Kyivstar Group's Q3 revenue rises 21%, driven by digital services and strategic investments amid Ukraine's recovery efforts.

OPERATOR - (00:01:49)

Good day and thank you for standing by. Welcome to the Kyivstar Group Third Quarter 2025 Earnings Conference Call and webcast. At this time all participants are in listen only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press 11 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press Star one again. If you wish to ask a question via the webcast, please use the Q and A box available on the webcast link anytime during the live event. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Cole Akerson. Please go ahead, sir.

Cole Akerson - Group Director of Investor Relations - (00:02:33)

Good afternoon and good morning. We are excited to welcome you to Kyivstar Group's first earnings call as a publicly listed company for the third quarter of 2025 that ended 9-30-20. I am Cole Akeson, Group Director for the Keystar Investor Relations team. Please allow me to introduce our senior management in the room today. Mr. Khan Terzioglu, Chairman of the Board, Mr. Oleksandr Kamarov, our CEO Mr. Boris Dalgushin, our CFO and Mr. Anand Ramachandran, Chief Corporate Development Officer for Veon. Today's presentation will begin with Oleksandr detailing the key highlights and business updates, followed by a discussion of the financial results from Boris. We will then open the line for your questions. Before we begin, please note that today's presentation may include forward looking statements which involve certain risks and uncertainties. Pardon? These statements relate to the company's expected performance, 2025 guidance, market developments, operational and network investments and the company's ability to realize its targets and initiatives. Among other things, actual results may differ materially due to risks detailed in Kyivstar's July 2025 Form F4 and other filings with the SEC. The earnings release and presentation, including reconciliations of non IFRS measures are available on our investor relations website. With that, let me hand over to Oleksandr.

Oleksandr Kamarov - CEO - (00:04:14)

