Axiata returns to profit on strong Celcom, XL revenues

Ebitda climbs 17.5% to RM2.3b in 4Q17, boosted by revenue growth and cost optimisation


Axiata Group Bhd recorded a net profit of RM24.73 million in the fourth quarter ended Dec 31, 2017 (4Q17), against a net loss of RM309.5 million a year earlier.

The telecommunications group attributed the turnaround to strong improvements in revenue from its mobile operating entities in Indonesia, Malaysia and Bangladesh.

Revenue for the quarter rose 8.1% to RM6.26 billion from RM5.79 billion a year ago.

Earnings before interest, tax, depreciation and amortisation (Ebitda) climbed 17.5% to RM2.3 billion in 4Q17 from RM2 billion, boosted by revenue growth and cost optimisation across the group.

“Our two largest operations, Celcom Axiata Bhd in Malaysia and PT XL Axiata Tbk in Indonesia, delivered as planned, while Dialog Axiata plc in Sri Lanka continued to perform.

“We’re very happy that the turnaround at Celcom is showing results — as at end-2017, all the key performance indicators are moving in the right direction, but we still have a lot of work to do,” Axiata president and group CEO Tan Sri Jamaludin Ibrahim (picture) told the media in Kuala Lumpur yesterday.

The telecommunications group declared a dividend of 8.5 sen per share for the financial year 2017 (FY17), which translates to a 64% dividend payout ratio compared to 50% in 2016.

For FY17 ended Dec 31, the group’s net profit jumped 80.4% to RM909.48 million from RM504.25 million a year earlier. Full-year revenue was 13.2% higher at RM24.4 billion versus RM21.56 billion previously, boosted by strong contributions across all the group’s mobile operating companies.

Ebitda grew 15.2% to RM9.2 billion in FY17 from RM8 billion a year ago.

Axiata’s regional operations — namely Celcom, XL, Dialog, Smart Axiata Co Ltd in Cambodia, Robi Axiata Ltd-Airtel Bangladesh Ltd in Bangladesh, and Ncell in Nepal — recorded growth in revenue and Ebitda for FY17.

However, Idea Cellular Ltd in India, in which Axiata holds an 18.1% stake, contributed a loss of RM450 million to the group compared to a profit of RM65 million in FY16.

Singapore’s M1 Ltd, an associate company of Axiata’s, contributed a profit of RM122 million to the group in FY17 compared to a profit of RM129 million a year ago.

Yet, the group is not in a hurry to sell its stakes in either Idea or M1, Jamaludin said, stating that the group’s gross debt to Ebitda ratio stands at 2.1 times, while its cash balance amounts to RM6.8 billion.

On the possibility of a re-merger with Telekom Malaysia Bhd (TM), Jamaludin noted that the two had previously demerged “for certain reasons and those reasons are still true”.

“We wouldn’t have demerged if we knew it would be beneficial for both of us. Frankly, I don’t think it’s something that can happen immediately.

It’s complex stuff, we demerged for a reason and the factors behind the demerger still apply today,” he said.

TM and Axiata collaborated to piggyback on each other’s mobile data and high-speed broadband services in 2016.

“That (collaboration) was doing reasonably well, but after we completed the agreement, the market structure changed again. Right now, it’s being renegotiated. So, instead of trying to re-merge, we decided to piggyback on networks, and the benefit from this is quite significant,” Jamaludin said.

He said the group’s digital businesses portfolio currently has 29 brands under its belt, which includes Axiata Digital Services Sdn Bhd and Axiata Business Services Sdn Bhd.

“We’ve invested about US$150 million (RM587.09 million) so far in these digital companies. We will invest about RM150 million this year,” Jamaludin said.