Q3 2025 Kyivstar Group Ltd Earnings Call

Speaker #1: The company for the third quarter of 2025 that ended September 30, 2025. I am Cole Aikisson, Group Director for the Kyivstar Investor Relations Team.

Speaker #1: Please allow me to introduce our Senior Management in the room today, Mr. Khan Terzioglu, Chairman of the Board; Mr. Oleksandr Komarov, our CEO; Mr. Boris Dalgushin, our CFO; and Mr. Anand Ramachandran, Chief Corporate Development Officer for Vian.

Speaker #1: 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.

Speaker #1: Before we begin, please note that today's presentation may include forward-looking statements which involve certain risks and insurgencies. 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.

Speaker #1: 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.

Speaker #1: With that, let me hand over to Oleksandr.

Speaker #2: Thank you, Cole. Good afternoon and good morning. Today we are excited to host our first quarterly earnings call as a US-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.

Speaker #2: Kyivstar remains a national champion in Ukraine's recovery and a unique investment opportunity. Let me start with the numbers. Revenue grew 21% year-on-year in Grivna, or 20% in US dollars.

Speaker #2: EBITDA grew 21.5% in Grivna and 20% in US dollars, we continue to generate very healthy cash flow. Secondly, let's focus on the digital services.

Speaker #2: Direct digital revenue grew more than five times and now contributes nearly 12% of Kyivstar revenue. Our ride-hailing business, Uklon, contributed much of this growth since its consolidation in April.

Speaker #2: Expanding our digital ecosystem remains central to our strategy as reflected in our 49% rise in a monthly active users year-on-year. Up to a record high 13.5 million monthly active users.

Speaker #2: Thirdly, our growing ecosystem of services continues to expand Kyivstar's 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.

Speaker #2: This cross-engagement raised our PU higher and strengthened 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.

Speaker #2: We are the first Ukrainian company to list on US exchange offering investors a unique opportunity to take part in Kyivstar digital transformation and Ukraine's recovery.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Total revenue grew 21% year-on-year to 12.3 billion Grivna, or 297 million US dollars. Telecom revenue grew 9% to local currency, driven by our differentiated products and services continuing to lift our PU and subscribers' engagement.

Speaker #2: The exponential growth in direct digital revenue was driven by Uklon's consolidation. In like-for-like terms, without Uklon, digital revenue grew as strong 89% year-on-year. EBITDA climbed 21.9% year-on-year.

Speaker #2: The EBITDA margin reached 57%. Reported net profit for the quarter was negative 89 million US dollars, with reported earnings per share at a negative 41 cents.

Speaker #2: However, that was driven by a 162 million dollar one-off non-cash charge related to sponsor shares in connection with the Kyivstar listing. Excluding this impact, Q3 adjusted net profit was positive 73 million dollars, 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.

Speaker #2: Adjusted EPS for Q3 was 33 cents, which took our nine-month EPS to 93 cents. 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.

Speaker #2: Despite this escalated investment, we generated free cash flow of 174 million dollars in Q3, bringing the LTM figure to 373 million. Finally, we ended the quarter with a cash balance of 472 million dollars, sustaining our fortress balance sheet.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Mobile RPU maintained double-digit growth, rising 40% year-on-year to 153 Grivna, equivalent to 3.7 US dollars for the quarter. Repricing of legacy plans, multiplayer user growth, and rising data use drove our PU higher, reflecting customers adopting more of our digital services.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: We are making good progress on our cross-sell 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.

Speaker #2: 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 voice and data services.

Speaker #2: The multiplay segment drives growth through stronger customer engagement, higher data consumption, more frequent usage of voice services, improved retention. Our multiplay customers also generate higher RPU than voice-only subscribers.

Speaker #2: On the right, you will see multiplay 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.

Speaker #2: 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 Grivna this quarter, or almost 12% of revenues.

Speaker #2: 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.

Speaker #2: Secondly, the growth spans all verticals: health, Kyivstar TV, digital enterprise, and Uklon. Thirdly, our sustainable cost advantage, advantages are our low customer acquisition cost and our optimized distribution model.

Speaker #2: This enabled us to maintain profitability and strong unit economics. Moving to Uklon, our right-hand business. In 3Q alone, Uklon contributed 1 billion Grivna in revenue and 378 million Grivna in EBITDA.

Speaker #2: 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.

Speaker #2: In Uzbekistan, Uklon is expanding its driver network and ride volumes. Customer engagement and also improved. Uklon's EBITDA reflects a growing and profitable business in Ukraine as well as our investment into scaling the business in Uzbekistan.

Speaker #2: Uzbekistan is a high-potential market, and Uklon'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.

Speaker #2: Demand is rising across Ukraine corporate and government sectors for cloud, cybersecurity, big data, and advanced connectivity solutions. The business generated 222 million Grivna in revenues this quarter, up 81% year over year.

Speaker #2: It also connects other parts of our ecosystem. Businesses are increasingly turning to Kyivstar's 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.

Speaker #2: At Wizz Air, our self-service AppTouch platform handles campaign management for B2B customers. It enables targeting, audience engagement, and optimization. Kyivstar Tech is shifting from an internal IT function to offer IT, digital, and AR services to the external customers.

Speaker #2: Kyivstar Touch 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 contexts.

Speaker #2: 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.

Speaker #2: Kyivstar TV continues to strengthen its position. As Ukraine's 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.

Speaker #2: The business revenues grew 137% year-on-year in Q3 to 140 million Grivna. 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 Kyivstar's role and direct customer engagement.

Speaker #2: The move to the new model accounts for about 45 million Grivna for this quarter's revenue, with little impact to profits. Excluding this change in model, revenue growth would have been 64% year-on-year.

Speaker #2: As of September, 34% of our broadband users subscribe to Kyivstar TV. Monthly active users for September on the OTT application rose 32% to 2.1 million.

Speaker #2: 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.

Speaker #2: Now we have healthy on the next slide. Healthy, Ukraine's leading health touch platform. As of end of September, healthy had approximately 29 million registered patients with access to more than 1,600 healthcare institutions and over 38,000 medical professionals.