Thank you Cole. Good afternoon and good morning. Today we are excited to host our first quarterly earnings call as a U.S. listed company. We are proud that the third quarter not only produced robust financial results, but also clear strategic progress to transform Kyivstar into a digital service provider with a telco license. Kievstar remains a national champion in Ukraine's recovery and the unique investment opportunity. Let me start with the numbers. Revenue grew 21% year on year in Hryvnia or 20% in US dollars. EBITDA grew 21.5% in Hryvnia and 20% in US dollars. We continue to generate very healthy cash flow. Secondly, let's focus on the digital services. Direct digital revenue grew more than five times and now contributes nearly 12% of Keystar revenue. Our ride hailing business Uklon contributed much of this growth since its consolidation in April. Expanding our digital ecosystem remains central to our strategy as reflected in our 49% rise in monthly active users year on year up to A record high 13.5 million monthly active users. Thirdly, our growing ecosystem of services continues to expand keystar role in our customers daily lives. Multiplayer users, customers who are using Telco and at least one of our digital services grew 25% year on year to reach 32% of our user base. This cross engagement raise ARPU higher and strengthen customer retention. Finally, we continue to make solid progress on delivering on our strategic priorities. Our NASDAQ listing has set a transparent Group valuation of 2.8 billion. We are the first Ukrainian company to list on US exchange, offering investors a unique opportunity to take part in Kivstar Digital Transformation and Ukraine's recovery In August we completed first in Europe test of Starlink direct to sale services. We plan a full scale commercial launch in the coming weeks. We are making good progress on developing Ukraine's first National Large Language Model or LLM in partnership with the Ministry of Digital Transformation. The LLM is the first to be trained exclusively on Ukrainian Language dataset with a first version scheduled for release by December. The next slide summarizes performance for the quarter. Total revenue grew 21% year on year to 12.3 billion Grivner or US$297 million. Telecom revenue grew 9% in local currency driven by our differentiated products and services continuing to lift ARPU and subscribers engagement. The exponential growth in direct digital revenue was driven by Uklon's consolidation in like for like terms. Without Uklon Digital revenue grew a strong 89% year on year. EBITDA climbed 21.9% year on year. The EBITDA margin reached 57%. Reported net profit for the quarter was negative US$89 million with reported earnings per share at a negative US$0.41. However, that was driven by a $162 million one off non cash charge related to sponsor shares in a connection with the Keystar listing. Excluding this impact, Q3 adjusted net profit was positive $73 million. The 10% decline in adjusted net profit was driven by a lower interest income and non operational gains relative to the third quarter of 2024. Adjusted EPS for Q3 was $0.33, which took our nine month EPS to $0.93. Moving on, our 29% LTM CapEx intensity as of Q3 reflects ongoing initiatives on energy resilience, network modernization, securing and sustaining coverage in line with our Invest in Ukraine now program. Despite these escalated investments, we generated free cash flow of $174 million in Q3, bringing the LTM figure to 373 million. Finally, we ended the quarter with a cash balance of $472 million, sustaining our fortress balance sheet going segment by segment on the next slide, Let me start with mobile. Operationally, mobile subscribers ticked up quarter on quarter to 22.5 million. A weaker year on year trend reflects Ukraine's present demographic pressures. In fact, our annualized churn rate improved markedly to 9.9% from 16.2% last year. Altogether, we continue to lead with the highest market share in Ukrainian mobile. Mobile ARPU maintained double digit growth rising 41% year on year to 153 grivne equivalent to US$3.7 for the quarter. Repricing of legacy plans Multiplayer user growth and rising data use drove ARPU higher, reflecting customers adopting more of our digital services. This is also reflected in continued expansion of 4G which has gained 4 points in the past year to reach 66.5%. On the next slide, I will focus on a fixed line where we saw 3% year on year growth in Q3 to reach 1.2 million subscribers. This market is highly fragmented, however we maintain the largest market share in the country in this segment as well. We are making good progress on our cross sales initiatives across the customer base. As an example, 45% of our fixed line subscribers now also subscribe to our digital entertainment platform Kyivstar TV, an increase of about 4.5 percentage points year on year. Cross Sales and Synergies how our connectivity and digital services complement one another brings me to the core of our digital growth strategy. Multiplay. Multiplay counts customers that use at least one digital service in addition to voicing data services. The multiplay segment drives growth through stronger customer engagement, higher data consumption, more frequent usage of voice services, improved retention. Our multiplayer customers also generate higher ARPU than voice only subscribers. On the right you will see multiplayer users grew 29% year on year to 6.6 million. They now represent 32% of our one month active base and contribute 45% of customer revenue. Let me now dig deeper into our digital revenue performance. I have highlighted how Digital grew over five times to reach nearly one and a half billion Hryvnia this quarter or almost 12% of revenues. I would like to underline three main points. First, while the consolidation of Uklon from April magnified our digital revenues even in a like for like terms, excluding Uklon, digital revenues grew 89% year on year. Secondly, the growth spans all verticals healthy keepstart tv, Digital Enterprise and oclon. Thirdly, our sustainable cost advantages are our low customer acquisition cost and our optimized distribution model. This enables us to maintain profitability and strong unit economic moving to Uklon, our ride hailing business. In 3Q alone, Uklon contributed 1 billion Hryvnia in revenue and 378 million Hryvnia in EBITDA. The platform grew rides booked by 13% year on year to 42.2 million and deliveries by 33% to 1.2 million. For September alone, monthly users rose 16% to 3.6 million. In Uzbekistan, Oklone is expanding its driver network and ride volumes, customer engagement and also improvement. Oklon's EBITDA reflects a growing and profitable business in Ukraine as well as our investment into scaling the business in Uzbekistan. Uzbekistan is a high potential market and UCLA's early traction gives us confidence in its ability to scale on the next slide. Our digital enterprise business contributed to gain traction this quarter. Demand is rising across Ukraine corporate and government sectors for cloud, cybersecurity, big data and advanced connectivity solutions. The business generated 222 million Hryvnia in revenue this quarter, up 81% year over year. It also connects other parts of our ecosystem. Businesses are increasingly turning to keystar as trusted digital transformation partner and we are seeing steady growth in both the number of clients we serve and the depth of services they consume. Advizor, our self service AdStage platform, handles campaign management for B2B customers. It enables targeting, audience engagement and optimization. Keystar tech is shifting from internal IT function to offer it digital and AR services to the external customers. Kyiv Startetch is also leading the way on our partnership to build an LLM with Ukraine's Ministry of Digital Transformation. The model captures Ukrainian dialects, terminology, history and cultural context. It also processes sensitive national data within Ukraine, critical for sectors that span government, defense, healthcare, financial services and more. The first version is scheduled for release in December. Kstar TV continues to strengthen its position as Ukraine leading digital entertainment platform, delivering high engagement and deeper customer integration across our ecosystem. We offer it as a fixed iptv broadband service and as a mobile OTT application. The business revenues grew 137% year on year in Q3 to 140 million Hryvnia. We have also shifted our TV partnership to a platform rent model. This moves us closer to the end customers to the content creation, enhancing KeyStar's role and direct customer engagement. The move to the new model accounts for about 45 million Hryvnia for this quarter's revenue with little impact to profits. Excluding this change in model, revenue growth would have been 64% year on year. As of September, 34% of our broadband users subscribed to Keystart TV. Monthly active users for September on the ott application rose 32% to 2.1 million. We are pleased to share that customer engagement is rising. Users are spending more time on the platform, consuming more content and interacting more deeply with our ecosystem services. Now we have Halcy on the next slide. Halcy, Ukraine's leading health stage platform. As of end of September, Healthi had approximately 29 million registered patients with access to more than 1,600 health institutions and over 38,000 medical professionals. Revenue grew 51% to 76 million. GMNA monthly active users for September reached 2.5 million, up 5.6% year over year during the quarter. Healthy added analysis and telemedical consultations to its subscription model. In September we launched the Healthy Superpower. It's a health hair subscription service for Keystar users. Healthy is deeply embedded in Ukraine's eHealth ecosystem, which manages appointment scheduling, prescriptions and health records management. This motivates patients and providers to continue working with the platform. The service also contributes to a major national priority while reflecting our company's commitment to ESG by providing access to digital healthcare during the wartime. Let me now pass the call to Boris Delvusion to talk through the financial in more detail.

