Govt’s 5G SPV would be positive for edotco

Axiata says the group could provide towers that may be needed by the SPV for the 5G rollout

by ASILA JALIL / pic by BLOOMBERG

THE government’s decision to assign a special purpose vehicle (SPV) for the handling of 5G implementation in the country will benefit Axiata Group Bhd’s 63%-owned subsidiary, edotco Group Sdn Bhd.

Axiata CEO Datuk Mohd Izzaddin Idris said the group could provide towers that may be needed by the SPV for the rollout.

“The SPV would need towers to put up the radio equipment and others, so it could well be a good potential for edotco.

“We had the foresight of carving up the tower business out of the MNOs (mobile network operators), in this case, Celcom Axiata Bhd, for edotco to be able to offer its services as an independent tower business to the SPV,” he said during a virtual press conference for the group’s financial results yesterday.

He said the group is also not planning to list edotco soon as it still has the capacity to borrow and raise funds.

“Any listing exercise would only mean bringing in new capital to fund the business. The good news is edotco has what we call a lazy balance sheet, meaning it has the capacity to borrow.

“So, we will exhaust the avenue first before looking at listing edotco. We are not convinced it is a good time to list the company,” he said.

For its fourth quarter ended Dec 31, 2020 (4Q20), Axiata registered a net loss of RM255.96 million against a net profit of RM332.56 million in 4Q19 due to accelerated depreciation and write-off of assets, mainly for 3G assets amounting to RM1.07 billion.

Revenue for the quarter slipped 0.1% year-on-year (YoY) to RM6.26 billion from RM6.27 billion in 4Q19.

Revenue from Malaysian operations dropped by 5.5% to RM1.62 billion as they were impacted by the Covid-19 outbreak and its containment measures.

Ebitda, however, registered a growth of 14% to RM794.8 million due to lower operating cost in Malaysia.

Profit after tax declined by 18% to RM202.3 million due to accelerated depreciation of 3G assets amounting to RM126.4 million. Excluding accelerated depreciation of assets, PAT would have increased by 33.3%.

For the whole financial year, Axiata’s net profit came in 74.9% lower YoY at RM365.16 million from RM1.46 billion in 2019, impacted by accelerated depreciation and write-offs of assets, mainly 3G assets, amounting to RM821.8 million, as well as lower one-off gains.

Revenue for FY20 dropped 1.5% to RM24.2 billion from RM24.58 billion mainly due to the impact of the Covid-19 pandemic on its businesses.

For the whole year, its operations in Malaysia recorded a decrease in revenue by 7.3% to RM6.22 billion due to containment measures caused by the pandemic.

As for Celcom, its revenue (ex-device) dropped 8.8% in FY20 amid lower prepaid and postpaid revenue and average revenue per user dilution.

“Celcom’s revenue has shown signs of recovery with revenue ex-device growth in 3Q and 4Q consecutively from the increase in subscriber base. Throughout the year, Celcom recorded steady Ebitda growth quarter-on-quarter, mainly from lower direct cost and bad debt, with an underlying Ebitda and profit after tax and minority interests growth of 2.4% and 11.5% year-to-date respectively,” the group said in a statement.

As for Boost, its gross translation value expanded two times in FY20 as it continued to attract users and a merchant base which grew 1.7 times to 8.8 million and 1.8 times to over 224,000 respectively.

Axiata announced a second interim dividend of five sen, bringing total dividend for the year to seven sen as Axiata transitions to a “high dividend” company with dividend per share target of 20 sen by 2024.

Touching on the digital banking licence, Mohd Izzaddin said the group has narrowed down its potential partner to one company, from 11 institutions that approached the group last year.

“We hopefully can announce it in the next couple of weeks. We hope to announce the equity partnership with one partner and commercial partnerships with a few other organisations, just to assemble the makings of the digital bank to serve consumers,” he added.


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