Earnings call transcript: Vodafone Qatar Q3 2025 reveals strong growth amid revenue miss

Vodafone Qatar, with a market capitalization of $2.81 billion, reported its Q3 2025 earnings, showcasing robust growth in key financial metrics despite a slight miss in revenue forecasts. According to InvestingPro analysis, the company is currently trading below its Fair Value, suggesting potential upside opportunity for investors. The company’s revenue for the quarter was QAR 2.5 billion, marking an 8.4% year-over-year increase, although it fell short of expectations with a 1.9% revenue surprise. The net profit rose nearly 13% to QAR 494 million. Following the announcement, Vodafone Qatar’s stock saw a slight decline of 0.66%, closing at QAR 2.429.

Key Takeaways

• Total revenue increased by 8.4% year-over-year.
• Net profit grew by 13%, reaching QAR 494 million.
• Service revenue and prepaid revenue saw significant growth.
• Stock price decreased by 0.66% post-earnings announcement.
• Revenue fell short of forecasts by 1.9%.

Company Performance

Vodafone Qatar continued its upward trajectory in Q3 2025 with notable improvements across various financial metrics. The company has demonstrated strong financial health, earning a "GREAT" overall score from InvestingPro, with particularly high marks in profitability (3.87/5) and growth (3.5/5). Two key InvestingPro Tips highlight the company’s consistent dividend payments for 7 consecutive years and its strong return over the last five years. Subscribers can access 8 additional exclusive insights on the platform. The company reported a total revenue of QAR 2.5 billion for the first nine months of the fiscal year, reflecting an 8.4% increase compared to the same period last year. This growth was driven by a 4.8% rise in service revenue and an 8.6% increase in prepaid revenue. Despite the revenue miss, the company maintained a strong competitive position in the telecom market, with a focus on high-value customers and disciplined pricing strategies.

Financial Highlights

• Revenue: QAR 2.5 billion (+8.4% YoY)
• Net profit: QAR 494 million (+13% YoY)
• EBITDA margin: 42.4% (+8.5% YoY)
• Free cash flow: QAR 679 million (+53% YoY)

Earnings vs. Forecast

Vodafone Qatar’s actual revenue of QAR 2.5 billion fell short of the forecasted QAR 850.15 million, resulting in a 1.9% negative revenue surprise. Despite this miss, the company’s strong net profit growth and increased EBITDA margin indicate resilient financial health.

Market Reaction

Following the earnings announcement, Vodafone Qatar’s stock price decreased by 0.66%, closing at QAR 2.429. Despite this minor setback, the stock has delivered an impressive year-to-date return of 40.52% and maintains relatively low price volatility with a beta of 0.32. The stock’s performance remains within its 52-week range, suggesting that investors are cautiously optimistic about the company’s future prospects despite the revenue miss. For detailed valuation analysis and comprehensive insights, investors can access the full Pro Research Report available on InvestingPro, part of their coverage of 1,400+ top stocks.

Outlook & Guidance

Looking forward, Vodafone Qatar expects full-year revenue growth to exceed 7%, with an EBITDA margin around 42.5%. The company currently trades at a P/E ratio of 16.07, with analysts maintaining a consensus "Buy" recommendation. Want deeper insights? InvestingPro subscribers get access to over 30 additional financial metrics, advanced valuation models, and expert analysis tools to make more informed investment decisions. The company also projects a 15% increase in underlying net profit. Capital expenditure intensity is anticipated to rise to 15.5%, indicating potential acceleration in network investments.

Executive Commentary

Masroor Anjum, CFO, highlighted the company’s strategic focus on long-term value creation through consistent investments in mobile and fixed network infrastructure. He emphasized the strong financial acceleration observed in the first nine months of fiscal year 2025 and expressed confidence in the market potential across fintech and ICT services.

