Ooredoo Qsc reports 3.2% revenue decline in 2015 and 1.5 pp EBITDA Margin growth from 37.6% to 39.2%
01 Mar 2016 • About Ooredoo Qsc (
$ORDS) • By InTwits
Ooredoo Qsc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ooredoo Qsc has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.4%. At the same time it's a lot of higher than industry average of 12.4%.
- CAPEX is quite volatile: 2,139 in FY2015, 2,555 in FY2014, 3,721 in FY2013, 5,075 in FY2012, 2,542 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.4%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 1.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Ooredoo Qsc ($ORDS) key annual financial indicators
| mln. QAR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 31,745 | 33,476 | 33,851 | 33,207 | 32,161 | -3.2% |
| SG&A | | | 8,225 | 8,305 | 7,757 | -6.6% |
| EBITDA | 14,566 | 15,389 | 14,360 | 12,492 | 12,595 | 0.8% |
| Net Income | 2,606 | 2,947 | 2,579 | 2,134 | 2,118 | -0.8% |
Balance Sheet
|
|---|
| Cash | 21,250 | 15,006 | 20,305 | 17,437 | 18,158 | 4.1% |
| Short Term Debt | 13,851 | 7,308 | 8,058 | 7,156 | 6,664 | -6.9% |
| Long Term Debt | 32,073 | 32,019 | 37,254 | 35,641 | 36,108 | 1.3% |
Cash flow
|
|---|
| Capex | 6,575 | 7,316 | 9,298 | 8,391 | 8,537 | 1.7% |
Ratios
|
|---|
| Revenue growth | 16.8% | 5.5% | 1.1% | -1.9% | -3.2% | |
| EBITDA growth | 18.7% | 5.6% | -6.7% | -13.0% | 0.8% | |
| EBITDA Margin | 45.9% | 46.0% | 42.4% | 37.6% | 39.2% | 1.5% |
| Net Income Margin | 8.2% | 8.8% | 7.6% | 6.4% | 6.6% | 0.2% |
| SG&A, % of revenue | | | 24.3% | 25.0% | 24.1% | -0.9% |
| CAPEX, % of revenue | 20.7% | 21.9% | 27.5% | 25.3% | 26.5% | 1.3% |
| ROIC | 9.0% | 9.3% | 8.5% | 6.4% | 6.4% | 0.0% |
| ROE | 13.0% | 12.1% | 9.8% | 8.8% | 9.4% | 0.5% |
| Net Debt/EBITDA | 1.7x | 1.6x | 1.7x | 2.0x | 2.0x | -0.1x |
Revenue and profitability
The company's Revenue decreased on 3.2% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.5 pp from 37.6% to 39.2% in 2015.
SG&A as a % of Revenue decreased slightly on 0.89 pp from 25.0% to 24.1% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
Ooredoo Qsc's CAPEX/Revenue was 26.5% in 2015. The company's CAPEX/Revenue increased on 4.7 pp from 21.9% in 2012 to 26.5% in 2015. It's average level of CAPEX/Revenue for the last three years was 26.4%.The company invested a big chunk of EBITDA (67.8%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (6.39%) and ROE (9.35%). ROIC showed almost no change in 2015. ROE increased slightly on 0.54 pp from 8.8% to 9.4% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 3.4x. Net Debt / EBITDA decreased on 0.1x from 2.0x to 2.0x in 2015. Debt showed almost no change in 2015 while cash increased on 4.1% in 2015.
