Kyivstar Group Ltd. (KYIV) Q2 2026 Earnings Call Transcript

Good afternoon, good morning. Thank you for joining us to discuss Keevstar Groups, or Keevstar's first quarter results. First, we're going to pass off to our moderators to provide you a few introductory instructions, and then we'll return to the table.

Hello and welcome to Keevstar's 2Q26 results presentation. Today's presentation will be followed by a Q&A session where we'll take questions from the room, as well as from virtual attendees. For those of you who have joined the Zoom webinar, if you would like to ask a question, you can use the raise hand button, which can be found on the black bar at the bottom of your screen at any time to join the queue to ask a question, and you'll be called upon during the Q&A session. For those of you watching on the webcast, if you would like to submit a written question, please use the ask a question tab at the top right of your screen. These questions can also be sent in at any time during the presentation. As a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Cole Aikison, you may begin.

Thank you. As noted, I am Cole Aikison, Group Director for Keefstar Investor Relations. Joining me today are Executive Chairman Khan Terziolu, CEO Alexander Komarov, CFO Tanner Kiziltoprak, and Anand Ramachandran, the Chief Corporate Development Officer for Vion. Before we begin, please note the date for your calendars. We will be hosting our first Capital Markets Day on November 16 in New York City. Details will follow. Returning to earnings, Alexander will begin with strategic and operational highlights, followed by Tanner with a review of our financial performance. We will then open the line for your questions. Before we begin, please note that today's presentation contains forward-looking statements which involve risks and uncertainties. Further details are available in our SEC filings, including our Form 20F, filed March 16, 2026. Our earnings release and presentation are available on our Investor Relations website. With that, I'll hand over to Oleksandr.

