Axiata’s 1Q earnings up on disposal gains

by NUR HAZIQAH A MALEK / pic by MUHD AMIN NAHARUL

AXIATA Group Bhd has a dedicated team looking into the details of projects alongside the proposed merger with Telenor ASA over the next three months.

Axiata president and group CEO Tan Sri Jamaludin Ibrahim (picture) said the group’s focus on the proposed merger is “business as usual”, and key priorities for all operating units would be to achieve its 2019 targets.

“We must continue to have our foot on the pedal in delivering a promising 2019 for the group,” he said in a statement yesterday.

Axiata’s chairman Tan Sri Ghazzali Sheikh Abdul Khalid said, should the proposed merger occur, it will be a significant development.

“Not only will it result in delivering synergies to both companies, but one that will create new opportunities for the next generation to become globally skilled and conversant with technologies of the future,” he said.

For its first quarter ended March 31, 2019 (1Q19), Axiata’s net profit rose to RM709.05 million from a net loss of RM147.41 million recorded in 1Q18.

The mobile telecommunications company noted that the improved profitability was due to better top line, gain on nonstrategic investments’ disposal and the discontinuation related losses from investment in India.

Its portfolio rationalisation led to the quarter being its best in headline profitability due to one-off gain from its M1 stake divestment, which netted RM1.65 billion cash proceeds and RM113 million one-off gain.

Net profit also gained on the group’s non-core digital ventures transferred to a fund manager at a valuation of US$140 million (RM624.28 million), which registered RM302 million in disposal gain.

However, the discontinued profit share in M1 slightly moderated its net profit.

Jamaludin added that the group’s strengthened results in 1Q19 show that the group is realising its “shifting gear” initiatives, which are driven by a profit and cash focus.

“It is encouraging to note that the top-line growth across our triple core business covering digital telcommunications, digital businesses and infrastructure,” he said.

Axiata’s return on invested capital for the quarter improved to 6.2% and cash position grew from RM5.1 billion in 2018

to RM6.8 billion as of 1Q19. “Our cost optimisation programme yielded RM262 million and is firmly on track to meet the full-year target of RM1.2 billion,” he said.

Group revenue grew 3.5% year-on-year to RM5.95 billion on higher performance from all operating companies, except for mobile operations in Malaysia and Nepal.

Its operation in Malaysia saw revenue drop by 7.4% to RM1.66 billion due to lower device sales, downward domestic interconnect rate revision and domestic roaming rate, while its Nepal operation were impacted by the telecommunication service charges implementation from mid-July 2018.

Axiata’s share price closed unchanged yesterday at RM4.54.

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