Appendix 1: Peers in Fixed Line Telecommunications
Below you can find Ooredoo Qsc benchmarking vs. other companies in Fixed Line Telecommunications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Syqic ($SYQ) | 190.6% | 37.6% | 20.5% | 126.5% | |
| Alternative Networks ($AN.) | | -2.1% | -0.4% | 17.5% | 9.2% |
| Telecom Egypt ($TEEG) | -3.4% | 1.6% | 11.0% | 9.2% | |
| Verizon Communications Inc ($VZC) | | 4.5% | 4.1% | 5.4% | 3.6% |
| Rostelekom ($RKMD) | 7.4% | -0.2% | -1.6% | 2.8% | |
| |
|---|
| Median (13 companies) | 7.4% | -2.1% | -4.1% | -0.8% | -0.2% |
|---|
| Ooredoo Qsc ($ORDS) | | 5.5% | 1.1% | -1.9% | -3.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kt Corp ($KTCD) | 81.6% | 75.5% | 76.0% | 77.9% | 77.9% |
| Verizon Communications Inc ($VZC) | 58.6% | 60.1% | 62.8% | 60.7% | 60.1% |
| Telecom Egypt ($TEEG) | 45.0% | 41.4% | 41.9% | 44.2% | |
| Syqic ($SYQ) | 59.6% | 57.3% | 59.9% | 43.6% | |
| Alternative Networks ($AN.) | 38.1% | 39.0% | 39.2% | 41.2% | 41.3% |
| |
|---|
| Median (6 companies) | 51.8% | 49.4% | 50.9% | 43.9% | 50.7% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| O2 Czech Republic As ($O2CZ) | 41.6% | 39.1% | 38.6% | 41.0% | 29.9% |
| Koninklijke Kpn Nv ($0O8F) | 39.5% | 35.9% | 34.1% | 39.1% | 33.2% |
| Hellenic Telecom.Organization S.A. ($OTES) | 33.0% | 32.0% | 28.8% | 35.4% | 31.3% |
| Orange Polska Sa ($OPLD) | 39.2% | 34.3% | 30.1% | 33.2% | 29.1% |
| Rostelekom ($RKMD) | 40.8% | 39.7% | 39.0% | 33.0% | |
| |
|---|
| Median (13 companies) | 32.2% | 32.0% | 32.0% | 31.7% | 29.5% |
|---|
| Ooredoo Qsc ($ORDS) | 45.9% | 46.0% | 42.4% | 37.6% | 39.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Rostelekom ($RKMD) | 28.0% | 31.7% | 23.6% | 19.3% | |
| Telefonica Sa ($TDE) | 14.5% | 15.2% | 17.0% | 19.1% | 18.7% |
| Orange Polska Sa ($OPLD) | 17.5% | 16.6% | 16.9% | 17.6% | 16.9% |
| Hellenic Telecom.Organization S.A. ($OTES) | 14.2% | 11.7% | 14.8% | 15.4% | 16.9% |
| Verizon Communications Inc ($VZC) | 14.7% | 14.0% | 13.8% | 13.5% | 13.5% |
| |
|---|
| Median (13 companies) | 13.2% | 13.5% | 13.7% | 12.9% | 13.7% |
|---|
| Ooredoo Qsc ($ORDS) | 20.7% | 21.9% | 27.5% | 25.3% | 26.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| BT Group ($BT.A) | 23.3% | 23.6% | 27.0% | 34.7% | 37.5% |
| Syqic ($SYQ) | 64.3% | 38.9% | 3.2% | 33.9% | |
| Alternative Networks ($AN.) | 36.7% | 35.2% | 33.7% | 28.5% | 20.2% |
| Adept Telecom ($ADT) | 11.9% | 11.6% | 15.5% | 13.2% | 14.3% |
| Hellenic Telecom.Organization S.A. ($OTES) | 4.8% | 8.2% | 5.4% | 10.4% | 7.1% |
| |
|---|
| Median (13 companies) | 11.9% | 11.2% | 9.7% | 8.7% | 10.7% |
|---|
| Ooredoo Qsc ($ORDS) | 9.0% | 9.3% | 8.5% | 6.4% | 6.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telefonica Sa ($TDE) | 3.0x | 2.5x | 2.5x | 3.6x | 4.2x |
| Kt Corp ($KTCD) | 2.0x | 2.1x | 2.1x | 3.1x | 1.3x |
| Koninklijke Kpn Nv ($0O8F) | 2.4x | 3.8x | 3.4x | 3.0x | 3.6x |
| Verizon Communications Inc ($VZC) | 1.4x | 1.7x | 0.8x | 2.8x | 2.1x |
| Rostelekom ($RKMD) | 1.3x | 1.7x | 1.8x | 1.8x | |
| |
|---|
| Median (13 companies) | 1.4x | 1.7x | 1.1x | 1.4x | 1.2x |
|---|
| Ooredoo Qsc ($ORDS) | 1.7x | 1.6x | 1.7x | 2.0x | 2.0x |