Thank you, Cole. Hello, everyone. I'm very pleased to see some of you here in New York in person. We delivered another strong quarter. Our telecom core is resilient. Our digital ecosystem keeps scaling. The two businesses fit each other, and we are rising our full-year outlook for the second time this year. Let me start with the numbers. Revenue reached $339 million, up more than 19% year-over-year. EBITDA grew nearly 14% to $188 million, with healthy margins in both businesses. Equity-free cash flow grew more than 32% to $104 million cash generation funds our growth. Second, our digital transformation. Digital revenue grew 83% year over year. This is one first quarter with a clone in both comparison periods, so the comparison is clean. Digital reached 21.7% of total revenue from just over 14% a year ago. This is a structural shift, not a side project. Third, our Multiply strategy. 8.1 million Multiply customers up almost 24% year over year. They pay more and they churn less. I will come back to the mechanics. Finally, three strategic developments during this quarter. The first one is Starlink. More than six million customers have used direct to sell, which now also carries light data for essential applications even without terrestrial signal. The second one is energy. We acquired six solar power plants in the Lviv region, strengthening our energy independence and hedging our electricity costs. The third one is sovereign AI infrastructure. More about this when we discuss the digital enterprise vertical. As for the scorecard, telecom and infrastructure revenue grew nearly 9% to $265 million on rising IRPU and data usage. Within your bid, the telecom and infrastructure generated $157 million at a 59% margin, and digital generated $31 million at a 42% margin. Both engines are profitable. Net profit declined nearly 6% year-over-year to $77 million, or $0.33 per share. The cost of the paper decline is one of non-cash items, a $21 million fair value charge on our listed warrants. Tanner will walk you through the mechanics and more later. Let's look at the mobile business starting with subscribers. Our mobile base declined nearly 3% year over year to 21.8 million customers. The main mechanism is double simmers. Many Ukrainians carry secondary low IRPU SIM cards. When they stop using extra cards, this fell out of the customer base. Demographics and seasonality play a role. Internal and the third-party estimates put our market share steady at approximately 47%. We focus on the quality of the base, not the volume. The quality shows in three numbers. The first one is churn, down almost a full point year over year to just over 14% annualized. The second one is IRPU. It grew more than 11% to $3.90. The third one is usage. 4G penetration passed 70%, and monthly data consumption grew more than 18% to almost 15 gigabytes per customer. These drive our double-digit telecom revenue growth in Gryvna. Fixed broadband grew nearly 11% to 1.3 million customers, households. Nearly half of them also subscribe to Kyivstar TV. One product pulls the other into the household. The fragmented market leaves room for organic and inorganic growth. Multiplay is a core of our engagement model, so let me explain the mechanics. A Multiplay customer uses voice, data, and at least one of our digital applications. These customers now represent almost 40% of our one-month active base, up more than eight points from a year ago, and a stable quarter-on-quarter at 8.1 million. The economics are simple. A Multiplay customer generates $5.80 in monthly IRPU. Compare that with the $3.90 of a mobile-only customer, a difference of nearly 50%. Multiplay customer also churns less. Engagement drives the top line and retention protects it. Now, the digital ecosystem. This chart shows grivna figures to eliminate currency effects from the comparison basis. But I will focus my comments on our reporting currency, the U.S. dollars. Digital revenue reached $74 million, up 83% year-over-year, and now makes up almost 22% of total revenue. Three points stand behind this performance. The first one is the broad base of our growth that spans all five verticals with Uklon, the biggest contributor. The second one is profitability. Digital EBITDA reached $31 million at 42% margin compared with almost 44% a year ago. The small decline reflects investment in new services as we scale the business. These platforms pay their own way. The third one is structure. Our telecom base gives a customer acquisition at a near zero cost, and multi-play bundles are our distribution channels. Moving to Oklon, our mobility platform. Oklon generated almost $33 million in revenue this quarter, up more than 50% year-over-year, and more than $12 million in EBITDA, up more than 35%. Real scale in Ukraine, a growing operation in Uzbekistan, active customer grew 8% to 5.2 million, rides grew more than 4% to 43 million, and deliveries grew almost 26% to 1.4 million. Uklon is becoming a one-stop solution for movement around and between cities. There are three moves to note. The first one is a multimodal transport. We agreed to acquire E-Wings, which adds electric scooters in 11 Ukrainian cities. With the travel service for intercity buses, Uklon covers more of the journey. Remember, Ukraine remains a no-flying zone, so buses and trains carry the country. The second one is autonomy. Uklon ran Ukraine's first live testing of autonomous vehicle technology. Uklon leader Sergei and I tested it personally, which you can watch on our YouTube channel. This technology is still at an early stage, but our testing places us first in this space at home. The third one is commerce. Our Uklon store pilot starts with the same-day flower delivery in Kyiv, applying Uklon's expertise in space adjacent to mobility. On the healthcare, Halsey is Ukraine's leading health-statch platform. Halsey served 5 million customers this quarter, and revenue grew almost 36% year-over-year to $2.4 million. The engine behind this growth is premium subscription, from 57,000 subscribers at the end of last year to more than 109,000 today. Family medical care plans and health insights, automatic interpretation of test results, biomarker tracking, drive the conversion, and our healthy superpower bundle inside Kyivstar mobile plan is the core channel to distribute. The foundation keeps widening. More than 43,000 doctors and specialists, around 1,800 healthcare institutions, and 2.4 million patient appointments booked in the quarter. Healthy is deeply embedded in the state e-health system, convenient to join and hard to live. It also eases access to healthcare during the war, which we are considering as a national priority. Then Tabletki, the leading online marketplace for pharmaceuticals and other healthcare products, its first full quarter with us after consolidation in February. The quarter was strong. Revenue reached $7.8 million and EBITDA reached $6.2 million and implied margin close to 80%. The margin follows from the model. Customer booked $376 million of gross merchandise value, but we recognize as a revenue only our commission and service fees. Low capital, very, very high conversion. The scale is national, 6.3 million customers, 15 million average monthly bookings, and more than 14,500 partner pharmacies across the whole Ukraine. Healthy and tabletki have natural synergies, and we are building toward a more connected patient journey, from doctor's appointment to prescription to a medicine order. And we are evaluating whether delivery could join that flow. We are taking a deliberate approach so that any changes serve customers well, create shareholders' value, and comply with regulatory requirements. Moving to entertainment, Cave Star TV remains the largest media streaming service in Ukraine. The customer base grew almost 48% year-over-year to $3.6 million, and revenue reached nearly $14 million. To be clear, the growth rate mainly reflects the move to gross revenue recognition last September. But underlying drivers are real, a bigger customer base, a high-demand exclusive content. Last quarter, I told you we would broadcast world boxing champion Alexander Usyk's latest high-profile boxing match. We deliver it with exclusive rights to the Usyk-Werhoven fight in Ukraine alongside premieres such as Kill House and the deep library of international and Ukrainian contents. Local, exclusive local content acquires customers and the ecosystems keeps them inside. From B2C to B2B, digital enterprise serves companies and institutions from small businesses to the largest. Revenue grew almost 16% year-over-year to $16.9 million. Active contracts grew more than 29% to 2,400. Two product lines drive the growth, big data and AI services and cloud. Advisor, our self-service advertising platform passed 4,100 registered clients. Now, Sovereign AI, two milestones this quarter. The first one is SAIVA, our Ukrainian large-language model in Kyiv's Artege portfolio. The latest model, 4B, a kind of pilot model, entered better testing and has achieved high marks in local competitive testing. The second one is infrastructure. In June, at the Ukrainian Recovery Conference, we signed a memorandum with Ukraine's Ministry of Economy to explore expanded cooperation in sovereign AI infrastructure. Any investment would be faced within our existing CAPEX framework, discipline, capital, national capability. All these parts serve one growth strategy. We are digital and communication service provider with a strong backbone in our telco business. In core connectivity, we intend to maintain market leadership. We focus on a high quality customer base and technological innovation. This quarter launch of direct-to-sell light data is a good example. We grow IRPU by expanding value to the customers, not just through price. In fixed broadband, we aim to expand market, share through organic growth and targeted acquisitions. Broadband brings entire households into our ecosystem. In digital, we scale through organic growth and strategic acquisitions, increase multi-play adoption, and deepen daily engagement with our customers. Our loyal telecom base is a launch pod for digital products. The next slide shows how we build the ecosystem step-by-step since late 2024. Spectrum, Uklon, Healthy, Starlink Direct-to-Sell, Solar, Tabletki, Storm, each move fits the same design. The newest one is energy. In May, we completed the acquisition of six solar power plants in the Lviv region, 105 megawatts total power, for roughly $81 million. With our first plant, Sunwin, our capacity now stands at 118 megawatts. Expected output equals roughly 30% of the electricity our telecom operations consume in a year. The logic is clear. Energy independence that hedges a major operational cost and reduces our exposure to potential green instability during the war. With that, I will ask Taner to walk you through the financials.

