not sustain for a long time. In a shrinking market where macroeconomic conditions are not good, stiff competition doesn't make sense, but we've seen that in some other markets as well. So to answer your question, there is no sign of the stability yet or prices going up in the market, but we'll have to wait and see how that plays out here.

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Herve Drouet, HSBC, Research Division - Head of EEMEA Telecoms, Media and Technologies Equity Research [5]

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Do you think you -- I guess, one operator, one of the player needs to lead the way in term of assuring maybe an intent of getting back more towards profitability and actually stabilizing revenue. Could Ooredoo play that role? Or are you waiting for the competitors to make the first move?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [6]

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No, I don't think I can comment on competitive dynamics in a call like this. But what I can tell you is that on a big-picture basis, we as a group don't like to destroy market -- value in any market. However, if there is a need to react to competition, then we have to do that, yes. So that's what I can comment on. And as there is good signals in the market, I'm sure, if everyone is suffering, it would be for everyone's benefit to have some stability in the prices. So we'll have to wait and see how that plays out here. So your question was on Tunisia EBITDA margins. So I think it's -- the improvement of the margin is a combination of 2 things. One, of course, is the revenue increase, which is happening in the market. And on top of that, there have been focus on cost as well. So there's nothing one-off big to talk about in this quarter. So I would say that the trends are generally in line with expectations.

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Operator [7]

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Our next question comes from Dilya Ibragimova from Citi.

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Dilya Ibragimova, Citigroup Inc, Research Division - VP [8]

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I had a couple of questions, please. First one on Qatar. Looking at the service revenue performance year-on-year in second quarter, it seems they have been declined. You did mention that there is some pressure in mobile due to regulator interconnect decline, maybe you could quantify that impact and comment whether there are any other pressures either on -- due to the market -- the number of subscribers is not growing from quarter-on-quarter on the market. And whether -- what do you see there from the pricing perspective? And also, if you could comment on the fixed, what trends are you seeing both year-on-year and from the competitive dynamic, whether it is like competitive for the [home] is gaining some traction on the market? Are you seeing any pressure on your pricing and your ARPU, any color on that? And what your expectations are for the second half in Qatar service revenue? That would be helpful. And second question is on Kuwait. Whether -- if you could comment on overall competitive dynamics? Is it stable, is it improving? I think in the second half of last year, there have been some positive interventions from the regulator, blocking some of aggressive price promotions. If you could comment whether that is ongoing and whether price -- what type of price environment we're going to play in second half?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [9]

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See, as far as Qatar's revenue is concerned, there was a decline in that revenue, not a very significant one, but it is a combination of 3 things; one is lower handset sale. First -- talking service revenues, our handset sale is already taken care of. So excluding handset sale, we had an impact coming from transit revenue, which is international transit revenue, which is a very low-margin business, low single digits, where certain transit revenue is not coming anymore, so which is not really critical from overall revenue impact to Ooredoo Qatar and it has hardly any margin impact on that. That's one piece of it. The second piece of this was the local interconnect, which also has gone down, which also has impacted the incoming interconnect revenue. And lastly, on the prepaid side, the price erosion has been there. I think that prepaid revenue was also impacted. So I would say -- one could say almost equally, each one of these has impacted us. Although, I would -- relatively speaking, the prepaid and the transit revenue is a bigger piece compared to the local interconnect. That's as far as the service revenue is concerned for mobile. On the fixed side, competitive dynamics have not changed over the quarter. I think they are similarly and the ARPU impact has not been significant also on the fixed side. We normally don't give an outlook for second half of the year. However, we don't see anything in Q2, which is pointing to any major deterioration in ARPU on the fixed side. Kuwait on the other hand, first half of the year, especially quarter 1, there was stabilization of prices and the positive impact of that was visible in the performance of the operator. However, towards the end of the second half as the 5G rhetoric hits us, there has been again some enhanced competitive dynamics. So I think the -- one can see competition coming back to some extent in the market by the end of quarter 2.

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Operator [10]

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Our next question comes from Nishit Lakhotia, SICO.