Risks and Challenges

• Competitive telecom market dynamics may pressure pricing strategies.
• Market consolidation could impact market share and growth prospects.
• Increased CapEx intensity might strain financial resources if not managed effectively.
• Global economic uncertainties could affect consumer spending and investment plans.
• Regulatory changes in the telecom sector may pose compliance challenges.

Q&A

During the Q&A session, analysts inquired about the reclassification of B2B/B2C customer segments and the decision to advance QAR 30-35 million of network investments from 2026 to 2025. These discussions highlighted the company’s proactive approach to optimizing its investment strategy and enhancing its competitive edge.

Full transcript - Vodafone Qatar (VFQS) Q3 2025:

Ellie, Conference Operator: Hello everyone and welcome to Vodafone Qatar conference call. Please note that this call is being recorded. I’d now like to hand over to our moderator for today from QNB Financial Services, Bobby Sarkar. Please go ahead.

Bobby Sarkar, Head of Research, QNB Financial Services: Thank you, Ellie. 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 and nine months 2025 results conference call. On this call from Vodafone Qatar management, we have Masroor Anjum, who is the CFO. As usual, we’ll conduct this conference with the management first reviewing the company’s results, followed by Q&A. 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.

Pauline Saab, Head of Investor Relations, Vodafone Qatar: Thank you, Bobby. Good afternoon everyone and welcome to Vodafone Qatar Financial Results Call. Before we begin, I would like to apologize on behalf of Sheikh Hamad Abdulla Jassim Al-Thani, our Chief Executive Officer, who could not be with us today. Masroor Anjum, our Chief Financial Officer, will be presenting the performance highlight on his behalf. Today’s presentation is accessible on our website, as usual, under the Investor Relations section, with a disclaimer on slide number two. To begin, I now hand it over to Masroor.

Masroor Anjum, Chief Financial Officer, Vodafone Qatar: Thank you, Pauline. Thank you, Bobby, and thank you, QNB, for organizing this conference. Good afternoon everyone. It’s my pleasure to welcome you to our quarterly analyst call. The first nine months of fiscal year 2025 reflect strong financial acceleration underpinned by disciplined execution and strategic focus. The positive momentum established in recent quarters has further strengthened, translating into sustained and profitable growth across all core business segments. This performance reaffirms the soundness of our data-driven strategy and consistent operational excellence of our teams, positioning the company well for continued value creation and long-term shareholders’ returns. I would like to start by highlighting our financial results so far this year. On slide number four, we achieved robust growth, with total revenue surpassing QAR 2.5 billion over the first nine months, an 8.4% increase compared to last year.

Our net profit is nearing half a billion QAR, reflecting a 13% year-on-year rise. Moving on to the next point, I want to emphasize how every business unit has played a role in driving our revenue growth. This is significant because it demonstrates that our company remains strong in highly competitive segments such as enterprise, while also capitalizing on growth opportunities in areas like handsets, ICT, and managed services. This not only underscores the effectiveness of our strategy, but also provides evidence that we are advancing on the right path for continued success. The third key point I would like to touch on is our dedication to delivering exceptional telecom services. Our focus is on providing an outstanding telecom experience and building long-lasting relationships with our customers.

We prioritize long-term value creation by consistently investing in both mobile and fixed network infrastructure and by introducing innovative features, rather than relying on short-term tactical measures. Most recently, we have enhanced our premium plans by introducing the Call Plus feature and Vodafone World benefits, which are detailed in the following slide. These are part of a broader innovation roadmap, with many more customer-focused initiatives underway. Lastly, I would like to highlight the steady progress we are making on our diversification strategy, with a focused approach on select high-potential areas such as fintech and ICT services. These initiatives are advancing well, and we look forward to sharing more details in the coming quarters as they continue to mature. We see strong market potential in these domains and are confident in our capabilities and resources to meet evolving customer needs and market demands.