Boris Dalgushin - CFO - (00:17:53)

Thank you Alexander. We delivered total revenue of 12.3 billion Hryvnia in Q3, up 21% year over year. In dollar terms, revenue reached 297 million, up 19.8%. Telecom revenue grew 9% year over year to 10.9 billion Kriva in Q3 driven by RPU expansion. That expansion in turn reflects disciplined repricing, rise in mobile data consumption and mitigation and migration to 4G. Direct digital revenue sold more than fivefold to 1.5 billion green in Q3, reaching almost 12% of total revenue. Growth came not only from the Uclone acquisition, but also multiplay and growth across all our digital verticals, including Digital Enterprise Solutions, Keystar TV and Healthy. On profitability, EBITDA grew 21.5% year over year to 7.1 billion Hrivna in Q3. In dollar terms, EBDA reached 171 million up 20.4%. The quarter's EBITDA margin reached 57.6%, up 300 basis points year over year reflecting effective top line growth and cost management. Uklon contributed 378 million krivna in EBDA in Q3 or $9.1 million with an EBITDA margin of 36.8%. I will highlight here that digital margins are structurally lower than telecom margins, but capex intensity is significantly lower resulting in incomparable cash conversion. As the revenue mix shift towards digital, we are focused on sustaining EBITDA growth at scale while enhancing group wide capital efficiency and long term free cash flow. Generation Q3 capex total 3.7 billion krivna of $89 million. On an LTM basis, capex intensity stands at 29.1%. As Alexander noted earlier, this reflects our investment to sustain and improve quality across our services inclusive of network modernization, regulatory compliance measures and installations that support network resilience. As of September we operated more than 3.6 thousand generators and more than 240,000 additional batteries for backup capacity and improved network resilience. Despite these escalated investments, Keystar continues to generate substantial free cash flow. Last 12 months Equity free cash flow before visas and licenses reached 15.5 billion krivna or 373 million doll. Turning now to the balance sheet, we ended the quarter with 19.5 billion Hryvnia or US$472 million in cash. With this solid cash position, we are continuing to be exceptionally well placed to fund growth while keeping a prudent and flexible capital structure. Debt excluding leases stood at 4.1 billion or approximately $100 million. Most of this reflects debts to VON and Ukrainian Tower Company. There is no external finance lease liabilities of 14.5 billion Kryvna or $353 million arise mainly from our infrastructure lease agreements with Ukrainian Tower Company which are fully recognized under IFRS 16 standards. Let me now hand the call back to Alexander.

Oleksandr Kamarov - CEO - (00:21:27)