Speaker #2: Revenue grew 51% to 76 million Grivna. Monthly active users for September reached 2.5 million up 5.6 percentage year over year. During the quarter, healthy added analysis and telemedical consultations to its subscription model.

Speaker #2: In September, we launched the health superpower; it's a healthcare subscription service for Kyivstar users. Healthy is deeply embedded in Ukraine's e-health ecosystem, which manages appointment scheduling, prescriptions, and health records management.

Speaker #2: 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.

Speaker #2: Let me now pass the call to Boris Dolgushin to talk through the financial in more details. Thank you, Alexander. We deliver total revenue of 12.3 billion Grivna in Q3, up 21% year over year.

Speaker #2: In dollar terms, revenue reached 297 million up 19.8%. Telecom revenue grew 9% year over year to 10.9 billion Grivna in Q3, driven by our PU expansion.

Speaker #2: That expansion in turn reflects discipline for pricing, rising mobile data consumption, and mitigation and migration to 4G. Direct digital revenue showed more than fivefold to one and a half billion Grivna in Q3, reaching almost 12% of total revenue.

Speaker #2: Growth came not only from the Uklon acquisition but also multiplied and grows across all our digital verticals, including digital enterprise solutions, Kyivstar TV, and healthy.

Speaker #2: On profitability, EBITDA grew 21.5% year over year. To 7.1 billion Grivna in Q3. In dollar terms, EBITDA 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.

Speaker #2: Uklon contributed 378 million Grivna in EBITDA in Q3, or 9.1 million dollar, with an EBITDA margin of 36.8%. I will highlight here that digital margins are structurally lower than telecom margins.

Speaker #2: But CapEx x intensity is significantly lower, resulting in comparable cash conversion. As the revenue mix shifted towards digital, we are focused on sustaining EBITDA growth at scale, while enhancing group-wide capital efficiency and long-term free cash flow generation.

Speaker #2: Q3 CapEx totaled 3.7 billion Grivna or 89 million dollars. 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 interinstallations, that support network resilience.

Speaker #2: 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, Kyivstar continues to generate substantial free cash flow.

Speaker #2: Last 12 months, equity free cash flow before business and licenses reached 15.5 billion Grivna or 373 million dollars. Turning now to the balance sheet.

Speaker #2: We ended the quarter with 19.5 billion Grivna or 472 million US dollars 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.

Speaker #2: Debt excluding leases stood at 4.1 billion Grivna or approximately 100 million dollars. Most of this reflects debts to VION and Ukrainian Tower Company. There is no external financing.

Speaker #2: Lease liabilities of 14.5 billion Grivna or 353 million dollars arise mainly from our infrastructure, lease agreements with Ukrainian Tower Company, which are fully recognized under IFRS 16 standards.

Speaker #2: Let me now hand the call back to Alexander.

Speaker #1: 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-sell.

Speaker #1: In fixed broadband market, we want to strengthen group leadership. We are organic expansion and acquisitions. In digital, we are concentrated on growing digital offerings organically and through acquisitions, and increasing multiplayer penetration and customer engagement.

Speaker #1: Let me conclude with our outlook for the next year. Despite the challenges and uncertainties, Kyivstar continues to execute strongly. For the full year 2025, we expect revenue growth of 24 to 27 percentage and EBITDA growth of 23 to 26 percentage in a local currency terms.

Speaker #1: 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.

Speaker #1: In US dollar terms, we expect this to translate to 20 to 23 for revenue growth and 19 to 22 percentage for EBITDA growth for the full year, assuming exchange rates do not fluctuate significantly from current levels.

Speaker #1: We expect CapEx intensity in a range of 30 to 33 percentage 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.

Speaker #1: On the next slide, let me summarize. We are uniquely positioned at the only direct dedicated equity exposure to Ukraine, listed on US stock exchange.

Speaker #1: Despite the geopolitical issues, we are leveraging our digital momentum, sustainable cash flow, and fortress balance sheet to drive expansion, reinforce our network resilience, and play a leading role in Ukraine's stage sector.

Speaker #1: Our operational and financial performance, including double-digit growth across segments, reflects not only the attractiveness of our offerings and markets, but also the execution strengths of our team.

Speaker #1: 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.

Speaker #1: Thank you for your support for Ukraine and Kyivstar. I think now we can open for the line of Q&A.

Speaker #2: Thank you so much, dear participants. As you reminded, if you wish to ask a question, you need to press star 11 on your telephone keypad.

Speaker #2: And wait for your name to be announced. To withdraw a question, please press star 11 again. Alternatively, you can submit your questions via the webcast.

Speaker #2: Please stand by. We'll compile the Q&A queue. This will take a few moments. And now we're going to take our first question. And it comes from one of Jesse Sobelson from BTIG.

Speaker #2: Your line is open. Please ask your question.

Speaker #3: Hi everyone. Thanks for taking my question. I noticed churned increased 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.

Speaker #3: Can you elaborate on the main factors driving this improvement? Was it predominantly due to the multiplayer strategy, increased digital engagement, or any particular retention initiatives that might have made this most impactful?

Speaker #1: Let me be sure that I do understand your question correctly, okay? So you are asking about the customer base dynamics?

Speaker #3: Yes.

Speaker #1: And here we see two actually trends. The first one is the overall market decline that is very much driven by decline of the double SIM penetration and the growth of the multiplayer customers with the Kyivstar customer base that is very much driven by the engagement of our telecom customer base into the different digital services.

Speaker #1: 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.

Speaker #3: Okay. Great. I appreciate understanding the strength of that customer. There's another piece that I wanted to touch on too. Beyond recently announced that Ukraine is aiming to transition to an independent tower ownership model.

Speaker #3: Could you elaborate on what this shift means for your business specifically in terms of operational flexibility, potential costs, and any potential impact to the balance sheet?

Speaker #3: Thank you.

Speaker #1: Okay. I think there are two questions in one. Okay? The first one is probably to be on and be on strategy. Okay? So with regard to the tower calling passive infrastructure business.

Speaker #1: And the second one is probably I will ask Boris to handle about the financial impact of our, let's say, lease liabilities. Yes.

Speaker #4: Hello. Hi, Jesse. So this is Khan. With regard to our strategy of having asset light service companies and spinning out our towers, Ukraine is no different.