Moving to the finance section and starting the key financial performance highlights on slide number seven. As I mentioned before, revenue growth momentum remains strong, up 8.4% year-on-year, driven by positive contributions across all the core revenue segments. At the same time, operating cost efficiency continued to improve, with OPEX intensity declining to 21.5%, down 1.7 percentage points year-on-year, despite ongoing network expansion. This resulted in sustained growth in EBITDA of 8.5%, while net profit registered a strong growth of 13% year-on-year. Lastly, our liquidity and financial strength remains robust, as evidenced by the free cash flows, which reached QAR 679 million during the nine-month period, representing a significant 53% year-on-year increase. Now, let’s turn our attention to slide number eight. This slide showcases our key financial performance metrics for the nine-month period compared to the same period of last year.

Total revenue grew by QAR 199 million, representing a substantial 8.4% growth year-on-year. This growth was primarily driven by an impressive 4.8% increase in service revenue, coupled with the impact of higher handset sales, equipment, and enterprise project revenue. Despite higher revenue, ongoing network expansion, and an increase in subscriber base, we have effectively maintained stable expenses, underscoring the success of our smart cost-saving initiatives. Year-on-year increase in direct cost is attributable to volume-driven higher equipment revenue and customer acquisition costs. Looking at the OPEX, despite continuing network expansion and its associated costs, OPEX is largely stable compared to the same period of last year. With increased service revenue and optimized costs, our EBITDA grew by an impressive 8.5% year-on-year, translating into a margin of 42.4%. This strong operational performance translated into solid bottom line.

We delivered a 13% year-on-year increase in net profit, reaching QAR 494 million for the period. This double-digit growth was achieved despite recognizing an accelerated depreciation charge of QAR 32.3 million for the first nine months. This was highlighted in the last quarter as well. This charge primarily reflects: one, the full write-off of assets related to FDD to DDD migration, in line with recent regulatory requirements, and early retirement of certain legacy assets under our network modernization program, designed to enhance efficiency and, more importantly, reduce future maintenance costs. Now, taking a closer look at service revenue on slide number nine. As I mentioned before, all our service revenue segments continue to show positive growth year-on-year. Postpaid revenue continues to grow steadily, recording a further increase of 2.1% year-on-year.

We remain focused on enhancing our portfolio with richer features, including Loyalty, Call Plus, MultiSim, and Vodafone World, and on continuously improving the overall customer experience, especially with the focus on high-value customers. As a result, our postpaid subscriber base expanded by 6.7% year-on-year, serving as the primary driver of postpaid revenue growth. On the ARPU front, the consumer pricing environment has remained largely stable, supporting the sustained level of customer postpaid ARPU. In addition, as I have mentioned before as well, we have been focusing on upgrading our customer base by minimizing discounted offerings to existing customers. Resultant ARPU and revenue growth flows through to profitability and greatly helps in expanding overall business profitability. Conversely, in the enterprise segment, we continue to operate in a highly competitive pricing landscape, a trend we have highlighted consistently.

While we anticipate greater market discipline over time, our near-term focus remains on profitable retention and disciplined bidding. Despite ongoing competitive dynamics in the enterprise mobility segment, overall postpaid ARPU remains resilient, with a modest 1.2% year-on-year movement. Now, moving to the prepaid segment, prepaid revenue has recorded a growth of 8.6% year-on-year. As highlighted before, we have seen noticeable reduction in market pricing aggression and some pricing correction in the prepaid segment by customers receiving good value but at a reasonable price. As a result, prepaid ARPU has registered a strong growth year-on-year. Just to highlight, prepaid market revenue during Q2 has grown by 7% for the first time after 2014. Again, growth in revenue here flows through to profitability. However, this shift has also led to market consolidation and the attrition of ultra-low-value subscribers, resulting in prepaid base declining by 1.6% versus last year.