Thank you, Alexander. It's a pleasure to join my first earnings call as a Kiev Star CFO. Let me walk through the mechanics of the quarter. Total revenue reached 15 billion Hrivnia, up 27% year over year, $339 million, up 19%. EBITDA grew 21% to 8.3 billion Hrivnia, or $188 million. Digital's lower margin comes with lower capital intensity, so its cash conversion is comparable to telecoms. The resulting cash flow funds are expansion. Below EBITDA, one item deserves precision, the warrant charge. Our listed warrants are a fair value liability, $49 million at the end of June, against $28 million at the end of March. The $21 million increase runs through the income statement as a non-cash loss, driven only by the warrant's market price at quarter end. Net profit came to $77 million. Without the warrant item, it would have been $98 million. On investment, CAPEX was $59 million, 17% of revenue for the quarter, almost 27% over the last 12 months. On cash, net cash flow from operating activities reached $170 million, and acute free cash flow after leases and licenses reached $104 million, up 32% year-over-year, $243 million over the last 12 months. Turning on the balance sheet, we ended June with $364 million of cash and equivalents, up from $353 million at the end of March. Free cash flow flow absorbed the solar acquisition payment and still grieved the position. Growth step, excluding leases, stands at $88 million, largely payable to our majority shareholders beyond. Lease liabilities total $400 million, mainly from our tower agreements with Ukraine Tower Company, recognized under IFRS 16. Excluding leases, we hold a net liquidity position of $277 million. The balance sheet gives us room to keep investing from our own cash generation. Let me hand the call back to Alexander.

Thank you, Tanner. Let me close with the outlook. We are rising full-year guidance for the second time this year. The first half gives us the confidence. In Grimna, we now expect revenue to grow 21% to 23% and EBDA to grow 17% to 19%. In dollars, that is 14% to 16% revenue grows and 9% to 12% EBDA grows. There are a couple of important background items to keep in mind here. The first one is the exchange rate. In the past, we guide in both our reporting and trading currency with a fixed currency assumption. This is a factor outside our control, along with the wider geopolitical and macroeconomic environment. The second one is the comparison base. From this quarter, uclone seats in both periods, so gross rates describe the underlying business. Tabletki and our investment in energy assets add inorganic growth through the second quarter of 2027. CapEx intensity stays at 21 to 24 percent of revenue. We are past the peak of our elevated investment cycle and we allocate within a disciplined framework. And one more item for your calendars. On November 16th, we will hold our first ever Capital Markets Day in New York City. We will present a medium-term update, strategy, the unit economics of the ecosystem, and the capital allocation framework. Details will follow from our investor relation team. We hope to see you there. To wrap up, the quarter shows our model working. The telecom core generates cash, and the digital ecosystem compounds growth.