Okay, thank you Boris. So on the next slide on this one. Yes, let me briefly update you on the strategic priorities in mobile telecom business. We are focused on sustainable market leadership through maintaining and developing high quality paying subscriber base technological leadership ecosystem of existing and new digital products and innovations like direct to selling in fixed broadband market. We want to strengthen group leadership via organic expansion and acquisitions in digital. We have concentrated on growing digital offerings organically and through acquisitions and increasing multiplayer penetration and customer engagement. Let me conclude with our outlook for the next year. Despite the challenges and uncertainties, KSTAR continues to execute strongly. For the full year 2025, we expect revenue growth of 24 to 27% and EBITDA growth of 23 to 26% in the local currency terms. As we look to the fourth quarter, we expect EBITDA to reflect higher costs that occur seasonally. At the year end, we expect our underlying growth trajectory to remain intact. In US dollar terms, we expect this to translate to 20 to 23 for revenue growth and 19 to 22% for EBITDA growth for the full year. As human exchange rates do not fluctuate significantly from current levels, we expect CAPEX intensity in the range of 30 to 33% as we target investments to further strengthen our network resilience. This outlook reflects the best visibility we have today, but obviously is subject to the significant external uncertainties that we are facing on the next slide. Let me summarize. We are uniquely positioned as the only direct dedicated equity exposure to Ukraine listed on US Stock Exchange. Despite the geopolitical issues, we are leveraging our digital momentum, substantial cash flow and fortress balance sheet to drive expansion, reinforce our network resilience and play a leading role in Ukraine's stage sector. Our operational and financial performance, including double digit digit growth across segments, reflects not only the attractiveness of our offerings and markets, but also the execution strength of our team. Regardless of difficult external environment, we remain confident in Kyivstar's trajectory and the opportunities before us. We are committed to shaping Ukraine's digital future, from AI and cloud capabilities to offering our customers more ways to connect with each other and the world. Thank you for your support for Ukraine and Kyivstar. I think now we can open for the line for Q and A.

OPERATOR - (00:24:38)

Thank you so much. Dear participants, As a reminder, if you wish to ask a question, you need to press 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press Star one and one again. Alternatively, you can submit your questions via the webcast. Please then bow or compile the Q&A queue. This will take a few moments and now we're going to take our first question and it comes to the line of Jesse Sobelson from btig. Your line is open. Please ask your question.

Jesse Sobelson - Equity Analyst - (00:25:11)

Hi everyone, thanks for taking my question. I noticed churn decreased significantly to 9.9% from almost 15% last quarter and this seems to be the first quarter in at least the last two years that saw a sequential increase in mobile Subscribers. Can you elaborate on the main factors driving this improvement? Was it predominantly due to the multiplayer strategy, increased digital engagement?

UNKNOWN - (00:25:32)

Was.

Jesse Sobelson - Equity Analyst - (00:25:33)

Or any particular retention initiatives that might have made this most impactful?

Oleksandr Kamarov - CEO - (00:25:42)

Let me be sure that I do understand your question correctly. Okay, so you are asking about the customer base dynamics. Yes. And here we see two actually trends. The first one is the overall market decline. It is very much driven by decline of the dual SIM penetration and the growth of the multiplayer customers with the Kyivstar customer base. It is very much driven by the engagement of our telecom customer base into the different digital services. Okay, so as you see, we reached a record high 30 plus percent of the multiplayer penetration in our customer base. And this segment of the customer base is already contributing more than 45% of the total revenue.

Jesse Sobelson - Equity Analyst - (00:26:33)

Okay, great. I appreciate understanding the strength of that customer. There's another piece that I wanted to touch on too. You know, Veon recently announced that Ukraine is aiming to transition to an independent tower ownership model. Could you elaborate on what this shift means for your business? Specifically in terms of operational flexibility, potential costs and any potential impacts to the balance sheet? Thank you.

Khan Terzioglu - Chairman of the Board - (00:26:58)

Okay, I think there are two questions in one. Okay. The first one is probably to Veon and we own strategy. Okay. So with regard to the tower calling passive infrastructure business. And the second one is probably I will ask Boris to handle about the financial impact of our lease liabilities. Hello. Hi, Jesse. So this is Khan. You know, with regard to our strategy of having asset light service companies and spinning out our towers, Ukraine is no different. We have already done that. We have Ukrainian tower company as a standalone entity which is owned directly by Vyond. And of course all the managed services contracts and tower rental agreements are done on a fully arm's length basis with with Kievstar. But I think ultimately it is critical that these type of tower companies do not only serve one operator, but serves multiple operators. And I think this is the area where we see the real value creation as our tower company will convert itself into an independent tower company serving multiple operators and creating value and potentially efficiencies for Kiev Star as one of the customers of the tower company. And that execution process continues. Thank you, Jesse.

Boris Dalgushin - CFO - (00:28:24)

I would add from the finance perspective. So Ukrainian tower company works on the arm's length basis with the KGL Group as well with all other providers on the market. So absolutely mirror terms for all market players. So what you see in our balance sheet is lease liabilities $353 million. These are the liabilities predominantly to the Ukrainian tower company as the main provider. Of the towers for us. So we do not expect any changes due to any ownership change in the UTC as we are on the arms land spaces.

Jesse Sobelson - Equity Analyst - (00:28:59)

Great, thank you.