Lastly, managed services, wholesale, and fixed revenues continue to be an integral part of service revenue growth drivers. Our commitment to diversification and expanding our fiber network is paying off. We are adding new customers nationwide, which has led to a steady increase in year-on-year revenues. Turning to slide number ten, this slide illustrates our efficiency and profitability margin trends. The solid line represents underlying performance, while the dotted line reflects the reported results. Starting with the operational efficiency, the first graph shows OPEX intensity. Despite continued expansion of both our mobile and fixed networks, we have delivered notable efficiency gains, achieving a further reduction of 1.9 percentage points in underlying OPEX intensity versus 2024. This improvement was partly supported by non-recurring project revenue recognized during this period. Excluding this impact, underlying OPEX intensity stood at 22.3%, marking a 1.1 percentage point reduction versus 2024 underlying levels.

Moving to the middle graph, which highlights EBITDA margin performance, the combination of service revenue growth, as I explained earlier, and our disciplined cost management continues to drive margin expansion. Our underlying EBITDA margin improved to 48.3%, up 2.5 percentage points year-on-year, while the reported EBITDA margin also increased by 0.6 percentage points, reflecting the strong flow-through impact of revenue growth. Finally, looking at the net profit margin trend, on an underlying basis, we recorded a 0.7 percentage point improvement over 2024. This was primarily driven by a continued strengthening of EBITDA margins, underscoring our disciplined execution, operational efficiency, and sustained profitability focus. Now, let’s turn our attention to slide number 11. This slide showcases our key financial performance metrics for the quarter in comparison to the same quarter last year. The growth momentum we experienced in the first half of the year continued strongly in Q3.

Service revenue registered a robust growth of 7.4% year-on-year, with contributions from both our mobility and fixed segments. I’ve already explained the key drivers in the previous slide. Non-service revenue has decreased by QAR 19 million, mainly due to booking of non-recurring enterprise project revenue last year in Q3. Overall, total revenue increased by 4.1%. Turning to expenses, total cost increased by 1.6% year-on-year, primarily reflecting higher direct costs in line with the revenue recognized during the quarter. Direct cost is also impacted by a one-off provision for certain aged receivables, amounting to QAR 6 million. Operating expenses were also modestly higher, reflecting ongoing network expansion and higher employment-related costs, both of which support our growth and service quality objectives. With increased service revenue, our EBITDA stands at QAR 364 million, growing by an impressive 7.5% year-on-year. Our EBITDA margin for the current quarter is a healthy 43.7%.

This strong operational performance translated directly to our bottom line. We recorded an extremely healthy 14.9% year-on-year growth in our net profit, reporting QAR 165 million for the current quarter. Now, turning our attention to slide number 12, let’s take a closer look at CapEx and Return on Equity. Our CapEx for the period stands at QAR 277 million, representing an intensity of 10.7%. Our ongoing net expansion of fixed and mobile network infrastructure is driven by a commitment to comprehensive coverage and cutting-edge digital capabilities. The ultimate goal is to provide superior experience for our customers. Our relentless focus on growth and profitability has yielded impressive results, as evidenced by a significant improvement in our return on equity. Compared to FY2024, our return on equity has increased by further 0.8 percentage points on an annualized basis.

This translates to remarkable growth in returns over the past five to six years. Now, coming to slide number 13, this section highlights our cash flow generation and net debt position. As we have emphasized in previous quarters, working capital management remains a key strategic priority. Starting with the first chart, which illustrates free cash flow, this represents cash generated from operations after CapEx, taxes, and lease payments, effectively showing the cash available for dividends, debt repayment, and strategic investments. Our free cash flow increased by an impressive 53% year-on-year, reflecting the success of our company-wide focus on cash optimization and working capital efficiency. This demonstrates our ability to translate strong financial performance into real, tangible cash generation. As a result, net debt reduced by 67.2% year-on-year despite an increase in dividend payout, while net debt-to-equity ratio improved further, declining from 7.9% to 2.5%.

Together, these results highlight a strong liquidity position, effective capital discipline, and capacity to fund growth while maintaining a healthy balance sheet. Turning to statutory income statement on slide number 14, we have already covered the major year-on-year movements. We have seen that both consumer and enterprise and other revenue segments increased year-on-year. The increase in direct cost is in line with higher equipment sales. Higher depreciation is driven by CapEx investments and accelerated depreciation we explained earlier. Lastly, the earnings per share has also increased in line with the net profit. As shown on slide number 15, we are revising our full-year guidance upward, reflecting our strong year-to-date performance and sustained business momentum. Management is pleased to share the following updated outlook. Top-line growth is now expected to exceed 7% for the full year 2025, supported by solid performance across all major business segments.

