Axiata in the red in 1Q18

The telco records a net loss of RM147.4m attributable to increased losses from its Indian operations


Axiata Group Bhd slipped to a loss for its first quarter ended March 31, 2018 (1Q18), due to higher losses incurred from the group’s operations in India.

The telecommunications provider (telco) recorded a net loss of RM147.41 million in the quarter against a profit of RM239.02 million in 1Q17 as its share of business losses from Idea Cellular Ltd increased to RM124.3 million from RM25.4 million.

Idea continues to struggle with a “devastating” price war and “hyper competitive” market, the telco noted in its filing to the exchange yesterday.

Axiata group CEO and president Tan Sri Jamaludin Ibrahim said the investment in Idea remains challenging.

“The current state of the industry in India has led to foreign operators either exiting the market or consolidating,” he said in a statement.

“Delays in the proposed merger between Idea and Vodafone India will bring further impact to Axiata.”

Axiata’s revenue in 1Q18 declined by 2.2% year-on-year (YoY) to RM5.75 billion due to foreign-exchange (forex) losses resulting from the ringgit appreciating by an average of 12% against all its foreign markets.

Axiata now has controlling stakes in mobile operators Celcom Axiata Bhd in Malaysia, PT XL Axiata Tbk in Indonesia, Dialog Axiata plc in Sri Lanka, Robi Axiata Ltd in Bangladesh, Smart Axiata Co Ltd in Cambodia and Ncell Pte Ltd in Nepal, and boasts some 350 million customers.

Despite the loss and decline in turnover, Axiata managed to grow its market share in most of these markets on revenue base.

Jamaludin said the underlying performance of the group is good with all its operating companies performing better than the industry average in their respective markets.

“We gained significant revenue market share in Malaysia, Indonesia, Sri Lanka and Bangladesh,” he said.

“Celcom’s turnaround performance continues to gain momentum, and overall, we see quarter-on-quarter improvements in key performance drivers.”

Total operating revenue from Malaysia — the largest contributor to group turnover — grew by 12.5% YoY to RM1.8 billion, underpinned by the strong growth in the data segment.

This was in spite of earnings declining over the adoption of new financial reporting standards, which were offset by higher share of results from associates and overall savings.

The company’s infrastructure unit edotco Group Sdn Bhd also grew its revenue by 11% YoY to RM350.2 million in 1Q18 on improved portfolio and tenancy ratio, while owning 16,800 towers and managing 11,000 sites.

Profit after tax from the unit, however, decreased to RM24.9 million due to forex losses.

Its Indonesian operations were negatively impacted by the SIM (subscriber identification module) registration process outpacing the increase in data revenue, resulting in revenue from the country declining 9.3% YoY to RM1.59 billion for the quarter under review.

“While the Indonesian market’s dynamics and structural changes have impacted the entire industry, we believe it will lead to a healthier market environment ahead,” Jamaludin said.

With the exception of Sri Lanka, markets in Bangladesh, Nepal and Cambodia all noted declines in revenue in 1Q18.

“We also expect regulatory matters in Sri Lanka, Malaysia and Bangladesh, as well as currency fluctuations, to be challenging for the year,” Jamaludin said.

He added that edotco’s growth and expansion is expected to bring material gains for the group, while Axiata will continue to invest in key digital businesses going forward.

Axiata is also on track to achieve RM1.3 billion in savings this year via its group-wide cost optimisation programme.