OPERATOR - (00:29:00)

Thank you. Now we're going to take our next question and it comes to line of yifu Lee from Cantor Fitzgerald. Your line is open. Please ask your question.

Yifu Li - Equity Analyst - (00:29:13)

Good morning, good afternoon. Alexander and Boris, thank you for taking my questions and congratulations on your first earnings call as a publicly traded company. Well done team. So I just want to focus on the growth fact the growth driver. Alexander and Boris, the direct digital revenue at nearly 12% of total operating revenue for this quarter. Just want to take a step back on the Strategy. Newly integrated UConn is by far the largest in scale but we are seeing very healthy year on year growth across Kyivstar TV over 130%, digital enterprise over 70% and healthy over 50% while at a small base of course.

UNKNOWN - (00:29:49)

Right.

Yifu Li - Equity Analyst - (00:29:50)

So Alexander, can you discuss next steps in terms of scaling these other digital services and assets? Any bolt-on acquisitions in mine or organic development? And I also have a couple of more. One more for you and another for Boris.

Oleksandr Kamarov - CEO - (00:30:08)

Let me take it from the strategy perspective. Of course I can't make any, let's say hard forward looking statements.

UNKNOWN - (00:30:16)

Okay.

Oleksandr Kamarov - CEO - (00:30:17)

I just want to somehow reconfirm our strategy of organic and non organic development of the digital operator with the telco license. Okay. So and from this perspective we are focused on developing new digital services inside Kyivstar and I will say right acquisitions if we will have such type of opportunities. I can't comment on any work in progress despite even some kind of media around these questions. Okay. Until we will have proper Sale and Purchase Agreement (SPA) in place and anti monopoly committee decisions.

Yifu Li - Equity Analyst - (00:30:54)

But any areas you're looking at Alexander, just to give us some flavors what. you're thinking in terms of.

Oleksandr Kamarov - CEO - (00:31:03)

We have disclosed at the let's say listing process that we are interested in developing first our current verticals. Okay. So modern mobility, digital health. Okay. We are interested in the verticals like FinTech, e-commerce and adtech. So these are priorities but at the same time we are quite open in our mind for other opportunities that we will consider will help us to rise engagement, to improve retention and to create value.

Yifu Li - Equity Analyst - (00:31:38)

Got it, got it. Extremely helpful in naming these sectors. So in the analyst day in August, you know Chen Khan talked about this concept called augmented intelligence. Want to circle back Alexander on the first national Large Language Model development in collaboration with the Ukraine Minister of Digital Transformation. So can you discuss how this model is built? Are you partnering up with Leading foundational model providers like OpenAI, Anthropic, et cetera. And what do you envision, Alexandra? The revenue uplift will be when these large language model capabilities, especially if incorporated to the greater platform, especially to the TSR cloud services.

Oleksandr Kamarov - CEO - (00:32:25)

Yes, for the time being it's a partnership project between keystar and the Ministry of Digital Transformation. So we are at the stage to choose one of the open models to be developed into the proper Ukrainian LLM based on the Ukrainian data set that will be collected by the Ukrainian, let's say government, Ukrainian authorities as a unique digital available data set in Ukraine. From our side we invest into the development team that will lead the whole process and into the computing power that will be provided for the LLM creation. As a result, we would like to establish a quite strong cooperation with the Ministry of Digital Transformation with a certain rights that will belong to the keystar for the further digital product developments with AI Incorporated.

Yifu Li - Equity Analyst - (00:33:24)

Got it, Got it. And then on the financial sidebar, let. Me turn to you right, 162 million. In public listing costs, should we expect going forward any of these additional charges coming in in later quarters in terms of lagging and also I want to turn back to the annualized churn rate. Obviously we've seen great improvements to now high single digits 9.9% this quarter I think best we've seen since 2021. Want to get your thoughts on the ground trends you're seeing. Can we kind of say the telecom base is stabilizing or am I too. Early to call a bottom here.

UNKNOWN - (00:34:13)

As.

Yifu Li - Equity Analyst - (00:34:13)

The telecom revenue is still expanding at a solid 8% growth. And that's it for me. Thank you guys. Thank you. Yi.

Boris Dalgushin - CFO - (00:34:20)

So let me take the first part of your question. About 162 million listing loss and I think Alexander would comment the revenue dynamics for the telco business for the listing loss. This is a one off listing loss due to the transactions for bringing the company public. So answering your question, we do not expect any impacts of this in the future. We do have warrants (financial instruments) on our balance sheet. So the warrants (financial instruments) as you know, kind of, they are regulated on a quarterly basis depending on their kind of actual trading dynamics. So otherwise than this we do not expect any impact on the recurrent performance.

