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EBIT falls 19%, Capex surges, modest subscriber growth & digital lending expands
BeNewz Report
ISLAMABAD: Jazz Pakistan delivered strong revenue and EBITDA growth in the second quarter of 2026, but the headline performance masked several pressure points, including a sharp decline in EBIT, higher capital spending, modest subscriber growth and rapidly expanding exposure to digital lending.
According to the latest earnings report of parent company VEON, Pakistan’s total revenue increased 26.6 percent year-on-year to $500 million in the quarter, equivalent to Rs 139.36 billion, while EBITDA rose 31.9 percent to $216 million, or Rs 60.30 billion.
However, EBIT declined 18.7 percent year-on-year to $143 million despite the strong growth in revenue and EBITDA. The decline points to the impact of higher depreciation and amortisation costs as Jazz steps up investment in network infrastructure and prepares for a wider 5G rollout.
Capital expenditure increased 27.4 percent year-on-year to Rs20.43 billion during the quarter. The company expects spending to rise further during the remainder of the year as it deploys newly acquired spectrum and accelerates 5G network investment, creating additional near-term pressure on cash flows.
Digital business drives growth
Jazz’s digital operations remained the strongest growth engine, with digital revenue increasing 45.6 percent year-on-year to $193 million. Digital services accounted for 38.7 percent of total Pakistan revenue, compared with 33.6 percent a year earlier.
Digital EBITDA almost doubled, rising 94.2 percent year-on-year to $63 million, while the digital EBITDA margin improved to 32.3 percent from 24.3 percent.
Financial services were a major contributor to the expansion. Revenue from the business rose 53.3 percent year-on-year to Rs38.97 billion, supported by higher lending disbursements as well as growth in payments, merchant services and SME solutions.
JazzCash had 27.7 million customers by June 2026, while its last-12-month transaction volume increased 57.1 percent. Gross transaction value rose 67.5 percent to Rs19.6 trillion.
The company also reported more than 224,000 digitally issued loans per day and an active merchant network exceeding 735,000.
The rapid expansion of lending, however, is also increasing Jazz’s exposure to credit risk. The company’s gross loan portfolio has grown 2.2 times year-on-year, while the latest report does not provide detailed information on loan defaults or credit losses.
Core telecom growth trails digital expansion
The telecommunications and infrastructure business grew 17 percent year-on-year to $307 million, considerably slower than the 45.6 percent growth recorded by the digital business.
The gap highlights Jazz’s increasing reliance on digital and fintech operations for growth, while its traditional connectivity business expands at a more moderate pace.
The company’s mobile subscriber base increased only 2.1 percent year-on-year to 75.4 million. Mobile average revenue per user, or ARPU, rose 14 percent to Rs328.6, suggesting that a significant portion of revenue growth is being supported by higher monetisation and pricing rather than rapid expansion of the subscriber base.
The 4G customer base increased 6.6 percent to 58.1 million, taking 4G penetration to 77.1 percent, while average data consumption increased 14.4 percent to 8.2 GB per user.
Multiplay customers rose just 2.6 percent year-on-year to 22.9 million, indicating relatively modest growth in bundled-service adoption compared with the much faster expansion of digital revenues.
New insurance business adds another layer
VEON has also expanded Jazz’s financial-services footprint through the acquisition of a 76.33 percent controlling stake in TPL Insurance for approximately $16.4 million.
The acquisition gives Jazz access to an insurance business with more than 277,000 policies covering motor, healthcare and property products.
While the move provides an opportunity to expand embedded financial services, it also introduces integration and execution risks as JazzWorld adds general insurance to its existing payments, lending and banking operations.
Entertainment platforms maintain large audiences
Jazz’s digital entertainment business also remained active during the quarter. Tamasha reached 48.9 million users at the beginning of the quarter during the Pakistan Super League season before declining to 38.7 million by quarter-end as sports-related engagement moderated.
SIMOSA reached 33.8 million users, FikrFree recorded 17.9 million policyholders, while premium digital brand ROX reached 3.3 million users.
VEON group results under pressure
Despite Pakistan’s strong operating performance, VEON’s consolidated results were affected by significant declines elsewhere and comparison effects.
The group reported a 77 percent year-on-year decline in profit for the period and a 79.6 percent fall in diluted earnings per share. The company attributed much of the decline to non-recurring items, including the gain from the Pakistan tower sale in the second quarter of 2025 and a fair-value loss related to KGL warrants.
Pakistan nevertheless remained one of the key contributors to VEON’s growth outlook, helping support the company’s upgraded full-year 2026 guidance for revenue growth of 15–18 percent and EBITDA growth of 9–12 percent.
The latest results therefore present a mixed picture for Jazz: strong revenue, EBITDA and digital growth on one side, but declining EBIT, rising capital requirements, relatively slow subscriber expansion and growing exposure to digital lending and new financial-services businesses on the other.