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Nishit Lakhotia, Securities & Investment Company BSC, Research Division - Head of Research [11]

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I have a few questions. First, on the miscellaneous income for the first half, I've seen it's around QAR 170 million, it's quite a significant amount in the first half compared to what it was last year. If you remove the one-off gain that Ooredoo had booked from the subsidiary recognition into this amount. So it's around QAR 175 million for this quarter and QAR 277 million for the first half. So it looks very material compared to your bottom line. So if you can give more color as to what is coming in the miscellaneous income in this year, that would be helpful. Second question is on your exposure to Myanmar. I understand that Ooredoo has also given some shareholder loans to Myanmar. So if you can just quantify exactly how much is that? Because that was leading to a lot of ForEx impact as well under this other income. And what's your exposure right now in terms of shareholder loans to Myanmar operations? And third, on the Ooredoo Oman operations, what are you hearing about this third license from Vodafone? Is aware of -- what's the management's outlook on when this is expected? Any color on the third license would be helpful.

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

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On miscellaneous income, you're right, it's a significant number. And if you look at quarter 2 itself, it's almost about QAR 173 million, and it's got 3 pieces in it, about half of it is related to reversal of certain provisions for taxes in certain operations, where favorable court decisions were declared in our favor. So half of that listed. Also, you remember in Q1, we talked about spectrum refarming benefit in one of our opcos, that will be about 25% of that. Another 25% would be one-off sale of assets in the opcos, yes. If you look at the full year basis -- sorry, the half year basis, that's for both the quarters put together, the total miscellaneous income is very similar numbers. Over last year, we had this Artajasa fair value gain. And this time, we have the spectrum refarming, which is -- the valuation of that is about half of the benefit comes from there. And this provision reversal, which I referred to in Q2 would be another 35% approximately. And rest of the 15% is one-off sale of asset. That the big picture, is the miscellaneous income breakdown. Exposure to Myanmar. We have not -- see the company in Myanmar is run in large extent by shareholder loans and local funding is not available much. They did have external debt of about $300 million from IFC and ADB, with partner primarily all the investment through shareholder funding it. We haven't given that number in public domain, but I think you can make your assumptions based on the data I've given you now. And that policy does impact the FX exposure in the country for us, and the FX impact that you see coming last year, year-to-date was QAR 150 million negative, was a result of the inexposure we have in the country. This year, on the other hand, it's been slightly positive. So we have a QAR 47 million overall gain, which we are assuming on the slides on net profit. For the Oman third license, no formal new information in public domain as far as the issuance of the license is concerned. However, I think the operators were advised to start discussions with Vodafone and potential -- interconnectional agreements and discussions like that, but that was not very recent. Of course, it's an old news, but no new update as far as the license is concerned. The expectation really be until the license is awarded difficult to know what time lines would start after that. But in a market like Oman, it could take 6 to 8 months for someone to launch operations once I think the license is awarded.

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Sara Al Sayed, Ooredoo Q.P.S.C. - Investor Relation [13]

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We have a couple of questions on the webcast, if I can read them. First question from [Kaplin]. Thank you for the presentation. You mentioned a shift in product mix helped overall EBITDA. Could you explain what the shift in product mix is?

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

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The shift really is a decline in handset sales. Handset sales are low-margin sales. So once the handset sales are low, you will see a lower revenue number, but the EBITDA margin actually goes up once the handset sales are less.

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Unidentified Company Representative, [15]

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There are a couple of more questions online. If we start to see first question from Akbar from Al Rayan. How much of Qatar's EBITDA margin expansion is because of lower handset sales and how sustainable is the current level?

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

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I think it's good to look at the actual margin itself rather than the percentage of margin. I think the absolute number is a sustainable number because that's coming from service revenue and OpEx optimization. The percentage of EBITDA, of course, or EBITDA divided by revenue, really that is based on the mix of the product. So I think that can change in any quarter if there are more handset sales. But that -- if you talk about the absolute EBITDA number itself, the riyal number, I think that's sustainable.