UNKNOWN - (00:35:03)

Okay.

Oleksandr Kamarov - CEO - (00:35:04)

In telco business we are growing 9% in the local currency year on year. And in general we do expect that we will be able, for example to sustain, for example, for example reasonable level of growth taking into account a relatively high inflation in Ukraine. Okay, so whatever you See right now as a result is in line with our strategy that we actually declare it beforehand is to ensure, for example healthy top line growth that will help us to create shareholders value despite for example double digit inflation in Ukraine.

Yifu Li - Equity Analyst - (00:35:42)

Got it. Thanks Alexandra and Boris. Let me touch on the line.

UNKNOWN - (00:35:47)

Thank you. Thank you.

OPERATOR - (00:35:51)

Dear participants, as a reminder, if you wish to ask a question over the phone, please press Star one on your telephone keypad. Alternatively you can submit your questions via the webcast. And at this moment I would like to hand over to the management team for any written questions.

UNKNOWN - (00:36:10)

Thank you Nadia. As Nadia said, if you happen to want to present your question verbally, please do let us know. We'd be happy to hear you. Otherwise, I will begin reading off some of the written questions. First we have Vladislav Khusya from I believe the Kyiv School of Economics. Please correct me if I butchered your surname. Vladislav.

Vladislav Khusya - (00:36:33)

Thank you. He asks, could you please describe the detailed listing cost, the 162 million USD for listing.

Boris Dalgushin - CFO - (00:36:43)

So the listing cost is calculated as the difference between the share price given to Cohen Circle. So the company beyond did this listing transaction with and the value of the net assets of Cohen Circle at the moment of the acquisition. So this is a one off impact of the listing transaction that you would not see further impact in KGL performance maybe.

Khan Terzioglu - Chairman of the Board - (00:37:12)

Boris, this is Khan. Just to add on to this, I agree with you, it's quite a big number. And I was as well, you know. Asking the same question to myself. In IFRS international financial reporting standards, the amount of shares that Cohen Circle got is considered as share based compensation. And this is actually the reflection of this. Very interestingly you might ask yourself the. Question, you know the value of Kiev. Star on our equity was 1.25 billion. We listed the company for 2.8 billion. So there should be actually a sizable profit around that. And we actually raised cash out of this. But because of IFRS and the rules around share based compensation treatment of this. Amount, this is the non cash hit. Basically on our P and L. Ben, thanks for asking the question so that we could clarify the situation.

UNKNOWN - (00:38:08)

Thank you Khan.

Natalia Shpigotska - (00:38:10)

Our next question is from Natalia Shpigotska from Dragon capital. She asked two questions in fact on CapEx. First off, how do we account for Uclone's acquisition in the 2025 CapEx numbers? Secondly, could you please explain what Right of Use Assets Investment part of the Capex stands for?

Boris Dalgushin - CFO - (00:38:33)

Let me take this one Natalia. Thank you for the question. So uklone is acquisition, so it goes directly to equity. So we do not include it in capital expenditures. So under our capital expenditures you need you see our normal kind of a capex in network in telco and other digital assets that we are developing. So Uklon price goes directly to the assets in terms of the right of use. So as I said what you see in lease liabilities kind of this is the right of use assets. So this is accounted under ifrs. So this is the fair value of all the future leases based on the existing contract where Ukrainian company kind of is the main provider but there are other providers apart from from UTC and definitely they are capitalized under IFRS 16 standard.

UNKNOWN - (00:39:25)

Thank you Boris. Our next question is from Ahmed Mostafa. At.

Ahmed Mostafa - (00:39:31)

What are the main drivers sustaining the momentum of the strong local currency revenue growth into the next year and what is our medium term target for digital revenues as a share of total?

Oleksandr Kamarov - CEO - (00:39:46)

Ahmed, thank you very much for your question. Okay, so I think what you see in Q3 is a perfect reflection of our strategy in action and this is what we are going to develop further into the future. Okay, so what you see is sustainable core telco business growth 9% year on year. You see almost 100% growth of our current digital revenue and non organic growth driven by Ooklon acquisition. So this is a pure reflection of what we would like to achieve as a combination of this magic formula of the digital service provider with telco license and this is what we will try to drive into the future as a base of our future success. The second question is what is the okay. Medium term target for digital revenue as a share of total? So we do not provide forward looking statements about this. Okay, so the only one reference I can make as a three year strategy that we have delivered at the Veon capital base a couple of years ago which actually stated that our objective Is to reach 15% of the digital revenue profile.

