Telco ‘diligently monitoring’ ongoing financial and operational impact to its businesses across the region
by SHAHEERA AZNAM SHAH/ pic by ARIF KARTONO
AXIATA Group Bhd will focus on conserving cash after its first-quarter (1Q) earnings plunged 74% partly due to provisions for a voluntary restructuring scheme at its Malaysian unit, Celcom Axiata Bhd.
Though Covid-19 had “limited impact” on its 1Q results, the telecommunications company (telco) is “diligently monitoring” the ongoing financial and operational impact to its businesses across the region.
“Given the uncertainty surrounding the depth and duration of this pandemic, and the difficulty in predicting the pace of recovery at this point, the group is withdrawing its guidance on 2020 headline key performance indicators (KPIs),” it said in a statement yesterday.
Its 2020 headline KPIs included 3.5% to 4.5% revenue growth and 4% to 5.5% growth in Ebitda.
“The group’s key focus in 2020 is to conserve cash via disciplined cost management and capital expenditure efficiency during the crisis, while building a war chest for opportunities in the ‘new norm’,” the telco added.
As at end-March 2020, the group had free cashflow of RM1.2 billion and cash balance of RM6 billion.
Axiata’s net profit for the 1Q ended March 31, 2020 (1QFY20), plummeted 74.1% year-on-year (YoY) to RM188.11 million, while revenue rose 1.5% YoY to RM6.04 billion.
“Group profit after tax at RM398.3 million was dragged mainly by foreign-exchange (forex) losses arising from the strengthening of the US dollar against local currencies and one-offs, especially Celcom’s RM76.9 million employee restructuring programme (ERP),” it said.
On March 6, 2020, Celcom introduced an ERP to provide an offer of benefits to eligible permanent employees in exchange for termination of employment.
“As at March 31, 2020, applications were approved and termination benefits have been recognised in accordance with Malaysian Financial Reporting Standards 119 with a provision of RM101.2 million recognised during the current quarter and financial period to date,” the group said.
Revenue from its Malaysia business fell 6.1% to RM1.56 billion due to lower service revenue, while profit slipped 23% to RM102.6 million.
“Total data traffic surged in all our markets, from 12% to 40% in March and the trend seems to continue.
“However, in most cases because of the ‘lifeline’ support given to our customers in the form of free data usage, revenue in Malaysia and some markets were affected,” Axiata president and group CEO Tan Sri Jamaludin Ibrahim (picture) said.
Boost — Axiata’s e-wallet app — saw gross transaction value expand 3.8 times YoY in 1QFY20, while total users grew 1.8 times to 7.3 million and total merchants doubled to 156,000.
Active user spending also jumped to an average of RM326 per week during the quarter compared to RM209 a year ago.
Shares of Axiata closed 2.3% or nine sen lower at RM3.77 yesterday, bringing its market capitalisation to RM34.57 billion.