Kyivstar Group Ltd. Q1 FY2026 earnings call

Strategic Direction

• Core strategy: Maintain market leadership in the core connectivity business while scaling a digital ecosystem through organic growth and targeted strategic acquisitions. The telecom core provides low-cost customer acquisition and cash flow to fund digital expansion, creating synergies between the two business lines.
• Multiplay adoption and deepening daily customer engagement across the ecosystem is the central growth driver, as Multiplay customers generate higher revenue and have lower churn rates.

Operational Updates

• Digital transformation progress: Digital revenue now makes up 21% of total revenue, up 13 percentage points year-over-year, with 28+ million digital customers, exceeding the mobile subscriber base. The company updated reporting this quarter to integrate identity services into the digital enterprise vertical and switch to 3-month active customer counting for better comparability, with reclassified prior period numbers provided.
• Recent acquisitions: Consolidated Uklon (mobility) and Tabletki (healthcare marketplace) in the past year, and acquired fixed broadband provider Storm to add 52,000 new users. Expanded partnership with SpaceX to become the first official reseller of Starlink internet to Ukrainian B2B and public institution customers; direct-to-cell satellite messaging is already used by 5 million+ customers for free, with light data services launching in the second half of 2026.
• Product development: Launched intercity bus booking on Uklon, developing a sovereign Ukrainian-language large language model with government and international partners, and is rolling out 3G sunset to free up spectrum for 4G, which is on track to complete in 2026.
• 4G network coverage is near 97% of the population, with all major roads covered, and the company expects 5G commercial rollout to wait until after the war ends.

Financial Discipline

• Capital allocation remains disciplined, with CapEx of $67 million in the quarter (20.9% CapEx intensity), much of this spent on network resilience during the ongoing war. Ended the quarter with $353 million in cash, with $259 million net cash excluding lease liabilities. Equity-free cash flow grew 32% year-over-year to $87 million, supporting continued investment for growth.

Total company revenue was $323 million, up 27% year-over-year, with total EBITDA of $173 million, up 23% year-over-year, and net profit of $85 million.

1. Telecom and Infrastructure Segment: Revenue reached $256 million, an 8% year-over-year increase, accounting for 79.3% of total company revenue. The segment generated $144 million in EBITDA with a 56% margin. Mobile ARPU grew 14.1% year-over-year to $3.80, mobile monthly data consumption per user grew 31% to 15GB, 70% of the mobile base is now on 4G, and fixed broadband customers grew 12% year-over-year to 1.2 million. Multiplay customers (mobile + data + at least one digital service) grew 31.6% to 8.1 million, representing 40% of the active mobile base, with an average monthly ARPU of $5.30, 40% higher than average mobile-only customers.

2. Digital Platforms Segment: Total revenue grew 257% year-over-year to $67 million, accounting for 20.7% of total company revenue. The segment generated $29 million in EBITDA with a nearly 43% margin. Key sub-segment performance:

• Uklon (mobility platform): Generated $33 million in revenue and $12 million in EBITDA, with 44 million rides and 1.5 million deliveries in the quarter, and over 5 million active customers.
• Digital Enterprise: Generated $16 million in revenue (up 9% year-over-year), with 2,200 active B2B contracts (up 31% year-over-year). Big data/AI revenue grew 75% to $4.4 million, cloud revenue grew 42% to $2.3 million, and the self-service advertising platform now has over 4,000 registered clients.
• Kyivstar TV (entertainment): Revenue grew 390% year-over-year to $10.5 million, with a record 3 million+ customers, 46% of fixed broadband customers now subscribe to the service.
• Healthy (health tech platform): Generated over $2 million in revenue (up 32% year-over-year), serving 4.9 million active customers, with 87,000+ premium subscribers (up 50% quarter-over-quarter).
• Tabletki (online healthcare marketplace, consolidated February 2026): Contributed $5 million in revenue and $4 million in EBITDA from two months of operations, with $258 million in gross merchandise value.

• Management raised the full-year 2026 guidance from prior levels, driven by stronger-than-expected Q1 execution and lower than expected external turbulence. Full-year revenue growth is projected at 18-21% in hryvnia (11-14% in USD, based on an assumed average exchange rate of 45.5 hryvnia to USD), and EBITDA growth is projected at 14-17% in hryvnia (7-10% in USD).
• CapEx intensity is expected to be 21-24% of full-year revenue, down from the elevated 2025 investment cycle, with capital focused on network quality and energy resilience.
• The slower full-year growth rate compared to Q1 is expected due to base effects (the 2023 cyber attack comparison base laps, the Uklon consolidation is now lapped) and a weaker projected spot exchange rate.

• Operating in a war zone, with ongoing cybersecurity threats from state-sponsored actors; the 2023 large-scale cyber attack significantly disrupted operations, and Russia continues aggressive targeting of Ukrainian infrastructure.
• Persistent energy market volatility and elevated electricity prices in Ukraine, which create upward pressure on operating costs.
• Demographic decline and population outflow from Ukraine, which puts pressure on total mobile subscriber counts.
• Currency exchange rate volatility, which impacts USD-denominated reported growth results.
• Uncertainty around the timing of post-war economic normalization and 5G regulatory approval in Ukraine.

Q: The 400,000 net mobile subscriber losses in Q1 were higher than last year. How much comes from secondary SIMs versus primary SIMs, and what drives the strong ARPU growth this quarter? / A: The overall subscriber decline reflects industry-wide trends: the largest factor is dropping secondary SIMs (driven by heavy winter blackouts), followed by slower new growth from price increases and broader demographic shifts across Ukraine. Keevstar maintained its 47+% market share, growing 0.1% year-over-year. ARPU growth is driven by two main factors: 30% year-over-year growth in mobile data consumption, and disciplined pricing to adjust for domestic inflation. (327 chars)

Q: How do you characterize the Starlink direct-to-cell and resale business? Is it for resilience or standalone monetization, and what are your M&A priorities going forward? / A: Currently, free satellite SMS is provided as a humanitarian resilience feature for all customers, with 5 million users already accessing the service. Paid light data satellite services will launch in H2 2026 for monetization, focused on key utility apps. Keevstar is the first official Starlink B2B reseller in Ukraine with no exclusivity. M&A priorities are fixed broadband/infrastructure, digital vertical acquisitions to accelerate the transition from telecom to digital provider, and alternative energy to hedge energy price risk. (456 chars)

Q: Tabletki posted an 85% EBITDA margin this quarter. Is this margin sustainable long-term? / A: Digital businesses overall have much lower capex intensity than traditional telecom, as the majority of capex is only development labor, leading to stronger cash conversion than core telecom. Even if some digital verticals see margin compression as they scale, they still add to absolute EBITDA and net income. Management notes that 40%+ margin for the entire fast-growing digital segment is already impressive and sustainable. (310 chars)

Q: Can you compare organic digital growth versus acquisition-driven growth, and how much of current CapEx goes to network resilience versus network modernization? / A: Excluding recent Uklon and Tabletki acquisitions, organic digital growth is still around 60% year-over-year, in line with the company's target of high double-digit to triple-digit organic digital growth. Around 15% of current CapEx is allocated to network resilience projects related to the war, with the majority of remaining CapEx going to 4G network modernization and 3G sunset, which will complete this year. 5G commercial rollout is not expected until at least 12 months after the war ends. (412 chars)