We are delivering double-digit growth in most verticals despite external volatility our business remains strong and profitable thank you for your support we can now open for the line line for the q and a thank you alexander uh we will with the assistance of our colleagues take uh take questions from those in the room as first and once those are exhausted we will move along to those who have joined us online uh hi everyone good morning uh jesse sobelson with us bank corp btig um i had a two-parter on the ai initiatives first on cybo can you walk me through why keystar would build out a national llm and is the value of

the model itself or is it really about your proprietary ukrainian data and distribution and then secondly on the data center mlu um what's actually in scope does it commit capital or is it just a feasibility study thank you okay let me start with the second question and then i will last honor to take the second one okay the first one is quite simple okay so we are big believer in the sovereign ai infrastructure okay from our perspective it's just a matter of time of course we are a bit affected by the current war situation and certain mitigation actions but i'm absolutely sure that after the war ukraine as any other country will return to the sovereignty issue okay this is one aspect the second aspect we see a growing demand in market demand where government is the main customer potentially the main customer okay and the third one we are considering telco business ourselves at the much better prepared than anyone else to develop to invest and to run ai infrastructure across ukraine and at the end you know so as it was stated by counter zero glue at the previous call at the end every hour customer will use ai and taking account a relatively low income and low arpu country we need to find a way how to combine and to create synergies between global ai providers and local capabilities and at the end i'm absolutely sure that 90 of all questions and requests will be to some extent compute you know inside ukraine with the local infrastructure and local llm with the most difficult questions and requests you know lifted to the global brain so based on this assumption we are taking an initiative we see a request from the ministry of economy and ministry of digital transformation and we are considering the way how we can develop the national ai infrastructure for today for the data center side we are continuously evaluating all the options on the table for diamond in terms

of the capex intensity cells side uh we directly i plan or our investment plans within the guidance of the capex intensity levels 24 1 to 24. maybe one thing to add because you mentioned the distribution and it's a very important point we consider connectivity as the foundation and our competitive advantage if you look to the numbers 22 million telecom customers six million tabletki customers you know five million book long customers practically every single person in ukraine and outside of ukraine is our customer and that gives us a natural

advantage to distribute any additional service at a fraction of a cost okay i guess i'll do the next questions um vincent fernando is there one investment research so first question is i just want to understand a bit how the starlink service uh works with your subscribers so you mentioned you had six million uh users who had used the uh direct cell service do does every user basically onboard onto starling so they go off the like the tower network then they roll onto it or do they have to sign up for a special subscription and i have my second question is just to understand you have healthy which is a huge footprint across the country right in terms of like the users and now you have to bledky which you've acquired obviously a lot of synergies between those two businesses how should we see that rolling out in terms of how the synergies roll out in a timeline because i know it takes some time for us to kind of integrate and figure things out and at some point maybe then you have kind of a revenue lift you know as you kind of basically use healthy to to expand to black you just want to say the timeline that i roll out those two questions thank you okay let me start with the satellites so we are big believer in cooperation between terrestrial non-terrestrial networks right now our cooperation is is with two two spacex verticals the first one is uh uh starlink mobile okay with the starlink mobile