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Unidentified Company Representative, [17]

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And then his second question was, what [helps] you on the Indonesian first half performance, is it in line with your expectations?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [18]

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See -- now see, you obviously want good performance, but the first half performance has been positive. The trends -- our initial trends are meeting our expectations in terms of [TransAm]. So I would say it's a positive internal assessment, yes.

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Unidentified Company Representative, [19]

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And then a question on the mid-term revenue ARPU stabilizing in Indonesia?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [20]

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I think the ARPU numbers of Indonesia, you will see a big variation in the numbers in Indonesia. It's a function really of the cleanup of the data of customers. So you can see that the ARPU has been going up as we have been cleaning up the database. And in this quarter, it would be quarter-on-quarter. We can see healthy growth in the ARPUs. And the cleanup is behind us now. I think that dynamic itself, which is just a mathematical calculation with lower number of customers, once you clean up the customer base, that is behind us to a large extent. On the other hand, price correction can have a positive impact as well. And that really depends on competitive dynamics in the market.

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Unidentified Company Representative, [21]

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Just for your reference, the ARPU numbers for all of this is also available on Slide #25. The next question is, how does Indosat's recovery compare to the performance of the overall market?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [22]

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I think they are in line with the overall market growth, and we'll have to wait for the results of the other operators for Q2 to comment on relative performance. But in Q1, relative performance was also positive for Indosat.

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Unidentified Company Representative, [23]

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Okay. Operator, I think we could take the next live phone question then.

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Operator [24]

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Our next question comes from Omar Maher, EFG Hermes.

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Omar Maher, EFG Hermes Holding S.A.E., Research Division - VP of Telecom [25]

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I have 3 questions, if I may. First, as a follow-up on the point that you mentioned, Ajay, on Qatar actually, with the drop in revenue from projects. Can you just maybe clarify the nature of these projects? Are these government projects related to the government's investment program? And therefore, with the investment program rather coming to an end, maybe we shouldn't expect significant growth in this area, specifically in the coming few years? I see the project awards generally in Qatar has been coming down quite significantly because of this program coming to an end. So is this a correct assessment, if you can validate this? Second question is on Indonesia. Actually, have you heard anything from the regulator on another potential cleanup, this time being related to handsets rather than SIM cards, something that will be implemented in August? And if yes, is there something that, that is actually feasible and can have an impact on the market or not? Then last question is you mentioned something -- if I remember, seeing in the financials something about the company collecting in Iraq some payments from the banks in the form of land plots rather than cash. But it's not quite clear what the nature of this or why it is the case? So could you please clarify this?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [26]

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See, for Qatar performance concerns, I think, maybe, I didn't talk about projects there. I was talking about transit revenue, it was one reason, which is international transit revenue, so that was one reason.

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Omar Maher, EFG Hermes Holding S.A.E., Research Division - VP of Telecom [27]

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Sorry, I didn't -- maybe I didn't hear it clearly. So transit.

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [28]

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Yes. The second one. Yes, talking about project (inaudible) international transit revenue, local interconnect, and prepaid revenue. So projects likely have not had an impact during the first half, I think impacted that on B2B revenue.

Your second question on the regulation in Indonesia in August for handset. That is not actually linked to customer registration, which is a different requirement for the operator. There's more to check handset imports in the country, to make sure gray market imports are minimized. And it's more to look at the IMEI number of the handset which are on the system. So we don't expect any impact like what we saw for the customer registration, which was completely different. This is our assessment of that as we speak. Real comment on Asiacell. I think the company has had some land, which it has acquired, which it is being used for its own purpose right now. And that's where it stands right now. So I think there is no new development as far as that is concerned.

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Omar Maher, EFG Hermes Holding S.A.E., Research Division - VP of Telecom [29]

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Is there something new, the land acquisition? I mean it's -- I'm not sure if it's the first time, maybe I haven't noticed it before, but is this something that has been developing recently? Is it because you're -- I mean what is driving this? Is it because you're unable to collect foreign currency from the banks? Or is it the wait...