Speaker #4: We have already done that. We have Ukrainian tower company as a standalone entity, which is owned directly by Beyond. And of course, all the managed services contracts and tower rental agreements are done on a fully arm's length basis with Kyivstar.

Speaker #4: But I think ultimately it is critical that these type of tower companies do not only serve one operator, but serve 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 Kyivstar as one of the customers of the tower company.

Speaker #4: And that execution process continues. Thank you.

Speaker #3: Jesse, 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.

Speaker #3: So absolutely mirror terms for all market players. So what you see in our balance sheet as lease liabilities, 353 million dollar, these are the liabilities predominantly to the Ukrainian tower company as the main provider of the towers for us.

Speaker #3: So we do not expect any changes due to any ownership change in the UTC as we are on the arm's length basis.

Speaker #4: Great. Thank you.

Speaker #2: Thank you. Now we're going to take our next question. And it comes from one of Yifu Li from Canton Federal. Your line is open.

Speaker #2: Please ask your question.

Speaker #5: Good morning. Good afternoon, Alexandra and Boris. Thank you for taking my questions. And congratulations on your first earnings call as a publicly traded company.

Speaker #5: Well done, team. So I just want to focus on the growth fact, the growth driver, Alexandra and Boris. The direct digital revenue at nearly 12% of total operating revenue for this quarter.

Speaker #5: Just want to take a step back on the strategy. Newly integrated Yukon 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, right?

Speaker #5: So Alexandra, can you discuss next steps in terms of scaling these other digital services and assets? Any bolt-on acquisitions in mind or organic development?

Speaker #5: And I also have a couple of more one more for you and another for Boris.

Speaker #1: Let me take it from the strategy perspective. Of course, I can't make any, let's say, hard forward-looking statements. Okay? I just want to somehow reconfirm our strategy of organic and non-organic development of the digital operator with the telco license.

Speaker #1: Okay? 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.

Speaker #1: I can't comment on any work in progress despite even some kind of media around this question. Okay? Until we will have proper SPA in place and anti-monopoly committee decisions.

Speaker #5: But for any areas you're looking at, Alexandra, just to give us some flavors, what you're thinking in terms?

Speaker #1: 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.

Speaker #1: Okay? We are interested in a vertical like FinTech, e-commerce, and EdTech. 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.

Speaker #5: Got it. Got it. Extremely helpful in naming the sectors. So in the end of the day, in August, Cham Khan talked about this concept called augmented intelligence.

Speaker #5: Want to circle back, Alexandra, on the first national Los Angeles model development in collaboration with the Ukraine Minister of Digital Transformation. So can you discuss how this model is built?

Speaker #5: Are you partnering up with leading foundational model providers like OpenAI, Anthropic, etc.? And what do you envision, Alexandra, the revenue uplift will be when these large language model capabilities especially is incorporated into the greater platform, especially to the Kyivstar cloud services?

Speaker #1: Yes. For the time being, it's a partnership project between Kyivstar and the Ministry of Digital Transformation. Okay? 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 government, Ukrainian authorities as a unique digital available data set in Ukraine.

Speaker #1: Okay? 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.

Speaker #1: Okay? As a result, we would like to establish a quite strong cooperation with the Ministry of Digital Transformation with a certain right that will belong to the Kyivstar for the further digital product developments with AI incorporated.

Speaker #5: Got it. Got it. And then on the financial side, Boris, let me turn to you, right? 160 million in public listing costs. Should we expect going forward any of these additional charges coming in in later quarters in terms of lagging?

Speaker #5: 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.

Speaker #5: I think best we've seen since 2021. Want to get your thoughts on the ground trends you've seen? Can we kind of say the telecom-based is stabilizing?

Speaker #5: Or am I too early to call a bottom here? As the telecom revenue is still expanding at a solid 8% growth. And that's it from me.

Speaker #5: Thank you, guys.

Speaker #3: Thank you, Yifu. Let me take the first part of your question about 162 million listing loss and I think Alexandra would comment the revenue dynamics for the telco business.

Speaker #3: For the listing loss, this is a one-off listing loss due to the transaction for bringing the company public. So answering your question, we do not expect any impacts of these in the future.

Speaker #3: We do have warrants on our balance sheet. So the warrants, as you know, kind of they are regulated on a quarterly basis depending on their kind of actual trading dynamics.

Speaker #3: So otherwise than this, we do not expect any impacts on the recurrent performance.

Speaker #1: Okay. In telco business, we are growing 9% in the local currency year-on-year. Okay? And in general, we do expect that we will be able, let's say, to sustain reasonable level of growth taking into account a relatively high inflation in Ukraine.

Speaker #1: Okay? So whatever you see right now as a result is in line with our strategy that we actually declared it beforehand is to ensure, let's say, healthy top-line growth that will help us to create shareholders' value despite double-digit inflation in Ukraine.

Speaker #5: Got it. Thanks, Alexandra and Boris. Let me pass on the line.

Speaker #4: Thank you.

Speaker #1: Thank you.

Speaker #4: Yeah. Participants, as a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad. Alternatively, you can submit your questions via the webcast.

Speaker #4: And at this moment, I would like to hand over to the management team for any written questions.

Speaker #2: 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.

Speaker #2: Otherwise, I will begin reading off some of the written questions first. We have Vladislav Kusev from, I believe, the Kyiv School of Economics please correct me if I butchered your surname, Vladislav.

Speaker #2: Thank you. He asks, "Could you please describe the detailed listing costs, the 162 million USD for listing?"

Speaker #3: Yeah. So the listing cost is calculated as the difference between the share price given to coin circle. So the company beyond this listing transaction week and the value of the net assets of coin acquisition.

Speaker #3: So this is a one-off impact of the listing transaction that you would not see further impacting KGL performance.

Speaker #2: Maybe 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 asking the same question to myself.

Speaker #2: In IFRS, International Financial Reporting Standards, the amount of shares that coin circle got is considered as share-based compensation. And this is actually the reflection of this.

Speaker #2: Very interestingly, you might ask yourself the question of the value of Kyivstar on our equity was 1.25 billion. We listed the company for 2.8 billion.