we have two types of services the first service is sms okay and sms is available to every key star customers without without any extra charge it's embedded in our telecom value proposition okay and we are considering that this is part of our humanitarian mission in this very difficult environment okay with the with the energy supply rig you know issues you know we should give our customers opportunities to stay connected the second layer of starlink mobile is light data with the light data we did a first step to monetize the service light data is embedded into the high value premium subscriptions as a part of the value proposition or you can connect this service at the part of the superpowers ecosystem available to our customers okay for some of them if they have free slot it might be free of charge but it is a certain competition for the superpower like kievstar tv or healthy subscription so it's up to the customer to decide or you can connect this on the paid base okay for the extra monthly fee and these are the first steps to start monetization of the satellite services and the second pillar that we are developing with SpaceX right now is resell of the fixed satellite broadband services in Ukraine. We are the first. Kyivstar is the first official reseller of the Starlink services and hardware in Ukraine for the business and public institutions. And this is just a pure resell business. Okay. The second question is about healthy and tablet. You are absolutely right. you should consider let's say tablet acquisition from the perspective of strengthening our digital health vertical yes there are two different entities two different businesses but in our mid-term perspective is the digital vertical that is helpful to the client since first symptoms until full recovery and as i mentioned here there are plenty of synergies yes we are carefully developing this plan with the first initiatives but the idea that healthy application is a kind of universal uh helper is a universal advisor for you okay is a universal window to the house world okay so with tablet being embedded as a part of the value proposition okay and yes the third element of this synergies is potential delivery okay provided by uclone okay we are doing first steps here you are absolutely right we are right now much more focused on the proper integration of the tablet key business into the uh into the group you know because it's just a four months old acquisition okay so but our plans are very much okay about potential synergies can you give any rough color on when that really rolls out when the synergies can have like a couple quarters it will not roll like you know like a one-off okay what you will see is a gradual improvement of the business metrics you know so joint products okay and i hope at the result for the investor we will be able to stay with this quite significant let's say 35 40 percent growth rate in the hard currency in our digital health vertical great thank you we have any other questions from the room if not if you're all thinking we can move to some of the questions from our online participants thank you for those of you in the zoom webinar if you'd like to ask a question please click on the raise hand button which can be found on the black bar at the bottom

of your screen when it is your turn to ask a question you'll receive a prompt to be promoted as a panelist please accept wait a moment and once you have been introduced you may unmute yourself turn your video on and ask your question. Written questions can be submitted on the webcast by using the ask a question tab at the top right of your screen. Our first question comes from Max Finlay with Roth Trial & Co. Please go ahead.

Hi, thank you all for your time today. First of all, welcome Tanner to your first earnings call CFO. I'm sure you hope they continue as they did today with guidance upgrades. My first question's on mobile revenues. So reported mobile growth in US dollars was 7.3%, but that includes revenues, I think, from the energy acquisition made in May, which may have contributed four to five million to the quarter. So it looks like underlying growth has slowed from near 10% in Q1 to about 5% in Q2. And this slowdown seems to be driven by pricing. I've noticed the sequential ARPU increases have slowed down a bit so the question in short is is it getting harder to grow pricing? My second question is there's been another fantastic quarter for digital services growth as you've talked about on the call and in particular I noticed UConn's growth was very strong again and at 50% is growing faster than when you acquired the business which from memory was growing at a 30% CAGR.

How much are the different business lines such as uklon travel that you've introduced helping contribute to this accelerated growth and could you give us some color on what the opportunities are here and also uzbekistan as well thank you very much okay let me start with the second one and then i will ask tanar to address the first question so um uklon growth of 50 year on year consists of two major elements The first one is the business growth, organic business growth, driven by ride-hailing and delivery. And this is around 35 plus percent of the overall growth. And the rest, 15 percent, is driven by the new accounting approach as a growth up of the B2B Uclone revenue. So according to the IFRS that we applied, but it's actually reflected in the past period also. so that's why this 50 percent constitutes of actually two elements okay uh the growth is mainly provided by right hailing business okay plus delivery so these are two main growing elements we are doing certain pilots with the bus transportation and ticketing and marketplace embedded into the application, but their impact is marginal at this stage. Okay, so Tanner, please.

Thank you very much, first of all. Yeah, we have a strong revenue growth into second quarter with 27% revenue base and also 19% U.S. dollar base. Also, you know that we have acquisition in February tablet key, and also we have solar power acquisition in May. So all these, I mean, acquisition is going to have a positive impact for the following months and quarters as well. On top of it, also, except from these, I mean, impacts, these, I mean, acquisitions, we have directly also strong organic growth, which is, I mean, 23% in Rubinia base, when we directly extract these acquisitions effects on the table. And please also keep in mind that we have also negative effects coming from the beginning of the year due to this EU regulation to negatively impact our revenue. But all in all, I mean, the positive impact coming from these acquisitions, mainly tabletki and also energy assets, we are going to keep our revenue growth for the following quarters.

Brilliant. Thank you.

Thank you. Our next question comes from Adrian Cundey with Emerging and Frontier Capital. Please unmute, turn on your video, and ask your question.

