Independent Auditor’s Report
To the Shareholders of Mobile Telecommunications Company K.S.C.P. and its Subsidiaries State of Kuwait
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Mobile Telecommunications Company K.S.C.P. (the “Company”) and its subsidiaries (together “the Group”) which comprise the consolidated statement of financial position as at 31 December 2025, the consolidated statements of profit or loss, other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2025, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (“ISA”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), as applicable to audits of the consolidated financial statements of public interest entities and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Revenue recognition | |
|---|---|
| See Notes 2.3.16, 20 and 35 to the consolidated financial statements. | |
The key audit matter |
How the matter was addressed in our audit |
|
Revenue recognition is considered a key audit matter because of:
Revenue recognition involves the exercise of several key judgments around the identification of performance obligations that the Group has in its contracts with its customers, determination of stand-alone selling prices, allocation of transaction prices to the various performance obligations and the timing of fulfilling those obligations. We also identified a risk of management override of controls through inappropriate manual topside revenue journal entries as revenue is a key performance indicator for measuring management performance. |
Our procedures included, amongst others, those described below:
|
| Assessment of carrying value of goodwill | |
|---|---|
| See Notes 2.3.8 and 13 to the consolidated financial statements. | |
The key audit matter |
How the matter was addressed in our audit |
|
The Group holds significant investments in telecommunication and related businesses in various geographical locations. The carrying value of goodwill as at 31 December 2025 amounted to KD 538,745 thousand. The carrying amount of the goodwill is assessed for impairment on the occurrence of a triggering event or at least annually in accordance with IAS 36 Impairment of Assets.
The impairment testing of goodwill requires management to identify cash-generating units (“CGU”) in accordance with IAS 36. For the CGU which contain goodwill, the determination of recoverable amount, being the higher of fair value less costs of disposal and value in use, requires judgment on the part of management. The testing then requires comparing the carrying value of each CGU to its recoverable amount, which was estimated as the present value of its future projected cash flows.
The estimation of the recoverable amount involves significant judgments including key assumptions around the current and future market conditions in the various geographies in which the Group has operations, forecast cash flows and discount rates underpinning the recoverable amount. Therefore, we have considered the impairment assessment of goodwill as a key audit matter. |
Our procedures included, amongst others, those described below:
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| Capitalization of Property and Equipment (“PPE”) | |
|---|---|
| See Notes 2.3.7 and 12 to the consolidated financial statements. | |
The key audit matter |
How the matter was addressed in our audit |
|
The Group has a substantial capital expenditure plan and incurs significant annual expenditures related to the development and maintenance of infrastructure assets and network related equipment. Costs associated with the upgrading or enhancement of the network are treated as capital expenditures, while expenditures incurred to maintain the network’s operating capacity are expensed in the same year in which they are incurred.
Determining whether costs meet the capitalization criteria prescribed by IAS 16 Property, Plant and Equipment involves management applying significant judgment regarding the classification, timing and nature of expenditures capitalized. This includes the evaluation of whether expenditures enhance the asset’s performance or extend its useful life or represent repairs and maintenance that should be expensed. We have determined this to be a key audit matter, due to the magnitude of additions during the year and the level of judgment involved in distinguishing capital costs from operating expenses. |
Our audit procedures in this area included, amongst others:
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| Application of IAS 29 Financial Reporting in Hyperinflationary Economies on the Group’s operations in Republic of Sudan | |
|---|---|
| See Notes 2.1, 34 and 35 to the consolidated financial statements. | |
The key audit matter |
How the matter was addressed in our audit |
|
The Group has applied IAS 29 Financial Reporting in Hyperinflationary Economies (“IAS 29”) to its operations in the Republic of Sudan, which management has determined to be a hyperinflationary economy, in its consolidated financial statements as at and for the year ended 31 December 2025, with retrospective application from 2015.
As a result, the financial information of the Group’s operation in the Republic of Sudan included in the consolidated financial statements has been restated to reflect the current purchasing power as at the reporting date. Accordingly, transactions for the years 2006 – 2024 (“prior periods”), comparative balances for the year ended 31 December 2024, and non-monetary balances at 1 January 2024 and 31 December 2024 were restated using relevant price indices as at 31 December 2025.
The application of IAS 29 had a material impact on the consolidated financial statements and involves significant judgments and complexity, particularly in relation to the accuracy and completeness of historical financial information and the appropriateness of price indices applied.
We have determined this to be a key audit matter, due to the extensive audit procedures required to assess the reasonableness of the Group’s application of IAS 29 to its operations in the Republic of Sudan since 2015. |
Our procedures included, amongst others, those described below:
|
Emphasis of matter
We draw attention to note 2.1 of the consolidated financial statements, which describes the management’s assessment of the ongoing impact of the political uncertainty in the Republic of Sudan on the Group’s operations and financial performance and related uncertainties. Our opinion is not modified in respect of this matter.
Other Information
Management is responsible for the other information. The other information comprises the information included in the Group’s annual report but does not include the consolidated financial statements and our auditors’ report thereon. Prior to the date of this auditors’ report, we obtained the Board of Directors report which forms part of the annual report and the remaining sections of the annual report are expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we have obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the Group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
We further report that we have obtained the information and explanations that we required for the purpose of our audit and the consolidated financial statements include the information required by the Companies Law No. 1 of 2016 as amended, and its Executive Regulations and the Company’s Memorandum of Incorporation and Articles of Association, as amended. In our opinion, proper books of account have been kept by the Company, an inventory count was carried out in accordance with recognized procedures and the accounting information given in the Board of Directors’ report agrees with the books of accounts of the Company. We have not become aware of any violations of the provisions of the Companies Law No. 1 of 2016, as amended, and its Executive Regulations, or of the Company’s Memorandum of Incorporation and Articles of Association, as amended, during the year ended 31 December 2025 that might have had a material effect on the business of the Group or on its consolidated financial position.
We further report that during the course of our audit, we have not become aware of any violations of the provisions of Law No. 7 of 2010, as amended, concerning the Capital Markets Authority, and its related regulations during the year ended 31 December 2025 that might have had a material effect on the business of the Company or on its financial position.
License No 130 of KPMG Al-Qenae & Partners
Member firm of KPMG International
Kuwait: 17 February 2026