With continued cost discipline and operating efficiencies, we expect to deliver an EBITDA margin of around 42.5% or slightly higher, depending upon the revenue mix in the final quarter. Underlying net profit is projected to grow by approximately 15% year-on-year, driven by both top-line growth and margin expansion. Finally, with strong cash flow generation, a low net debt position, and robust balance sheet, we see opportunity to accelerate our investments by preponing some of the investments originally planned for next years. Accordingly, we have slightly increased our CapEx intensity guidance to around 15.5% for the full financial year 2025. Thank you for your time. As usual, the balance sheet, detailed statement of income, subscribers, and R2 details are available in the appendix. Now back to Pauline.

Pauline Saab, Head of Investor Relations, Vodafone Qatar: Thank you, Masroor. That concludes the presentation. We will now open the floor for questions. The operator kindly guides participants on how to submit their questions over the phone.

Ellie, Conference Operator: Thank you. We are now opening the floor for the question and answer session. If you’d like to ask a question, please press star followed by one on your telephone keypad. That’s star followed by one on your telephone keypad. We will pause for a brief moment to wait for the questions to come in. Your first question comes from the line of Syed Hassan of QNB Financial Services. Your line is now open.

Hi. Good afternoon. I wanted to ask what is the adjustment between B2C and B2B every quarter?

Masroor Anjum, Chief Financial Officer, Vodafone Qatar: The adjustment between B2B and B2C has been 3.

Okay.

Sorry, just give us a few seconds, please. Sorry, can you elaborate the question a bit further, please?

Yeah, sure. There was a note that previous years have been changed due to some adjustment or movement between B2C and B2B. I was referring to that note, basically.

Okay. It’s basically reclassification of some of the customers across the two segments, consumer and enterprise, primarily relating to B2B to C segments.

Thank you.

Ellie, Conference Operator: Again, if you’d like to ask a question, please press star followed by one on your telephone keypad. We will pause for a brief moment to wait for the questions to come in. As of right now, we don’t have any pending questions. I’d now like to hand the call back to Bobby Sarkar for final remarks.

Bobby Sarkar, Head of Research, QNB Financial Services: Hey, it’s Bobby again. I have a question. Masroor, you increased your CapEx intensity guidance to 15.5%, pulling forward some projects from 2026. Could you elaborate a little bit in terms of what spending was preponed into this year? Thank you.

Masroor Anjum, Chief Financial Officer, Vodafone Qatar: Yes. Basically, as part of our network expansion plan, we continue to invest every year. As I explained during my presentation as well, given the overall cash situation and our overall balance sheet strength, we decided to prepone a part of that investment from next year to this year. In absolute, I think the number is around QAR 30 million, QAR 35 million that we’re going to prepone from next year to this year.

Bobby Sarkar, Head of Research, QNB Financial Services: Okay. That sounds good. Ellie, do we have any other questions from the outside?

Ellie, Conference Operator: As of right now, we don’t have any pending questions from the conference side.

Bobby Sarkar, Head of Research, QNB Financial Services: Okay. In that case, we can wrap up the call for today. I want to thank Masroor and Pauline for taking the time to go over the presentation and answer our questions. We will pick this up again next quarter. Thanks, everyone.

Pauline Saab, Head of Investor Relations, Vodafone Qatar: Thank you, Bobby. Thank you, everyone, for joining today’s call. We will keep you informed on all our upcoming earnings calls. Please feel free to reach the Investor Relations team if you have any further inquiries or visit our IR website. Thank you.

Ellie, Conference Operator: Thank you for attending today’s call. You may now disconnect. Goodbye.

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