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [30]

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No, this is -- this is nothing new here. Nothing with upstreaming of cash from Iraq. This is a local situation in Iraq and it's not recent in it's -- we've been talking about a couple of years back. So nothing new about this issue. Recently, in fact, on the other hand, as far as the upstreaming of cash is concerned, we've been able to upstream cash well in the recent times. So if you talk about last, say, 1 year, in excess of $200 million have been upstreamed. So I think the upstreaming part is working right now. That's, in fact, the new development.

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Operator [31]

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Our next question is from Dalal Darwich, Arqaam Capital.

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Dalal Darwich, Arqaam Capital Research Offshore S.A.L. - Research Analyst [32]

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I just have one quick question. Is there any color on a new MVNO coming in Kuwait?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [33]

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The new regulation was talked about by the regulator there. But the timing of when and how that will play out is still not absolutely clear. But as the installation comes more in public domain, I think we can talk about it at that time. No clarity on timing at this moment.

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Operator [34]

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Our next question is from Dilya Ibragimova, Citi.

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Dilya Ibragimova, Citigroup Inc, Research Division - VP [35]

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I had couple of follow-ups. First is on your comment on 5G pricing. You mentioned that in Kuwait the competitive capacity is increasing, because 5G capacity is coming in. Do you think that you need Kuwait and what is your view on Qatar in 5G? Do you think you may be facing similar situation where as capacity comes in from both yourself and your competitor, there may be some pricing pressure? I know you did comment that, right now you don't see anything that would affect price, but is Qatar different from Kuwait? And why do you think that the situation would be different. Second question, just on Iraq. You do mention in presentation that the competitive -- the price competition is high. Just wondering is the competition between the 2 MNOs, Zain and Asiacell, is Korek active at all or maybe the competition is coming from other small 5G -- sorry, 4G-specific players? Maybe just give us a little bit of color where competition is coming from?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [36]

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As far as Qatar is concerned, I think in terms of the competition is reasonably intense with Vodafone in any case. So I don't think the introduction of 5G adds a new dynamic. In case of Kuwait, we had some market repair in the first half of the year, and that's why the return of competition dynamics was a new development there because that slight price stabilization is impacted now with this 5G coming in. We don't have that situation here. We've not had price increases in Qatar, for example. So I think it's not relevant from that perspective. If you talk about my comment, and it's relevant to Qatar. As far as Iraq is concerned, I think the price competition in Iraq is to be seen for different regions differently. And in different regions, different operators are strong. And the dynamics -- in the dynamics, all the operators are generally involved. Sometimes Korek is going aggressive in strongholds for us and Zain. Otherwise Zain may react to that for its stronghold. So it's a more complex dynamic, given the size of the country, it's not the same dynamic in each region.

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Dilya Ibragimova, Citigroup Inc, Research Division - VP [37]

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And Korek is still competitive, even though there are some unclear -- there is unclear situation around ownership?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [38]

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I think at the operating level, their competitive dynamics hasn't changed much. So they are reasonably aggressive in their competitive approach.

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Operator [39]

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(Operator Instructions) Dear speakers, we have no other audio questions. Back to you for the written questions.

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Sara Al Sayed, Ooredoo Q.P.S.C. - Investor Relation [40]

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There's 1 question from web, where do you see leverage at the Indosat level given the higher CapEx at the end of the year?

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Ajay Bahri, Ooredoo Q.P.S.C. - Group CFO [41]

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We normally don't give forecast on leverage. But what we can say is that the current trends will ensure that they are within their covenant levels, which they have agreed with their lenders. But as you can see the trends of EBITDA are positive, the growth is good and that helps reduce the leverage levels also. So the positive trend of EBITDA will offset the increased CapEx intensity as far as leverage calculation is concerned.

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Sara Al Sayed, Ooredoo Q.P.S.C. - Investor Relation [42]

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No further questions on the webcast. Thank you, operator, and thank you all for joining today's call. Please refer to the Ooredoo Investor Relations website for additional updates. Follow us on Twitter @OoredooIR or feel free to contact the Investor Relations team if you need further information. We look forward to your future participation in our next update, probably around 29 October 2019. Meanwhile, thank you again for your continued interest in Ooredoo.

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Operator [43]

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Ladies and gentlemen, this concludes today's webcast. Thank you all for your participation. You may now disconnect.