Qtel achieves 58% year-on-year revenue growth in first quarter 2009

Qatar Telecom QSC (“Qtel” or “The Qtel Group” or “The Group”) (Ticker: QTEL.QA) today announced sound financial results for the period ending 31 March 2009, as the company’s diversified growth strategy continued to provide it with a strong basis for returns during a challenging economic period.

Financial Highlights:

In the first Quarter of 2009, Qtel achieved consolidated group revenue of QAR 5.6 billion (Q1 2008: QAR 3.5 billion), growth of 58 percent. The Group’s net profit attributable to shareholders for the same period reached QAR 604.4 million, registering 15 percent year-on-year growth. The Group’s consolidated customers stood at 55.9 million.

A range of factors enabled the company to deliver these results, including management focus on profitable growth; the defensive positioning of the telecommunications sector; ongoing development in key markets such as <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Qatar, Iraq and Indonesia; and the Qtel Group’s strategic balance across a range of markets and product areas.

Announcing the results, His Excellency Sheikh Abdullah Bin Saud Al-Thani, Chairman, Qtel, commented: “The Qtel Group continues to deliver positive results for its customers and shareholders, driven by our Group’s record of investment in key growth areas as well as prudent and responsible management, and enabled by our solid connection with our customers. Taking into account the changing economic climate, we have consolidated our position in established markets and sought to uncover new efficiencies in order to enhance continuing profit growth.”

“One of the key events during the quarter was the successful completion of the tender offer for Indosat, which has increased our ownership to 65 percent.  We will aim to grow our businesses prudently in all of our markets in the light of current economic conditions, to ensure that we are able to continue to serve our customers with market-leading products and services," he added.

The drive to consolidate and extract cost and revenue synergies contributed to progress across the Group in Q1 2009. EBITDA has increased 49 percent in the first quarter compared to the same period last year, to stand at QAR 2.7 billion (Q1 2008: QAR 1.8 billion).  Qtel’s increasing international profile continues to enable the Group to deliver strong results and manage risk across multiple markets more effectively.

Dr. Nasser Marafih, Chief Executive Officer, Qtel commented: “The strength of our performance across our operations demonstrates our capacity to deliver profitable growth both in periods of high regional economic prosperity and during more challenging global economic times. Despite the global economic pressures we have remained focused on retaining our existing customers, winning new ones and realizing value. The Group now has balance across its assets, with access to stable growth markets as well as growing revenue opportunities in developing markets.  This breadth is serving us well as we continue to navigate 2009.”

"We continue to steadily and successfully consolidate our latest addition, Indosat, into our wider Group and continue to focus on enhancing the performance of our operations, taking into account the current economic and competitive environment. The knowledge flow between the different parts of the Qtel Group is also contributing significantly to our competitive positioning, particularly in newly-competitive markets like Qatar, and also helping us launch innovative services across our operations. Our major strength remains our in-depth understanding of our customers’ distinct needs, and this connection has brought us closer to them in the current period,” he added.

Review of Operations

Each of the Group’s operations has continued to make progress during the first quarter of 2009:

Qtel Qatar

The Group’s operations in its home nation of Qatar continue to perform strongly, with Qtel Qatar’s active customer base closing Q1 2009 24 percent higher than in Q1 2008 at 2.1 million (Q1 2008: 1.7 million).  Revenue continued to grow during the quarter, standing at 31 March 2009 at QAR 1.5 billion (Q1 2008: QAR 1.2 billion), 18 percent higher than at the end of the first quarter of 2008.  EBITDA also showed growth, increasing 9 percent over Q1 2008 to stand at QAR 898.7 million (Q1 2008: QAR 822.4 million).

Qatar’s consumer telecommunications sector continued to develop in the first quarter of 2009, reflecting the nation’s continued healthy economy as well as Qtel’s success in delivering the preferred choice in products and services. Qtel Qatar continued to consolidate its leadership position ahead of the expected launch of domestic competition in 2009. The redevelopment of both HALA Pay As You Talk and Shahry – Pay Monthly to offer greater flexibility and a wider range of options continued to drive revenue and usage.  Qtel Qatar also continued to invest in its retail presence in country, with the launch of several concept stores which offer the widest range of consumer landline, broadband and entertainment services in a single convenient location. 

Ongoing investment in Qatar’s Broadband infrastructure, under the ambitious “Broadband Qatar” initiative, has made an important social contribution to the nation, as well as ensuring that Qtel remains at the forefront of a technology set likely to deliver significant returns in the future.  In March 2009, for the first time in Qatar’s history broadband penetration in Qatar exceeded more than 50 percent of Qatari households.  The increasing accessibility of broadband has driven the popularity of services such as Moziac TV+ and seen strong take-up of the new Unlimited Mobile Broadband plan, also launched in March 2009.

Indosat

In spite of unprecedented economic challenges and pricing and competitive pressures within the Indonesian mobile marketplace, Indosat delivered solid Q1 2009 revenue growth in local currency terms. In Qatari Riyal, revenue for Q1 2009 stands at QAR 1.4 billion (Q1 2008: QAR 1.7 billion).  Customer numbers increased over the comparative period last year, standing 26.1 percent higher at the close of Q1 2009 at 33.3 million (Q1 2008: 26.4 million).  Profitability was maintained, with Indosat delivering EBITDA for Q1 2009 of QAR 704.1 million (Q1 2008: QAR 867.4 million).

Wataniya Telecom

Wataniya Telecom (“National Mobile Telecommunications Company K. S. C.”) covers the Qtel Group’s presence in Kuwait, Tunisia, Algeria, Kingdom of Saudi Arabia, the Maldives and Palestine.  During the first quarter, Wataniya Telecom maintained its profitability, reporting EBITDA for Q1 2009 of QAR 550.4 million (Q1 2008 QAR 611.4 million) and revenue of QAR 1.4 billion (Q1 2008 QAR 1.5 billion, USD).  Wataniya Telecom’s consolidated active customer base also increased despite increased competition in many markets, particularly Kuwait, by 16 percent year-on-year to close Q1 2009 at 11.5 million (Q1 2008: 9.9 million).

During the period the Company continued to take specific actions to maintain its competitive edge in certain markets, such as measures to protect its competitive positioning in Kuwait to account for the recent elimination of termination fees levied on calls received from the fixed-line network.

Asiacell

In Iraq, the Qtel Group operates under the Asiacell brand.  Building on its strong performance in 2008, Q1 2009 saw Asiacell continue to grow its customer base from 4.1 million in Q1 2008 to 6.7 million at the close of Q1 2009  In Q1 2009, Asiacell also successfully delivered revenue of QAR 878.5 million, significantly higher than in Q1 2008 (Q1 2008: QAR 545.0 million).  EBITDA growth was also achieved, with EBITDA growing 67% percent year-on-year to close Q1 2009 at QAR 446.7 million (Q1 2008: QAR 268.1 million).

Nawras Telecom

Nawras, the brand under which the Qtel Group operates in Oman delivered a good performance in Q1 2009, achieving success in growing revenue away from traditional voice services towards higher value services such as roaming and data.  Customer numbers in Q1 2009 increased by 37.2 percent to 1.6 million (Q1 2008: 1.2 million) and the Company achieved revenue of QAR 362.7 million, broadly in-line with typical seasonal patterns and an increase on Q1 2008 of 28 percent (Q1 2008: QAR 282.8 million).  Nawras also continued to grow EBITDA in the quarter, delivering an EBITDA increase on Q4 2008 of 41 percent to QAR 147.3 million (Q1 2008: QAR 104.7 million).