Speaker #2: 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&L.

Speaker #2: And thanks for asking the question so that we could clarify the situation. Thank you, Khan. Our next question is from Natalia Shpigotska from Dragon Capital.

Speaker #2: She asked two questions, in fact, on CapEx. First off, how do we account for you clones acquisition in the 2025 CapEx numbers? Secondly, could you please explain what right of use assets investment part of the CapEx stands for?

Speaker #3: Let me take this one, Natalia. Thank you for the question. So clone is acquisition. So it goes directly to equity. So we do not include it in capital expenditures.

Speaker #3: So under our capital expenditures, you need you see our normal kind of CapEx in network in telco and other digital assets that we are developing.

Speaker #3: 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 asset.

Speaker #3: So this is accounted under IFRS. So this is the fair value of all the future leases based on the existing contract. Where Ukrainians, our company, kind of is the main provider, but there are other providers apart from UTC.

Speaker #3: And definitely, they are capitalized under IFRS 16 standard.

Speaker #2: Thank you, Boris. Our next question is from Ahmed Mustafa at Inam. What are the main drivers sustaining this momentum of these strong local currency revenue growth into the next year?

Speaker #2: And what is our medium-term target for digital revenues as a share of total?

Speaker #1: 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.

Speaker #1: Okay? And this is what we are going to develop further into the future. Okay? So what you see is a sustainable core telco business growth, 9% year on year.

Speaker #1: You see almost 100% growth of our current digital revenue. Okay? And non-organic growth driven by Uklon 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.

Speaker #1: 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?

Speaker #1: 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 Beyond Capital days a couple of years ago which actually stated that our objective is to reach 15% of the digital revenue from our top lines.

Speaker #2: Thank you, Alexander. Our next question is from Sefi Yofimov at the Kyiv National Economic University. Sefi asks, "What are the key milestones or KPIs that Kyivstar's management team is focused on achieving post-IPO?"

Speaker #1: 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 are to transform Kyivstar from the telco service provider into the digital service provider.

Speaker #1: 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 service provider with the telco license to ensure a long-term growth of the business, so as a digital service provider.

Speaker #1: Okay?

Speaker #2: Nadia, I believe we have another audio question.

Speaker #4: Yes, we do. Jeff, give me a moment. And the question comes along of Yifu Li from Canton Federal. Your line is open. Please ask your question.

Speaker #5: Thank you again. Hey, Alexander and Boris, just a couple of follow-ups. I'll make it quick. In terms of UConn performance, obviously, great days at almost 25 million USD.

Speaker #5: And very profitable. I was wondering if you think out the long-term trajectory, how big of a scale do you think this business could be?

Speaker #5: Because I think you're still scaling the delivery service on that.

Speaker #1: 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 right-hand business.

Speaker #1: Okay? Because it will be very much driven by the overall, let's say, economic development. Okay? And population development in Ukraine. Okay? The second one is non-organic growth of the delivery business as it's a new business line for us with quite significant potential.

Speaker #1: Okay? The third one is development of the mobility ecosystem around Uklon. And the first one is international expansion. So from my perspective, the key to success of the Uklon strategy is the right combination of these four drivers that will help us to create a profitable growth for the relative long-term future.

Speaker #5: Got it. Makes sense, Alexander. Can I move on to the multiplayer customer base? And Boris, feel free to jump in, right? Other key percent, I think on terms of pricing, to 2070 cents USD.

Speaker #5: Join the IPO due diligence. I remember the listing due diligence on the research side. I remember one of the slides was it's still a third lower your output base is still a third of the more developed countries in, let's say, Europe.

Speaker #5: I was wondering what's your longer-term trajectory of this growth and how sustainable is this?

Speaker #1: No, I'm leading Kyivstar since 2018. Okay? And I think during these years, we were able to demonstrate our ability to ensure sustainable output growth.

Speaker #1: Okay? And this is actually our vision for the future. Okay? Together with this combination of telco services plus digital services, mutual penetration, okay, I think that we are making this way even a bit more, let's say, attractive for the business and for the customer.

Speaker #1: Okay? We see a significant difference between IRPU of the multiplayer customer and this in telecom customer. And this combination of our digital service provider strategy plus leadership in the core telecom business gives us, let's say, it's a quite good perspective for the future.

Speaker #1: For the future output growth.

Speaker #5: Makes sense. That's my additional color, Boris. And my final follow-up is really the Starlink direct-to-sell 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.

Speaker #5: And you guys did, I think, a quarter ahead of schedule. I was wondering it sounds like from the press release that it's included as part of the plan.

Speaker #5: Can you give us more color, Alexander, and Boris, how you would monetize this? Or is this more of a customer retention, customer success mechanism?

Speaker #5: And that's it for me. Thank you, gentlemen, for taking all my questions.

Speaker #1: 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.

Speaker #1: Okay? We are technically ready. And right now, we are running a relatively big pilot for 16,000 customers across Ukraine who have volunteered to participate as an early adopters.

Speaker #1: 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-sell services across the whole Ukraine.

Speaker #1: 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 service for every customer with a Kyivstar SIM card.

Speaker #1: Okay? And I think that this is a very, very right step taken into account the war in Ukraine, yes, and necessity to provide so important humanitarian connectivity services for the Ukrainians in every circumstance.

Speaker #1: 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.

Speaker #5: So Alexander, just one to clarify. So after some testing, you're going to offer this product one year free for your customer, obviously, it's going to be much more loyal, right?

Speaker #5: And then you're going to monetize it afterward. Is that the timeline?

Speaker #1: Yes. It's the right timeline. We will feel free to modernize our commercial approach during 2026. But so far, it is our plan.

Speaker #5: Okay. Excellent. Excellent, gentlemen. Thank you.

Speaker #6: Thank you. Do you have speakers? Please be advised we do not have any further audio questions. Please kindly proceed with any written questions.

Speaker #7: Thank you, Nadia. Our next question is from Jesse Sobelson at BTIG. 2025 CapEx intensity is guided at 30 to 33 percent of revenue above historical telecom averages.

Speaker #7: 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?

Speaker #1: Let me start with our CapEx strategies. We do understand that it is well above, let's say, historical and average telecom level. Okay? And this is very much driven by the current circumstances.