Hi, Con. Alexander, Tanner, nice to eat. Me too, and Cole. Hope you're doing well. I wanted to touch on, extend really on sort of Oklon and marketplace and sort of where you sort of see the opportunities in Ukraine and digital financials. services. Last call, you mentioned that some of the major wallet providers in Ukraine were very robustly valued. At the same time, I've been reading that Ukraine is moving steadily towards open banking. And I'm just wondering, should we be expecting to sort of see Oklon evolve into sort of adding with digital wallet service or where do you sort of see the the digital financial services opportunity in the ukraine uh going forward and that's just given uh chairman khan's uh comments on beyond that dfs is a priority in every single market that the kind of the group operates in okay so um first of all we are doing just first steps to develop a marketplace embedded into

the uclone application okay and this is very much linked to our delivery competitive advantage you you you should see the essence why it is flowers okay because people are interested in a relatively quick delivery right now okay so and this is what we are piloting right now maybe it's too early to say how it will evolve right now we are servicing hundreds of customers per day And we want to understand what are the other categories that might be interested in such type of fast delivery from one side and relatively, let's say, high margin from another side, because it's a certain combination of the type of the product with delivery need. But let me once again stress that we see a very great potential in delivery business. Our own perception that this business is underdeveloped in our Uklon portfolio for the time being. And all these steps is how to strengthen the delivery, first of all. The second question is, it seems to be broader than just Uklon question. You know, I have already declared many times that we have two major priorities at the KGL in developing our ecosystem. The first one is the marketplace and the second one is finance services. You know, Ukrainian financial, you know, market, finance market is well developed. We have a lot of different institutions, it's a highly competitive market, okay? But taking into account our relationship with the millions of customers, engagement, a huge gross merchandise value, okay, that we can effectively manage, okay? We see ourselves in the future as a finance service provider in order to achieve two objectives. The first one is to actually decrease our transaction cost and to manage this gross merchandise value in the most effective way. And the second one is to find a value for the potential credit. Okay. We are just at the kind of feasibility stage right now in Ukraine. Okay. Because it's a new regulation. It's a very difficult regulator to deal with. Okay, there is a really extremely high competition with a well-developed, almost, let's say, global-scale institutions like Monobank or Privatbank that are in front of the privatization. But we are actively considering potential scenarios, how we can strengthen KGL ecosystem and UCLON in particular. And by the way, this question is even more, let's say, important from 2027, when the new legislation on the right-hailing will be imposed and we will be able to manage the whole gross merchandise value that is created by Uklon business.

So it's not out of their own possibilities that you could start having, taking, storing capital in Uklon users' accounts in the next couple of years and then engaging in financial intermediation yes okay in general in general yes okay um i have a second question which is unrelated to digital financial services but it sort of comes back off the data center comments and you've expressed in previous calls you know sort of a dream of you know having a next-gen fiber backbone infrastructure for all players in the ukraine so as you look at investing across data centers. Obviously, that creates significant backhaul needs. You move a lot of data between your towers and through your network. Are you investing a lot in fiber, not just to the home, but backhaul and that basic level infrastructure?

And is there a potential for a net link or an industry-wide sort of uh fiber broad backbone company evolving let me uh let me address this question from a different perspective from the operational perspective we are not investing a lot into the fiber because we already have one of the biggest fiber infrastructure across ukraine our current fiber is more than 50 000 kilometers of backbone back hole and last mile okay at the same time, at the same time, Ukraine has a relatively developed fiber business. We have few players, more or less the same scale in Ukraine. And yes, we are considering how we can first optimize our investments. And I can give you, I can't give it, it will be a forward-looking statement, sorry. Okay, so, but we are looking how we can optimize investments into the new infrastructure through a certain competition between the major players number one we are ready to consider non-organic development into the fiber core okay if we will see an opportunity to create a kind of a point of the valuation based on our fiber core infrastructure okay that can be monetized okay so as a standalone business through certain fiber core net core and service core separation so we have quite strategic plans but we will act situationally for the time being we are very much focused to ensure readiness for 5g and one of the key element of this readiness is a fiber penetration to the site we already reached around 50 across the whole country and up to 70 across some of the cities okay it sounds like making good progress and As I just an addition to Alexander, we directly, as an inorganic way, we directly, in February, we directly acquired the storm to expand our fixed broadband to be marked share with the 10 million dollars as an information. And this is including a certain infrastructure in this specific region, of course. So every acquisition of the fixed broadband business, and this is the second for us during the last two years, is actually coming with a certain elements of the infrastructure.

All right. Thank you. And congratulations again on a solid quarter.

Thank you very much. Thank you.

Our next question comes from Matthew Harrigan with StoneX. Please unmute, turn on your video, and ask your question.

