On behalf of the Board of Directors, I am pleased to present Vodafone Qatar’s financial results and business performance for the nine month period ended 31 December 2017.
At our Extraordinary General Assembly in October, Vodafone Qatar changed its financial year end to 31 December. This change aligns our results announcements and other reporting requirements with other listed companies in Qatar.
Vodafone Qatar made the necessary changes to its Articles of Association to provide more flexibility with respect to securing additional funding if required. Amendments were also made to comply with new corporate governance rules issued by the QFMA board decision No. 5 of 2016 for companies and legal entities listed on the stock exchange.
EBITDA for the nine months ended 31 December 2017 stood at QAR 407 million (flat year-on-year) reflecting an EBITDA Margin improvement of 1.2pps. Quarter on-quarter EBITDA increased by 75 per cent pointing to a strong recovery in revenue after a network outage in July 2017, disciplined cost management, and recognition of one off benefits during the quarter. These benefits included QAR 13 million recognised as Service Revenue and QAR 25 million credit note from a network supplier.
Revenue for the reported period stands at QAR 1,481 million, representing a decrease of four per cent year-on-year driven by a subscriber decrease of six per cent year-on-year as a result of the network outage and slowdown in the overall Prepaid market. However, compared to the previous quarter, total revenue grew by 25 per cent led by the acceleration of both the Postpaid subscriber segment (+nine per cent for the quarter-on-quarter), handset and equipment revenues and the QAR 13 million benefit mentioned above.
The Company’s net profit excluding amortisation improved by 12 per cent year-on-year to reach QAR 120 million driven by higher EBITDA and lower depreciation. The net debt position continued to improve, reaching QAR 620 million by 31 December 2017, the lowest net debt in the Company’s history.
The overall financial results clearly indicate a recovery in our business performance. Looking ahead, we will continue our growth plans by delivering innovative products and unmatched customer experiences across our core mobile offering. We will further expand our rapidly growing fixed-line proposition as well.
There are also a few key developments that have been recently announced that will re-set the company for the future:
Extension of Licence: The Communications Regulatory Authority (CRA) has extended our licence for an additional 40 years to 2068 which will enable us to reduce our amortisation cost annually from QAR 403 million to approximately QAR 100 million;
Capital Reduction: We will seek to obtain the necessary approvals to implement a reduction in the share capital from QAR 8.454 billion to QAR 4.227 billion by means of reducing the nominal value of the shares of the Company from QAR 10 per share to QAR 5 per share;
Extension of Vodafone Group Plc technical support agreement: We will continue our long term partnership with Vodafone Group Plc and continue to benefit from all services and support we currently enjoy as a Vodafone branded company.
In parallel, Qatar Foundation for Education, Science and Community Development entered into a conditional Share Purchase Agreement with Vodafone Group whereby Qatar Foundation agreed to purchase Vodafone Group’s shares. This transaction is subject to various regulatory approvals. We look to the future with confidence and optimism, supported by a clear strategy and solid foundation for the next stage of our journey.
On behalf of the Board of Directors, thank you to His Highness Sheikh Tamim Bin Hamad Al Thani, the Emir of the State of Qatar and to His Highness, Sheikh Hamad Bin Khalifa Al Thani, the Father Emir. The Board expresses its gratitude to the Communications Regulatory Authority and the Ministry of Transport and Communications for their continued support.
Thanks to the Executive team and Vodafone Qatar’s employees for their efforts and dedication. We extend our appreciation to our customers and to our valued shareholders for their trust and support. We confirm our full commitment to more prosperous results in 2018 and subsequent years.
We ask God Almighty that he gives us the ability to continue working in the best interests of us all.
2017 has been an eventful year for both Qatar and Vodafone. The spirit and resilience of Qatar’s population in response to the continuing economic blockade has been remarkable. Like the rest of the country, we too have had to adapt our operations in light of the challenges encountered this year, notably during a network outage we faced in July.
This challenge reinforced our unwavering commitment to our customers who will always be the heart of our business. Thanks to the commitment and hard work of our team, we dealt with the issue head on and took immediate corrective actions to prevent a similar outage from occurring in the future. I am pleased to report that overall customer impact was limited. Our proactive steps resulted in customer satisfaction rapidly recovering to pre-outage levels. I believe we are stronger than before.