Speaker #1: So our CapEx strategy in based on a few pillars. The first one is extensive investments into the network resilience and redundancy. The second one is accelerated investment into the 4G modernization and coverage development.

Speaker #1: Right now, Kyivstar is a market leader and it was many times confirmed by Oakland. And we are not just a market leader in a geographical coverage.

Speaker #1: 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 Oakland.

Speaker #1: Okay? And this is part of our strategy to ensure a technological leadership versus our competitors. Okay? And the third one, yes, we invest into the certain developments, including LLM.

Speaker #1: And I would probably ask Boris to give some highlights about figures.

Speaker #8: 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.

Speaker #8: So we are consistent with the investing Ukraine now strategy. And in the joint commitment with Vyon to invest up to $1 billion, within three years.

Speaker #8: So we are way on track with these targets. So what we are doing here with 30, 33 percent guidance, so we are reinvesting in Ukraine.

Speaker #8: 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.

Speaker #8: Also developing our digital footprint and also developing our M&A strategy as a kind of a contribution to the digital ecosystem that we are building.

Speaker #8: So in terms of the numbers, what I would highlight that the telco business historically has way higher CapEx intensity than the digital businesses we are investing in.

Speaker #8: Yeah? 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 pad than CapEx part.

Speaker #8: So you would not see it until CapEx and CapEx guidance. Yeah? But they, again, produce you kind of the cash result and these are future projects that we are developing to complement the portfolio of the services that we have currently.

Speaker #8: 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 percent.

Speaker #8: But this is our delivery reinvestment.

Speaker #1: Thank you for the question, Jesse.

Speaker #7: Thank you both. Thank you, Jesse. Our next question is from Vladislav Shveda at Team 10. What is Kyivstar's current M&A strategy? And what specific company profiles are you targeting in the Ukrainian market?

Speaker #1: Vladislav, thank you very much for your question. So I will probably focus on the general M&A strategy rather than specific targets. Okay? So from general perspective, we have three priorities.

Speaker #1: The first one is non-organic investments into the core business. Where we are interested in an infrastructure providers and fixed broadband service providers. The second priority is non-organic development of the digital ecosystem, digital product that the digital services that help us to build and accelerate our digital ecosystem for the Kyivstar customers.

Speaker #1: And Kyivstar 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.

Speaker #1: That will let us in a mid-term perspective to hedge the power supply. The prices for the electricity and will make a significant contribution into the Kyivstar ESG agenda.

Speaker #1: Okay?

Speaker #7: 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.

Speaker #7: You are already aware that if you'd like any follow-up, you are very welcome to contact us at IR@kyivstargroup.com. Thank you again, Duże Dziękuję. And we will be seeing you next quarter.

Cole Akeson: -listed company for the Q3 2025 that ended 30 September 2025. I am Cole Akeson, Group Director for the Kyivstar Investor Relations team. Please allow me to introduce our senior management in the room today. Mr. Kaan Terzioğlu, Chairman of the Board, Mr. Oleksandr Komarov, our CEO, Mr. Boris Dolgushin, 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 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.

Cole Akeson: Actual results may differ materially due to risks detailed in Kyivstar's July 2025 Form F-4 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 Komarov: Thank you, Cole. Good afternoon and good morning. Today, we are excited to host our first quarterly earnings call as a US-listed company. We are proud that Q3 not only produced robust financial results but also clear strategic progress to transform Kyivstar into a digital service provider with a telco license. Kyivstar remains a national champion in Ukraine's recovery and a 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 5 times and now contributes nearly 12% of Kyivstar revenue. Our ride-hailing business, Uklon, contributed much of this growth since its consolidation in April.

Oleksandr Komarov: 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 Kyivstar role in our customers' daily lives. Multi-play 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 rise 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 UAH 2.8 billion. We are the first Ukrainian company to list on US exchange, offering investors a unique opportunity to take part in Kyivstar digital transformation and Ukraine's recovery.

Oleksandr Komarov: In August, we completed first in Europe test of Starlink Direct to Cell 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 UAH 12.3 billion, or $297 million. Telecom revenue grew 9% to local currency, driven by our differentiated products and services continuing to lift ARPU and subscriber 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.

Oleksandr Komarov: EBITDA climbed 21.9% year on year. The EBITDA margin reached 57%. Reported net profit for the Q was -$89 million, with reported EPS at -$0.41. However, that was driven by a $162 million one-off non-cash charge related to sponsor shares in a connection with the Kyivstar listing. Excluding this impact, Q3 adjusted net profit was +$73 million. The 10% decline in adjusted net profit was driven by a lower interest income and non-operational gains relative to Q3 2024. Adjusted EPS for Q3 was $0.33, which took our nine-month EPS to $0.93.

Oleksandr Komarov: 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. All together, we continue to lead with the highest market share in Ukrainian mobile.

Oleksandr Komarov: Mobile ARPU maintained double-digit growth, rising 40% year on year to UAH 153, equivalent to $3.7 for the quarter. Repricing of legacy plans, multi-play 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 the 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-sell initiatives across the customer base.

Oleksandr Komarov: 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, multi-play. Multi-play counts customers that use at least one digital service in addition to voice and data services. The multi-play segment drives growth through stronger customer engagement, higher data consumption, more frequent usage of voice services, improved retention. Our multi-play customers also generate higher ARPU than voice-only subscribers. On the right, you will see multi-play 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.

Oleksandr Komarov: 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 term, excluding Uklon, digital revenues grew 89% year on year. The growth spans all verticals: Health, Kyivstar TV, Digital Enterprise, and Uklon. Our sustainable cost advantages are our low customer acquisition costs and our optimized distribution model. This enables us to maintain profitability and strong unit economy. Moving to Uklon, our ride-hailing business. In Q3 alone, Uklon contributed UAH 1 billion in revenue and UAH 378 million in EBITDA.

Oleksandr Komarov: 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, Uklon is expanding its driver network and ride volumes. Customer engagement also improved. Uklon'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. Uklon'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 UAH 222 million in revenue this quarter, up 81% year over year.

