Celcom Axiata unfazed by drop in subscriber base
Celcom Axiata

The company now places more importance on topline expansion, says deputy CEO


Celcom Axiata Bhd remains unfazed by its declining subscriber base as it continues to focus on revenue growth.

For the second quarter ended June 30, 2017 (2Q17), the telco saw its subscriber base decline 3.1% to 9.93 million subscribers, down from 10.25 million in 1Q17.

Postpaid subscribers stood at 2.916 million during the quarter under review compared to 2.946 million in 1Q17, while prepaid subscribers fell slightly to 7.013 million in 2Q17 from 7.3 million in 1Q17.

Deputy CEO Azwan Khan Osman Khan, while acknowledging the drop in subscriber numbers, said the company now places more importance on topline expansion.

“Our numbers have gone down, but what is more important is our revenue. Service revenue grew 1.4% quarter-on-quarter to RM1.5 billion in 2Q17, mainly on encouraging average revenue per user (ARPU) from the postpaid segment.

“Our focus going forward will be on service revenue as that is where we derive more profitability,” he said at a briefing on the company’s 2Q17 results in Kuala Lumpur yesterday.

Celcom’s postpaid ARPU was higher at RM82 in 2Q17 versus RM81 in 1Q17 and RM76 in 2Q16.

For the prepaid segment, ARPU stood at RM31 in 2Q17 versus RM30 in 1Q17 and RM29 in 2Q16.

Blended ARPU for the quarter under review grew to RM44 from RM43 in 1Q17 and RM39 in 2Q16.

Azwan Khan said the telco has been seeing a slight decline in the lower end of its postpaid segment as its focus is mainly on the higher-end postpaid users.

“We’re taking active measures to address that by introducing certain retention benefits. In the prepaid segment there was a clean-up exercise, and some churn for the same reasons (as postpaid) because we’re actively not fighting a price war,” he said.

Celcom CFO Jennifer Wong said the company is aware of the dropping subscriber numbers, although its ARPU figures are rising.

“We are now trying to streamline and segment our customers. We’re very conscious that we’re losing some subscribers, especially in the lower end, so our focus is more on the middle-to higher-tier customers,” she said.

The telco has recently been working to fortify its prepaid user base, which has been on the downtrend since 2015. At 7.013 million users presently, Celcom’s prepaid segment has declined 27.7% from 9.7 million in 3Q15.

However, Wong said the company’s prepaid segment has somewhat stabilised.

“All the operators are now focusing more on postpaid. We have improved our postpaid segment, while our prepaid segment is not falling as much as before — it’s quite stable compared to our competitors,” she said.

As per data from its parent company, Axiata Group Bhd, Celcom’s revenue for 2Q17 fell to RM1.62 billion from RM1.68 billion a year ago. Service revenue contributed 92.2% to total revenue, up from 88.2% last year.

Earnings before interest, taxes, depreciation and amortisation fell to RM580 million in 2Q17 from RM596 million a year ago.

Profit after tax and minority interest was 37.9% higher at RM360 million for 2Q17 compared to RM261 million for 2Q16.

Wong said the telco’s capital expenditure (capex) for the first half of the year amounted to some RM400 million, while total capex for 2017 has been budgeted at RM1.5 billion.

The remaining RM1 billion for the rest of the year will be directed towards ongoing network expansion as Celcom aims to achieve 85% fourth-generation long-term evolution (4G LTE) population coverage by end-2017.

“Our 4G LTE population coverage is currently at 77%. We have a long way to go, but we are tracking well and we’re on track to achieve 85% by year-end,” Wong added.