Qatar’s Ooredoo Expects Revenue To Fall In 2015

Factors largely beyond its control have dulled Ooredoo’s lustre, and its profits for the past two quarters have missed analysts’ forecasts by a wide margin.



Qatar’s Ooredoo forecasts its revenue will fall by as much as three per cent in 2015 and core earnings will drop by a similar margin, a presentation by the telecommunications operator on its website shows.

Ooredoo, which has expanded its operations into about 15 territories in the Middle East, Asia and Africa, is considered among the best-run of the Gulf operators, having avoided the excessive prices which its regional rivals paid to build up foreign portfolios.

But factors largely beyond its control have dulled Ooredoo’s lustre, and its profits for the past two quarters have missed analysts’ forecasts by a wide margin. Last year, annual profit dropped 17 per cent to QAR2.13 billion ($585 million), the lowest since 2007.

The company forecasts its consolidated revenue in 2015 will be flat to three per cent lower than 2014’s QAR33.21 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) will fall by as much as four per cent over the same period. Ooredoo’s 2014 EBITDA was QAR12.95 billion.

HSBC cut its forecasts for the company in a note this month, predicting Ooredoo’s 2015 revenue would drop to QAR32.78 billion.

The bank expects the operator’s 2015 annual net profit to fall to QAR1.83 billion – slashing its previous forecast by more than QAR1 billion – and will only increase slightly the year after.

“The fundamentals of the domestic market remain strong, but some international operations like Algeria, Tunisia, Indonesia and Iraq have seen sharp deterioration in margins,” HSBC wrote.

In terms of revenue, Qatar, Iraq and Indonesia are Ooredoo’s most important markets, but the latter two suffered double-digits declines last year – Indonesia because of the falling value of the rupiah, and Iraq because of loss of service in many areas held by Sunni rebel groups.

“We anticipated competitive pressure and political instability to weigh on overall group performance,” NBK Capital wrote in a note. “However, management’s current guidance is more bearish than our outlook. We will be revising our forecasts downwards.”

Ooredoo declined to respond to questions from Reuters.