Oleksandr Komarov: It also connects other parts of our ecosystem. Businesses are increasingly turning to Kyivstar 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. ADWISOR, our self-service ad tech platform, handles campaign management for B2B customers. It enables targeting, audience engagement, and optimization. Kyivstar.Tech is shifting from internal IT function to offer IT, digital, and AI services to the external customers. Kyivstar.Tech 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. Kyivstar TV continues to strengthen its position.

Oleksandr Komarov: As Ukraine's 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 UAH 140 million. 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 Kyivstar's role and direct customer engagement. The move to the new model accounts for about UAH 45 million for this quarter's revenue with little impact to profit. Excluding this change in model, revenue growth would have been 64% year on year. As of September, 34% of our broadband users subscribe to Kyivstar TV.

Oleksandr Komarov: 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. We have Helsi on the next slide. Helsi, Ukraine's leading health tech platform. As of end of September, Helsi had approximately 29 million registered patients with access to more than 1,600 healthcare institutions and over 38,000 medical professionals. Revenue grew 51% to UAH 76 million. Monthly active users for September reached 2.5 million, up 5.6% year over year. During the quarter, Helsi added analysis and telemedical consultations to its subscription model. In September, we launched the Helsi Superpower. It's a healthcare subscription service for Kyivstar users.

Oleksandr Komarov: Helsi is deeply embedded in Ukraine's e-health 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 Dolgushin to talk through the financial in more detail.

Boris Dolgushin: Thank you, Alexander. We delivered total revenue of UAH 12.3 billion in Q3, up 21% year-over-year. In USD terms, revenue reached $297 million, up 19.8%. Telecom revenue grew 9% year-over-year to UAH 10.9 billion in Q3, driven by our ARPU expansion. That expansion, in turn, reflects disciplined repricing, rising mobile data consumption, and mitigation and migration to 4G. Direct digital revenue soared more than 5-fold to UAH 1.5 billion in Q3, reaching almost 12% of total revenue. Growth came not only from the Uklon position, but also multi-play and growth across all our digital verticals, including Digital Enterprise, Kyivstar TV, and Helsi. On profitability, EBITDA grew 21.5% year-over-year to UAH 7.1 billion in Q3.

Boris Dolgushin: In dollar terms, EBITDA 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 UAH 378 million in EBITDA 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, CapEx intensity is significantly lower, resulting in comparable cash conversion. As the revenue mix shifts 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 totaled UAH 3.7 billion, or $89 million. On an LTM basis, CapEx intensity stands at 29.1%, as Alexander noted earlier.

Boris Dolgushin: This reflects our investment to sustain and improve quality across our services, inclusive of network modernization, regulatory compliance measures, and the installations that support network resilience. As of September, we activated more than 3,600 generators and more than 240,000 additional batteries for backup capacity and improved network resilience. Despite these escalated investments, Kyivstar continues to generate substantial free cash flow. Last 12 months, equity free cash flow before business and licenses reached UAH 15.5 billion or $373 million. Turning now to the balance sheet. We ended the quarter with UAH 19.5 billion or $472 million in cash.

Boris Dolgushin: 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 UAH 4.1 billion or approximately $100 million. Most of this reflects debts to VEON and Ukrainian Tower Company. There is no external financing. Lease liabilities of UAH 14.5 billion 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 Oleksandr.

Oleksandr Komarov: Okay. Thank you, Borys. On the next slide, 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 Cell. In fixed broadband market, we want to strengthen group leadership via organic expansion and acquisitions. In digital, we are concentrated on growing digital offerings organically and through acquisitions, and increasing multi-play penetration and customer engagement. Let me conclude with our outlook for the next year. Despite the challenges and uncertainties, Kyivstar 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.

Oleksandr Komarov: As we look to Q4, 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, assuming 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, 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.

Oleksandr Komarov: 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 tech sector. Our operational and financial performance, including double-digit growth across segments, reflects not only the attractiveness of our offerings and markets but also the execution strengths 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 Q&A.

Operator: Thank you so much. Dear participants, as a reminder, if you wish to ask a question, you need to press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 1 and 1 again. Alternatively, you can submit your questions via the webcast. Please stand by while we compile the Q&A queue. This will take a few moments. We will-

Oleksandr Komarov: Thank you.

Operator: Take our first question, and it comes to line of Jesse Sobelson from BTIG. Your line is open. Please ask your question.

Jesse Sobelson: Hi, everyone. Thanks for taking my question. I noticed, you know, churn decreased significantly to, you know, 9.9% from almost 15% last quarter, and this seems to be the first quarter in at least the last 2 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 multi-play strategy, increased digital engagement, or any particular retention initiatives that might have made this most impactful?

Oleksandr Komarov: Let me be sure that I do understand your question correctly. Okay, you are asking about the customer base dynamic? Yes, here we see 2 actually trends. The first one is the overall market decline that is very much driven by decline of the double SIM penetration, okay? The growth of the multi-play customers with the Kyivstar customer base that is very much driven by the engagement of our telecom customer base into the different digital services. Okay, as you see, we reached a record high 30-plus% of the multi-play penetration in our customer base, and this segment of the customer base is already contributing more than 45% of the total revenue.

Jesse Sobelson: 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.

Oleksandr Komarov: Okay. I think there are two questions in one. Okay. The first one is probably to VEON and VEON strategy. Okay. With regard to the TowerCo passive infrastructure business. The second one is probably I will ask Boris to handle about the financial impact of our, let's say, lease liabilities. Yes, Kaan.

Kaan Terzioğlu: Hello. Hi, Jesse. This is Kaan. You know, with regard to our strategy of having asset-light, you know, 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 VEON. Of course, all the managed services contracts and tower rental agreements are done on a fully arm's-length basis with Kyivstar. I think ultimately it is critical that these type of tower companies do not only serve one operator but serves multiple operators. 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 Kyivstar as one of the customers of the tower company.

Kaan Terzioğlu: That execution process continues. Thank you.

Boris Dolgushin: Jesse, I would add from the finance perspective, Ukrainian Tower Company works on the arm's-length basis with the KGL Group as well with all other providers on the market, absolutely mirror terms for all market players. What you see in our balance sheet is these liabilities, $363 million. These are the liabilities predominantly to the Ukrainian Tower Company as the main provider of the towers for us. We do not expect any changes due to any ownership change in the UTC as we are on the arm's-length basis here.