Thank you. It was actually fairly amusing a few days ago when the AT&T stock rallied because Starlink hadn't really hurt their business. A little premature to be worrying about that on a backwards-looking basis. And clearly, the mobile business is pretty protected given the penetration issues and latency and all that. But when you get version three deployed in the Starlink, you know, 28, 29, you know, obviously there are a lot of concerns on broadband. It's affected the cable stocks in the U.S. a lot. And clearly you've got some advantages in that your price point doesn't remotely resemble what it is in the U.S. or even some European markets. But how do you feel about the Starlink issue and your broadband business? Again, it's much smaller than digital or mobile, but is that a real developing concern in terms of the competitiveness of broadband? I mean, obviously, it's the highest capacity network, but you're still going to have some chief and cheerful potential price competition.

Well, I don't see any issues with Starlink broadband business development in Ukraine, you know, because of a few reasons. the reason number one ukraine has a very very high penetration of fiber either it's fttb or ftth technology okay ukraine is a relatively low arpu country okay and from my perspective i don't see any reason to pay premium and to substitute your home connection existing fixed connection that can be easily upgrade right now from 100 megabit to one gigabit from one gigabit to a few gigabits you know so and i don't see any reason to do this because in any case fixed terrestrial broadband is a bit stable okay and high quality service than let's say starlink uh fixed fixed broadband business okay but i see a number of very important use cases taking into account the current war situation in ukraine number one second one for a relative semi-fixed slash mobile mobility you know because there are people who are using this on their cars okay and there is a certain market niche that we would like to satisfy with our resale agreement signed between kievstar and uh and uh spacex uh you know a few months ago and sort of a fuzzy second question you know i think

even with some economic growth in ukraine the last couple years you're still off 20 or so on gdp you know from pre-invasion and you've got a big you know diaspora i know you've got some customers there as well but when you you know if we do you know hopefully pray for a settlement in ukraine do you think you're going to get a substantial step function improvement in your business i mean obviously you'll get some benefits filtered in over a number of years on massive reconstruction funds and all that. And I know it's premature, but it seems like it's certainly something that boosts your long-term potential, to say the least.

For sure, no doubt. So I think that we are ready from many perspectives. The first perspective, we are probably the most compliant international platform, okay, so for the future investments into the reconstruction. We are simultaneously an infrastructure business, critical infrastructure business and in the consumer digital business okay and i'm absolutely sure that there will be actually two very big positive outcomes extra investments into the critical infrastructure strengthening infrastructure developing infrastructure across ukraine where we can play a significant role but the second one is a certain return of the population i don't know how many 20 30 40 percent of the population will be back and these are our digital customers as it was underlined by khan okay so we are literally servicing every ukrainian with the different types of services okay and the non-organic growing population because of the return will have a positive impact on our business thanks olexander and just in addition we are also leading the most of the pillars in Ukraine.

I'm a mobile, fix, TV, healthcare, ride hailing. So there's also, I'm in this leading advantage also.

Thank you.

Thank you. Our next question will come from Nicholas Paton with the Edison Group. Please unmute to ask your question.

Hello, team. Could you just talk a little bit about the conversion from the earnings growth guidance you've given and the cash flow. How do you see the free cash flow moving over the next half and into 2027?

Dana, please.

Yeah, okay, let me take it.

In this quarter, we directly generated $104 million cash generation, which is nearly, I mean, normally we generate $30 million monthly basis, which is normal for us. For the following quarter, we also expect these, I mean, at least $30 million. cash generation for the quarters. And also just for the adding this quarter is, I mean, our capex intensity is lower. This is totally seasonal thing. So we are going to keep our guidance for this capex intensity for the following quarter as well to keep our guidance and also continue for this cash generation.

And a follow-up for Khan. I mean, it's notable that the revenue guidance for Vion is slightly above that for Kyivstar, but the EBITDA guidance is the same. How do you reconcile those two things?

Well, since the beginning of the year, of course, at Beyond Level, we have raised our both revenue and EBITDA guidance. And the same thing is true for KFSTAR. This is their second time on both revenue and EBITDA guidance. I think, you know, reconciliation is not necessarily the way I look at it. I look at it as a portfolio of five different countries. We mentioned in the previous call, you know, Kazakhstan, Bangladesh, in terms of our expectations. So I would be, you know, looking at it from a portfolio perspective. And I'm actually quite comfortable with where we are as it stands now. Thank you.

Our next question will come from Jake Ng with New Street Research. Please unmute, turn on your camera, and ask your question.

