Axiata positive on Celcom-Digi merger

The group is cognisant of the increasing risks and unpredictable scenarios that lie ahead for the industry and its businesses

by S BIRRUNTHA / Pic by BLOOMBERG

AXIATA Group Bhd is confident of securing positive outcomes for its customers and stakeholders, as the proposed Celcom Axiata Bhd-DiGi.Com Bhd merger talks have advanced with good progress.

Its chairman Tan Sri Ghazzali Sheikh Abdul Khalid said having started the year on a strong footing despite the prevailing macro conditions, the board is heartened to note the steady performance delivered across the group since the start of the pandemic in March last year.

He added that the group is cognisant of the increasing risks and unpredictable scenarios that lie ahead for the industry and its businesses.

“The region continues to grapple with multi-faceted challenges as each country battles to mitigate blows from the protracted Covid-19 crisis.

“Despite this, we press on towards the realisation of our ambition to become the ‘Next Generation Digital Champion’ by 2024,” he noted in a statement on Tuesday.

Ghazzali noted that the board will place strict emphasis on ensuring the relentless execution of the Axiata 5.0 vision, which will keep the group steady in these uncertain times.

“With the proposed Celcom-Digi merger making good headway, we are resolute in our intention to secure positive outcomes for our customers and stakeholders as Malaysia takes bold leaps in realising our digital aspirations,” he said.

For its first quarter ended March 31, 2021 (1Q21), Axiata’s net profit declined 60% year-on-year to RM75.56 million against the RM188.11 million recorded a year earlier.

In a filing to Bursa Malaysia on Tuesday, the telecommunications group stated that the fall in earnings was due to the accelerated depreciation of RM126 million and lower one-off gain registered in the same quarter last year.

Its mobile operating companies in Malaysia and Bangladesh had recorded accelerated depreciation of 3G assets total amounting to RM171.6 million as opposed to 1Q20, when Indonesia recognised a one-off gain from sale and leaseback of telecommunication towers of RM420.3 million.

Ebitda grew 7.5% to RM2.7 billion, expanding at a faster rate than sales driven by Celcom and Axiata Digital.

Revenue for the quarter rose marginally up by 0.5% to RM6.06 billion in the period from RM6.04 billion recorded in the corresponding period last year.

The group registered an earnings per share of 0.80 sen versus 2.10 sen in the same quarter last year.

Axiata president and group CEO Datuk Mohd Izzaddin Idris said the encouraging start to the year — as reflected by steady Ebitda growth and improved profitability — is a testimony to the strategy in place to support its immediate to mid-term goals.

“I am particularly assured to see our operating companies rise up to the challenges of intense market pressures, to exhibit resilience in their capacity to stay competitive and operationally efficient.

“While the results for 1Q are encouraging, we remain circumspect in our outlook for the 2Q and beyond, especially given the resurgence of movement restrictions and its strain on economic recovery,” he added.

Other areas the company would continue to monitor include challenges from the 3G shutdown in Malaysia and heightened competition subsequent to new spectrum allocation in Indonesia.

He noted that despite the current limited impact to edotco Group Sdn Bhd, the group is keeping a very close watch on the sociopolitical developments in Myanmar and will continue to assess any business, operational and financial risks that may arise.

“We look forward to the improved Ncell Axiata Ltd network from the 900MHz spectrum award and market share gain for PT XL Axiata Tbk despite the continuing intense competition.

“The recent RM250 million capital boost from SoftBank Corp into Axiata Digital Advertising Sdn Bhd provides strong growth impetus for the data analytics and artificial intelligence businesses, now valued at RM1.1 billion,” he said.