Vodafone Qatar -Equity Report -12-06-2012

Vodafone Qatar’s (VQ) revenues in-line while EBITDA margin beats our expectations. VQ’s 4Q2012 (fiscal year ends March) revenues grew by 12% year-over-year (YoY) to QAR 316 million, only 1% below our forecast but 16% below consensus estimates. EBITDA grew to QAR 42 million from QAR 4 million in 4Q2012, an EBITDA margin of 13.3% (compared to our forecast of 11.6%) up from 1.3% in 4Q2011. Net loss declined by 12% YoY to QAR 127 million.

Overall positive on 4Q2012 performance, recommendation downgraded to “Hold” on stock price rally. We like the operator’s 4Q2012 performance in light of slightly better than anticipated EBITDA margin performance, and view positively the forthcoming introduction of VQ’s postpaid products. We note that VQ’s stock price has rallied 22% year-to-date and currently stands 8% below our fair value, which we maintain at QAR 8.47 per share. Hence, we downgrade our recommendation from “Accumulate” to “Hold”