Jesse Sobelson: Great. Thank you.

Operator: Thank you. Now we're going to take our next question. It comes line of Yi-Fu Lee from Cantor Fitzgerald. Your line is open. Please ask your question.

Yi Fu Lee: Good morning. Good afternoon, Oleksandr and Boris. Thank you for taking my questions. Congratulations on your first earnings call as a publicly traded company. Well done, team. I just want to focus on the growth fact, the growth driver, Oleksandr 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 Uklon is, you know, 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 Helsi over 50%, while at a small base, of course, right? Oleksandr, can you discuss next steps in terms of scaling these other digital services and assets? Any bolt-on acquisitions in mind or organic development?

Yi Fu Lee: I also have a couple of more, 1 more for you and another for Boris.

Oleksandr Komarov: Let me take it from the strategy perspective. Of course, I can't make any, let's say, hard forward-looking statements. Okay? I just want to somehow reconfirm our strategy of organic and non-organic development of the digital operator with the telco license. Okay? From this perspective, we are focused on developing new digital services inside Kyivstar, and I will say the 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 SP in place and Antimonopoly Committee decisions.

Yi Fu Lee: Any areas you're looking at, Oleksandr, just to, you know, give us some flavors what you're thinking in terms?

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

Yi Fu Lee: Got it. Got it. Extremely helpful, in naming the sectors. In the analyst day, in August, you know, Cem Kan talked about this concept called augmented intelligence. Want to circle back, Oleksandr, on the first national Large Language Model development in collaboration with, you know, the Ukrainian Minister of Digital Transformation. Can you discuss how this model is built? Are you partnering up with leading foundational model providers like OpenAI, Anthropic, et cetera? What do you envision, Oleksandr, the revenue uplift will be when these Large Language Model capabilities, especially if it's incorporated to the greater platform, especially to the Kyivstar cloud services?

Oleksandr Komarov: Yes, for the time being, it's a partnership project between Kyivstar and the Ministry of Digital Transformation. Okay? We are at the stage to choose one of the open models to be developed into the proper Ukrainian LLM based on the Ukrainian dataset that will be collected by the Ukrainian, let's say government, Ukrainian authorities as a unique, digital available dataset in Ukraine. Okay? From our side, we invest into the development team that will lead the whole process and into the computing power, okay, that will be provided for the LLM creation.

Boris Dolgushin: Okay. As a result, we would like to establish a quite strong cooperation with the Ministry of Digital Transformation with a certain right that will belong to Kyivstar for the further digital product developments with AI incorporated.

Yi Fu Lee: Got it. Got it. On the, on the financial side, Borys, let me turn to you, right? You know, $162 million in public listing costs. Should we expect going forward any of these, you know, additional charges, coming in in later quarters, in terms of lagging? I wanna turn back to the annual churn rate. Obviously, we've seen great improvements, to now, you know, high single digits, 9.9% this quarter. I think that's been seen since 2021. Wanna, you know, get your thoughts on the on the ground transit scene. Can we kinda say, the telco base is stabilizing?

Yi Fu Lee: You know, am I too early to call a bottom here, you know, as the telco revenue is still expanding at a solid 8% growth? That's it from me. Thank you, guys.

Boris Dolgushin: Thank you, Yi. Let me take the first part of your question about UAH 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, used with the transaction for bringing the company public. Answering your question, we do not expect any impacts of this in the future. We do have war-warrants on our balance sheet, so the warrants, as you know, kind of they are regulated on a quarterly basis, depending on their kind of actual trading dynamics. Otherwise than this, we do not expect any impact on the recurrent performance.

Oleksandr Komarov: In telco business, we are growing 9% in the local currency year on year. In general, we do expect that we will be able to sustain reasonable level of growth, taking into account the relatively high inflation in Ukraine. Whatever you see right now as a result is in line with our strategy that we actually declared beforehand, is to ensure healthy top-line growth that will help us to create shareholders' value despite double-digit inflation in Ukraine.

Yi Fu Lee: Got it. Thanks. Thanks, Oleksandr and Boris. We'll detach on the line.

Operator: Thank you.

Oleksandr Komarov: Thank you.

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

Cole Akeson: 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 Vladyslav Kiusya from, I believe, the Kyiv School of Economics. Please correct me if I butchered your surname, Vladyslav. Thank you. He asks, Could you please describe the detailed listing costs, the $162 million for listing?

Boris Dolgushin: The listing cost is calculated as the difference between the share price given to Cohen Circle, so the company beyond the, this listing transaction with, and the value of the net assets of Cohen Circle at the moment of the acquisition. This is a one-off impact of the listing transaction that you would not see further impact in KGL performance.

Kaan Terzioğlu: Maybe Borys, this is Kaan. Just to add on to this, I agree with you. It's a 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 a share-based compensation. This is actually the reflection of this. Very interestingly, you might ask yourself the question, you know, the value of Kyivstar on our equity was UAH 1.25 billion. We listed the company for UAH 2.8 billion, there should be actually a sizable profit around that, and we actually raised cash out of this. Because of IFRS and the rules around share-based compensation treatment of this amount, this is the non-cash hit basically on our P&L. Thanks for asking the question so that we could clarify the situation.

Cole Akeson: Thank you, Kaan. Our next question is from Natalia Shpygotska from Dragon Capital. She asked two questions, in fact, on CapEx. First off, how do we account for Uklon'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 Dolgushin: Let me take this one, Natalia. Thank you for the question. Uklon is acquisition, so it goes directly to equity. We do not include it in capital expenditures. Under our capital expenditures, you see our normal kind of the CapEx in-network in telco and other digital assets that we are developing. Uklon price goes directly to the assets. In terms of the right of use, as I said, what you see in lease liabilities, kind of this is the right of use assets. This is accounted under IFRS. This is the fair value of all the future leases based on the existing contract, where Ukrainian Tower Company kind of is the main provider, but there are other providers apart from UTC. Definitely they are capitalized under IFRS 16 standard.

