Qtel Group achieves a record second quarter profit of QR 655 million, an increase of 59%

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Qatar Telecom QSC announced strong financial results for the period ended 30 June 2008, following another period with growth across all metrics.

Financial Highlights:

In second quarter 2008, The Group achieved record net profits of QR <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />655 m.

“We have continued to make excellent progress towards our strategic goals this period, reporting record profits as well as making an important acquisition,” said Qtel Chairman, H. E. Sheikh Abdullah Bin Mohammed Bin Saud Al-Thani, announcing the results. “We are pleased to have delivered another strong three months’ (Q2) gain in Group revenue, EBITDA and net profit.  During this period we also completed our US$ 1.8bn acquisition of 40.81% of PT Indosat (“Indosat”), one of Indonesia’s leading telecom companies, establishing a strong presence for the Group in one of the world’s most economically-dynamic regions with a fast growing communications market and low penetration levels of 48%. The addition of Indosat to the Group means that Qtel now has an international consolidated customer base of over 51 million that spans 16 countries.  Our long term investment in Indosat represents the logical next step in our plan to capitalize on growth opportunities which will broaden our service footprint and enhance shareholder value.”

In the first six months to 30 June 2008, Qtel delivered a strong performance across all financial metrics.  Consolidated group revenue grew 102% to QR 8,111 m (1H07: QR 4,015 m) as a result of continued product and marketing innovation across the Groups operations and from its selective acquisition growth strategy.  EBITDA has increased 92% in the first half of 2008 compared to the same period last year, to stand at QR 4,042 m. Group’s net profit attributable to the shareholders stood at QR 1,180 m for the first half of 2008: an increase of 33% over the same period last year.

As our operational footprint has changed, so has our revenue mix.  Qatar, Kuwait, Iraq, Algeria, Oman and Indonesia (post acquisition) now represent our six largest markets by revenue, contributing 32%, 19%, 15%, 10%, 8% and 7% to Group revenue respectively.  From Q3 onwards when Indosat’s full quarterly result are consolidated, its share of contribution to Group’s revenue will be significant.  While our revenue mix has changed, the strong growth that is a characteristic of each of our Group operations has been maintained and EBITDA has remained strong across each of our businesses.  We remain confident of the growth prospects in each of these markets.

RESULTS OF MAJOR OPERATIONS:

Our operations in Qatar continue to deliver solid results with revenue growing 21% to QR 2,610m over the same six month period in 2007 with mobile customers exceeding 1.4 million. Qtel has continued to focus on innovative marketing such as the complete corporate communications solution ‘Office in a Box’, and also on latest products and services such as introduction of Qatar’s first BlackBerry service, and Hala (prepaid) roaming. The company is well prepared for the launch of competition in the wireless market early next year.

Wataniya Telecom, which covers our operations in Kuwait, Tunisia, Algeria, Saudi Arabia and the Maldives also achieved a robust Group performance.  Wataniya’s total customer base increased 39% to 10.3 million customers while delivering revenue growth of 20% to QR 3,124m for the six month period, following particularly strong performances from Kuwait and Tunisia.

We were also pleased to announce after the period-end, Wataniya Telecom has been granted spectrum for their license in Palestine by the Palestinian Ministry for Telecommunication and Information Technology.  The allocation of this spectrum is a significant development, and the company now is preparing for their upcoming commercial launch.

Nawras, the brand name for our mobile operations in Oman, continues to deliver solid growth, increasing revenue from QAR 371m to QAR 609m (a 64% increase over 1H 2007) while increasing the customer base to 1.3 m, representing growth of 63% over 1H 2007.  Nawras continues to command a significant share of the Omani mobile market, finishing 1H 2008 at a 44.4% market share.

AsiaCell’s Iraqi operations contributed 15% of total revenues in 1H2008, with a similar contribution to Group EBITDA. The company also reported strong customer growth in the first half of 2008, ending the period with 4.8 million customers.

In June 2008, Qtel completed its acquisition of Indosat. For 1H 2008, Qtel has consolidated Indosat financials from June 2008. Indosat’s post-acquisition consolidated performance in the first half of 2008 contributed 7% of total revenues for the period, with a contribution of 6% to Group EBITDA. Furthermore, with a customer base of over 33 million, Indosat now represents the largest segment of the Qtel Group customer base.

 “Last year was a transformative one for Qtel and this period has seen us continue to shape and position our business in line with our strategic goals,” said Qtel Chief Executive Officer, Dr Nasser Marafih.  “Our goals are clear as we now begin to integrate Indosat into the Qtel Group. We are well positioned to execute on the integration, drawing on our experiences and past integration successes. We will continue to leverage our new-found scale in order to drive synergies and benefits through all of our businesses.”

In line with regionally accepted practices, Qtel will declare dividends based on an annual basis.

“We continue to execute our growth plans successfully,” commented Sheikh Abdullah in closing.  “Today our Group footprint is broader than ever, our financial position as robust as ever and I feel confident that our strategy to combine customer service-led organic growth with value-enhancing acquisitions positions us very well to achieve our ambition to be among the top 20 telecom operators by 2020.”