Thank you. I just have two questions. I think first is considering guidance. So even considering the Yukon acquisition not fully accounted for in the first half, is this new guidance, especially with regards to EBITDA conservative, considering especially first half EBITDA performance?

And secondly, may I know if you can share more on the decline in mobile customers, specifically in the double or multi-SIM unwind trend, is it largely completed now or can we expect more to come thank you let me start with the second question james and so we are not declining in the subscriber market share we are stable in the subscriber market share you see a certain decline in the mark in a number of active sim cards across the market okay and we are declining in line with the market and there are a number of very clear reasons the first one is decline of the second sim penetration into the customer base okay the second reason is a price increase and related to this decrease in the number of new gross ads okay and the third one is the demographic dynamics across ukraine these are the three main reasons of the overall active seems decline in ukraine okay that we are facing as much as our competitors okay and then i will ask to take the first one for the abta uh health two expectation

In the health fund, you know that the Uklon impact is directly year over year, three months in 2025 and six months in 2026. So, I mean, in the first half, we direct the relatively higher, I mean, inorganic growth coming from Uklon. But at the second half of the year, in terms of every day, the apple to apple, I mean, comparison and growth for the Uklon side. This is one of the major things that we should underline. And also we have, I mean, to some of KSTV and also GrossUp, we directly change our methodology starting from September 2025. It directly affects our, I mean, growth rate in the second half of the year. Thank you.

Our next question comes from Ahmed Mustafa with Inam. Please unmute, turn on your video and ask your question.

Hello, I have a question. how should we think about the earnings contribution and economic hedge from the expanded solar portfolio?

Ahmed, I couldn't quite hear you. Could you repeat that, please?

Yes, sure. I was asking how should we think about the earnings contribution and economic hedge from the expanded solar portfolio?

Okay, solar portfolio. So let me start with the hatch okay so our average average annual price is around uh let me calculate in my mind but it is around 20 euro cents per kilowatt okay with the current existing production we sell to the state at around 11 12 so you can imagine that at least 30 percent of our of our demand is being hatched at this level okay and this is a way for us how we can at least manage the inflation for us energy cost is the biggest single item in our operational expense and the fastest growing one okay and for us it's a clear way how we can hedge this is not a limited we want to develop okay we see that we can actually go into the further elements of the energy business with the certain investments into the best okay so and this is mainly focused on our own infrastructure but this will let us to further hedge our energy pricing okay and the third one with the current demand and current supply, we can consider ourselves with a certain investments into the metering and to play a quite significant role as a potential trader on this market. And this will be an extra step how we can manage the future tariff in the most efficient way. And these are three elements that we are very much focused from the perspective of the overall operational efficiency improvement.

And I will say that these acquisition green energy investments, we directly hedge our consumption, and also we have a quite high EBITDA margin as well in terms of the contribution to our financials.

Thank you.

We have completed our queue of online questions, but I know there may be some questions still in the room with the live audience. would anyone like to ask one last question before we wrap up okay we do have one and if there are any more afterward please come speak with us matt chesler from fnk thank you if we can double click on keep start tv for a moment with exclusive rights for relevant content or even the bundling of mobile and broadband how do you see the business developing over the medium and longer term uh maybe a sub question on that would be with regards to to content um what would the

prospects for profitability trend become let me try to explain so we see the benefits of the live sport events it was our first experience and it definitely paid back okay the result is better in our expectations okay so i see the full formula of success we need to be competitive with with the share of key sport events you know so just to attract new audience to the to the application okay we should be competitive in the overall content with a certain focus on the ukrainian content and this is part of our strategy we are during the last years have exclusive rights for the major let's say produced in ukraine content especially series and films okay and the third one we should provide the best in class experience because you know for the customer journey with uh advice mechanism with ai embedded in our service with the certain gaming elements in our service so this is the overall winning formula okay so we are very much dependent on the synergies between our telco business and entertainment business. And I think that the next frontier for us is to go outside from the Kyivstar perimeter, okay, with the proposal to the other mobile operators, let's say, subscribers. Thank you.

Thank you. I believe we are out of time. So we'd like to again say thank you to everyone who's joined us today. both those of you online and those of us who were able to join us here in new york and we'll be looking forward to speaking with you a number of times coming soon but especially at our next quarterly results and at our november 16 capital markets day thank you very much again and Alexander.

Thank you very much.

Thank you.

Thank you.