Cole Akeson: Thank you, Boris. Our next question is from Ahmed Mostafa at INAM. What are the main drivers sustaining the momentum of the strong local currency revenue growth into the next year? What is our medium-term target for digital revenues as a share of total?

Oleksandr Komarov: Ahmed, thank you very much for your question. I think what you see in Q3 is a perfect reflection of our strategy in action, okay? This is what we are going to develop further into the future, okay? What you see is a sustainable core telco business growth, 9% year on year. You see almost 100% growth of our current digital revenue, okay? Non-organic growth driven by Uklon acquisition. 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. 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 medium-term target for digital revenue as a share of total?

Oleksandr Komarov: We do not provide forward-looking statements about this, okay? The only one reference I can make is a 3-year strategy that we have delivered at the VEON Capital Markets Day a couple of years ago, which actually stated that our objective is to reach 15% of the digital revenue from our subscribers.

Cole Akeson: Thank you, Alexander. Our next question is from Serhiy Yeltiemov at the Kyiv National Economic University. Serhiy asks, What are the key milestones or KPIs that Kyivstar's management team is focused on achieving post-IPO?

Oleksandr Komarov: I think that at the end, IPO did not affect our, I will say, our targets too much, okay? 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, as a digital service provider.

Cole Akeson: Okay. Nadia, I believe we have another audio question.

Operator: Yes, we do. Just give me a moment. The question comes to line of Yi Fu Lee from Cantor Fitzgerald. Your line is open. Please ask your question.

Yi Fu Lee: Thank you again. Hey, Alexander 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 $0.5 million, and very possible. Was wondering if you think out, like, the long-term trajectory, how big of a scale do you think this business could be? I think you're still scaling the delivery service on that.

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

Yi Fu Lee: Got it. Makes sense, Alexander. Can I move on to the multi-play customer base? Borys, feel free to jump in, right? You know, up 13%, I think on terms of pricing to $20.07. During the IPO due diligence, I remember the listing due diligence on the research side, I remember one of the slide was, is 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 Komarov: You know, I'm leading Kyivstar since 2018. I think, you know, during these years, we were able to demonstrate our ability to ensure sustainable ARPU growth. 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 multi-play customer and decent telecom customer, and this combination of our digital service provider strategy plus leadership in the core telecom business gives us, let's say, you know, so quite good perspective for the future, for the future ARPU growth.

Yi Fu Lee: Makes sense. Thanks for the additional color, Borys. 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. You guys did it, I think a quarter ahead of schedule. I 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, Oleksandr and Borys, how you will, you know, monetize this? Or is this more of a customer retention, customer success mechanism? That's it for me. Thank you, gentlemen, for taking all my questions.

Oleksandr Komarov: Okay. Let me give you a bit more color about where we are right now. We finalized all technical tests with the Starlink. Okay. We are technically ready, and right now we are running a relatively big pilot for 16,000 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 Cell 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.

Oleksandr Komarov: I think that this is a very, very right step taken into account, the war in Ukraine. Yes. Necessity to provide so important humanitarian connectivity services for the Ukrainians in every circumstance. Okay? Somehow we expect that it will be a right reaction from the customer base. Okay? Will improve and strengthen our relationship with our customers significantly.

Yi Fu Lee: Alexander, just want to clarify. After you start testing, you're gonna offer this product one year free for your customer, obviously they're gonna be much more loyal, right? Then you're gonna monetize it afterward. Is that the timeline?

Oleksandr Komarov: Yes, it's the right timeline. We will feel free to modernize our commercial approach during 2026, but so far it is our plan.

Yi Fu Lee: Okay. Excellent. Excellent, gentlemen. Thank you.

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

Cole Akeson: 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? Can you please clarify the split between network, digital platforms, and one-time growth initiatives such as Starlink Direct to Cell or LLM development?

Oleksandr Komarov: Let me start with our CapEx strategy. We do understand that it is well above, let's say, historical and average telecom level. Okay. This is very much driven by the current circumstances. Our CapEx strategy is based on a few pillars. The first one is extensive investments into the network resilience and redundancy. The second one is accelerated investment into the 4G modernization, okay. Coverage development. Right now, Kyivstar is a market leader, okay. It was many times confirmed by Ookla, 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 Ookla. Okay. This is part of our strategy to ensure a technological leadership versus our competitors. Okay.

Oleksandr Komarov: The third one, yes, we invest into the certain development, including LLM, and I would probably ask Borys to give some highlights about figures.

Boris Dolgushin: Thank you, Alexander. I will start with the fact that we have presented our capital allocation policy during our previous investor call in New York. We are consistent with the Invest in Ukraine NOW! strategy and in the joint commitment with VEON to invest up to $1 billion within 3 years. We are way on track with this target. What we are doing here with 30% to 3% guidance, we are reinvesting in Ukraine. 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 M&A strategy as a kind of a contribution to the digital ecosystem that we are building.

Boris Dolgushin: In terms of the numbers, what I would highlight that the telco business historically has way higher CapEx intensity than the digital businesses we are investing in. Yeah. That's why they are less profitable in terms of marginality, but give you these comparable cash conversions. Some of these investments, like for example, invest in Starlink Direct to Cell or LLM, they have rather OpEx part than CapEx part. You would not see it under CapEx and CapEx guidance. Yeah. But they again produce you kind of for the cash result and these are future projects which we are developing to complement the portfolio of the services that we have currently. This is due to the situation we have in Ukraine. This is part of our commitment.

Boris Dolgushin: 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 deliberate reinvestment.

Oleksandr Komarov: Thank you for the question, Jesse.

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

Oleksandr Komarov: Vladislav, thank you very much for your question. I will probably focus on the general M&A strategy rather than specific targets. 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 products, digital services. That help us to build and accelerate our digital ecosystem for the Kyivstar customers and Kyivstar B2B, and B2C customers. The third one is investment 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 hedge the power supply, the prices for the electricity. Will make a significant contribution into the Kyivstar ESG agenda.

Cole Akeson: Everyone, we are unfortunately out of time. 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 at ir@kyivstargroup.com. Thank you again. Дуже дякую. We will be seeing you next quarter.

Oleksandr Komarov: Thank you very much.