UNKNOWN - (00:41:04)

How it applies.

Serhi Yelthimov - (00:41:07)

Thank you Alexander. Our next question is from Serhi Yelthimov at the Kyiv National Economic University. Serhi asks what are the key milestones or KPIs that KevStar's management team is focused on achieving post IPO?

Oleksandr Kamarov - CEO - (00:41:27)

I think that at the end IPO did not affect our I will say our targets too much. Okay, so we have our priorities and these priorities is to transform Kyivstar from the telco service provider into the digital service provider as a result of growing number of digital services to ensure penetration of these services into our Kyivstar customer base and other mobile operators customer base. And through this combination of digital service provider with a Telco license to ensure a long term growth of the business, you know, so as a digital service provider. Okay.

UNKNOWN - (00:42:13)

Nadia, I believe we have another audio question.

OPERATOR - (00:42:16)

Yes, we do. Just give me a moment. And the question comes to the line of Yifu Li from Canto Fijirat. Your line is open. Please ask your question.

Yifu Li - Equity Analyst - (00:42:27)

Thank you again. Hey Alexandra and Boris, just a couple of follow ups. I'll make it quick. In terms of like Uklon performance, obviously, you know, great base at almost $25 million USD and very profitable. Was wondering if you think out like the long term trajectory, how big of a scale do you think this business could be? Because I think you're still scaling the delivery service on that.

Oleksandr Kamarov - CEO - (00:42:55)

Uklon has a number of opportunities. Okay. The first one which is I'm considered the basic one is a further growth in Ukraine market with a core ride hailing business. Okay. Because it will be very much driven by the overall, let's say economy development. Okay. And population development in Ukraine. The second one is non organic growth of the delivery business as it's a new business line for us with quite significant potential. The third one is development of the mobility ecosystem around the clone. And the first one is international expansion. So from my perspective the key to success of the oklone strategy is the right combination of these four drivers that will help us to create a profitable growth for the relative long term future.

Yifu Li - Equity Analyst - (00:43:54)

Got it. Makes sense. Ola Daddy, can I move on to the multiplay customer base and buzz, feel free to jump in.

UNKNOWN - (00:44:00)

Right.

Yifu Li - Equity Analyst - (00:44:00)

You know, 13% I think in terms of pricing to $3.7 USD join the IPO due diligence. I remember the listing due diligence. On the research side I remember one of the slide was it's still a third lower. Your ARPU base is still a third of the more developed countries in let's say Europe. Was wondering what's your longer term trajectory of this growth and how sustainable is this?

Oleksandr Kamarov - CEO - (00:44:35)

I'm leading keystar since 2018 and I think during these years we were able to demonstrate our ability to ensure sustainable ARPU growth. And this is actually our vision for the future. Together with this combination of telco services plus digital services mutual penetration, I think that we are making this way even a bit more, let's say attractive for the business and for the customer. We see a significant difference between ARPU of the multiplayer customer and standard telecom customer. And this combination of our digital service provider strategy plus leadership in the core telecom business gives us, let's say quite good perspective for the future. For the future ARPU growth.

Yifu Li - Equity Analyst - (00:45:35)

Next. Thanks. Start with additional color bars. And my final follow up is really the Starlink direct to cell satellite technology. Obviously it's a great humanitarian effort that you are really testing this technology, state of the art technology across the entire Ukraine. And you guys did it, I think a quarter ahead of schedule. Was wondering, you know, like it sounds like from the press release that it's included as part of the plan. Can you give us more color, Alexander Amboris, how you would monetize this? Or is this more of a customer retention, customer success mechanism? And that's it for me. Thank you gentlemen for taking all my questions.

Oleksandr Kamarov - CEO - (00:46:19)

Okay, so let me give you a bit more color about where we are right now. So we finalized all technical tests with the Starlink. Okay. We are technically ready and right now we are running a relatively big pilot for sixteen thousand customers across Ukraine. These are people who have volunteered to participate as an early adopters. This will give us a very clear conclusion about our ability to launch, to start a commercial, let's say launch of the direct to sales services across the whole Ukraine. So far the coverage is actually the whole territory of Ukraine from the commercialization perspective. We already declared that at least for the first year, this will be a free of charge services for every customer with a Kyivstar SIM card. And I think that this is a very, very right step taken into account the war in Ukraine and necessity to provide so important humanitarian connectivity services for the Ukrainians in every circumstances. Okay, so somehow we expect that it will be a right reaction from the customer base and will improve and strengthen our relationship with our customers significantly.

