Vodafone Qatar

(QAR mn)(QAR mn)Global Research - QatarVodafone QatarEBITDA BreakevenWith positive EBITDA of QAR1mn in 3Q10-11, the company's EBITDA loss declined to QAR30.9mn in 9M10-11 fromQAR185.8mn reported in 9M09-10. The company’s operations turned EBITDA positive one quarter ahead of management’sexpectations. Management forecasts operations to report positive EBITDA on a cumulative basis by mid-2012 (calendar year).We expect Vodafone Qatar to turn EBITDA positive on a cumulative basis in FY2011-12. We expect EBITDA to increase atFY2011-12 to FY2013-14 CAGR of 45.3%.Capex and Cash Flow ForecastBased on our financial model we estimate Vodafone Qatar to achieve positive cash flow in FY2012-13. The company’s capexwas QAR235mn for 9M10-11 and management stated that capex for 4Q10-11 is estimated at QAR57mn. Capex relating tonationwide fixed-line deployment (under the National Broadband Network) are yet to be determined. However, managementexpects long-term capital expenditure expected to stabilize at 8% of revenue from 2013 onwards. We estimate Vodafone Qatar toachieve positive FCF in FY2012-13.500400Free Cash Flow Forecasts300200100-(100)(200)(300)(400)likely to achieve +ve cash flow2010-11e 2011-12e 2012-13e 2013-14eSource: Global ResearchOperations likely to achieve positive bottom-line in FY2013-14In 3Q10-11, the company reported a net loss of QAR144.4mn which declined by 1.2% YoY and 12.1% QoQ. We estimateVodafone Qatar’s bottom-line to remain negative till FY2012-13. We forecast the company to report net loss of QAR594.9mn inFY2010-11, QAR386.3mn in FY2011-12 and QAR166mn in FY2012-13. The operations are likely to achieve positive bottom-linein FY2013-14 with estimated full year net profit of QAR23mn.Net Profit Forecasts100.02010-11e 2011-12e 2012-13e 2013-14e-(100.0)(200.0)bottom-line likely to turn +ve(300.0)(400.0)(500.0)(600.0)(700.0)Source: Global ResearchMarch - 2011 12