As I wrote last year, we are in the middle of one of the most rapid technological transformations mankind has ever seen. Since the first touchscreen phone launched 10 years ago, technological innovation has progressed at an unprecedented pace. Progress has been unrelenting, surpassing boundaries that were previously inconceivable. Nearly 90 per cent of all the data in the world has been generated over the last two years alone, with today’s Internet users generating 2.5 quintillion bytes of data each day. Vodafone plays a central role in this incredible growth.
During 2017, we focused on building a platform for future growth, whilst improving our operational and financial performance. Our customer base reached 1.4 million and we now have a 21.7 per cent total revenue market share in Qatar.
We are increasing our footprint among high value customers whilst moving away from low-margin business. Within our postpaid customer base, we saw significant growth as we migrated more pre-paid and new customers to postpaid offers.
One of our most visible milestones in 2017 was the launch of our new brand campaign: The Future is Exciting. Ready? The response from our customers has been very positive, providing a signal of confidence in our intent to be Qatar’s best digital partner, delivering great innovation and a world-class experience.
Our role as a leader in driving digital transformation is to ensure that we continue to provide our customers with what they need today, whilst building what they will need tomorrow. In doing so, we continue to improve our financial and operational performance.
Vodafone Qatar’s future success relies on three strategic pillars.
Moving forward, we welcome the opportunity to compete just as effectively in fixed-line as we have in mobile, where the benefits of effective competition is clearly evident in the form of improved value, greater choice, better service and innovation.
We look forward to our continued work with the Communications Regulatory Authority (CRA). Together, we are evolving the existing wholesale access regime by implementing a more comprehensive suite of regulated wholesale products (both passive and active).
We also support and encourage the CRA to take a more active role in applying the existing regulatory framework, including the fixed number portability mandated in April 2016. This will create a more level playing field in both fixed-line and mobile markets, encouraging further investment.
For as long as we have been operating in Qatar, we have been committed to delivering positive economic and social change as a long-term partner through an integrated sustainable business strategy. Our innovative services and products will further develop the telecommunications sector in Qatar and contribute to sustained economic growth.
As the country diversifies to become a knowledge-based economy, world-class digital infrastructure is needed to ensure Qatar competes at a world-class level. We stand ready to invest further in Qatar’s networks.
Our social investment strategy leverages our expertise to drive positive social change. We ensure that all our contributions involve mobile communication technologies, whilst protecting the natural environment and supporting the communities where our stakeholders live. Our social investment programmes in 2017 include:
The future is exciting. We are ready!
Qatar is a young country, economically blessed and with endless ambition. We are fortunate to have opportunities to build and shape a world-class digital economy and society for Qatar.
Together our management team has laid a strong foundation for our continued expansion in 2018. I remain optimistic about the direction the business is heading, and expect that we will reap the benefits in due course.
Finally, one of the most exciting opportunities for the future is in our team of people. In particular, over the last few years, we have increased the number of motivated young Qataris who will be the management team in a few years’ time. The energy and engagement of the staff has contributed to the overall revival of the Company.
This will be my last report to you as I shall retire from full time work at our Annual General Assembly on March 19th, 2018. I am proud of what the team has achieved since I arrived in 2015 and I am grateful for your support and trust over these years.
I wish all of the team the very best for the future.
Vodafone Qatar provides services including voice, messaging, data and fixed communications in Qatar as part of one of the world’s largest telecommunications groups, the Vodafone Group.
Since Vodafone Qatar switched on its mobile network on 01 March 2009, we have delivered great value to customers with a range of innovative products and services. In nine years of commercial operation, close to 1.4 million customers use Vodafone’s services supported by our state-of-the-art network.
Having built a converged IP network, Vodafone launched a comprehensive range of fibre-based enterprise grade and residential fixed products and services in October 2012. With fibre connectivity, Vodafone is set to become a total communications provider, offering triple and quadplay solutions to accelerate Qatar’s digital agenda.
Vodafone’s mission is to help customers and communities to adapt and prosper as new trends and technologies reshape the world. We are committed to providing world-class telecommunications infrastructure and services in support of Qatar’s National Vision 2030.
With over 32,000 institutional and retail shareholders, Vodafone Qatar is 95 per cent Qatari-owned including 45 per cent for Vodafone and Qatar Foundation LLC. As a member of the Qatar Stock Exchange, Vodafone Qatar has paid capital of QR 8,454m.