Yifu Li - Equity Analyst - (00:47:47)

So Andrew, just wanted to clarify. So after it's done testing, you're going to offer this product one year free for your customer. Obviously it's going to be much more loyal, right? And then you're going to monetize it afterward.

Oleksandr Kamarov - CEO - (00:48:00)

Is that the timeline? Yes, it's the right timeline. We feel free to modernize our commercial approach during 2026, but so far it is our plan.

Yifu Li - Equity Analyst - (00:48:13)

Okay, Excellent, Excellent, gentlemen, thank you.

OPERATOR - (00:48:16)

Thank you. Dear speakers, please be advised we do not have any further audio questions. Please kindly proceed with any written questions.

Jesse Sobelson - Equity Analyst - (00:48:27)

Thank you, Nadia. Our next question is from Jesse Sobelson at BTIG 2025 Capex intensity is guided at 30 to 33% of revenue above historical telecom averages. What is driving this level? And can you please clarify the split between network digital platforms and one time growth initiatives such as Starlink Direct to Sell or LLM development?

Oleksandr Kamarov - CEO - (00:48:54)

Let me start with our Capex strategies. We do understand that it is well above, let's say historical and average telecom level. And this is very much driven by the current circumstances. So our capex strategy is based on a few pillars. The first one is extensive investment into the network resilience and redundancy. The second one is accelerated investment into the 4G modernization and coverage development. Right now Keystar is a market leader and it was many times confirmed by Okla. And we are not just a market leader in a geographical coverage. We are market leader with the fastest network. We are market leader with the best network in Ukraine according to the quality of experience provided by Okra. And this is part of our strategy to ensure a technological leadership versus our competitors. And the third one? Yes, we invest into the certain developments, including LLM. And I would probably ask Boris to give some highlights about figures.

Boris Dalgushin - CFO - (00:50:06)

Yeah, thank you, Alexander. So I would start with the fact that we have presented our capital allocation policy during our previous investor call in New York. So we are consistent with the invest in Ukraine now strategy and in the joint commitment with beyond to invest up to $1 billion within three years. So we are way on track with this target.

UNKNOWN - (00:50:31)

So what we are doing here with.

Boris Dalgushin - CFO - (00:50:32)

30, 33% guidance, so we are reinvesting in Ukraine. So first of all in telecom business that we know well and that gives us a very solid returns as you can see from the numbers, also developing our digital footprint and also developing our MA strategy as a kind of a contribution to the digital ecosystem that we are building. So in terms of the numbers, what I would highlight that the telco business historically has been way higher capex intensity than the digital businesses we are investing in. So that's why they are less profitable in terms of marginality, but give you these comparable cash conversion. So some of these investments, like for example invest in Starlink Direct to Sell or LLM, they have rather opex path than capex part. So you would not see it until capex and capex guidance, but they again produce you for the cash result. And these are future projects that we are developing to complement the portfolio of the services that we have currently. So this is due to the situation we have in Ukraine. This is part of our commitment. And yes, we do understand that in the normal circumstance you would expect a number in the range of 17 to 19%. But this is our delivery tree investment. Thank you for the question, Jesse. Thank you both.

Ladislav Shveda - (00:51:56)

Thank you, Jesse. Our next question is from Vladislav Shveda at Team 10. What is Keystar's current M& A strategy and what specific company profiles are you targeting in the Ukrainian market.

Oleksandr Kamarov - CEO - (00:52:12)

Ladislav, thank you very much for your question. So I will probably focus on the general M and A strategy rather than specific targets. Okay, so from general perspective we have three priorities. The first one is non organic investments into the core business where we are interested in infrastructure providers and fixed broadband service providers. The second priority is non organic development of the digital ecosystem digital product digital services that help us to build and accelerate our digital ecosystem for the Keystar customers and Keystar B2B and B2C customers. And the third one is investments into the alternative energy where we are interested in actually all types of alternative energy like solar, wind and storages that will let us in a midterm perspective to hatch the power supply, the prices for the electricity and will make a significant contribution into the KeyStar ESG agenda.

UNKNOWN - (00:53:22)

Okay everyone, we are unfortunately out of time, but we appreciate all the questions that you've submitted today and as well as your interest in our company. You are already aware that if you'd like any follow up, you are very welcome to contact us@irstargroup.com thank you again, Duozhe Diakoyo and we will be seeing you next quarter. Thank you very much.

OPERATOR - (00:53:53)

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.