Indonesia’s third largest operator XL Axiata continues to face headwinds as it tries to turn around its sluggish business, reporting a net loss in H1 of IDR851 billion ($61.6 million), almost double from a year ago, while revenue fell 4 per cent to IDR11.1 trillion.

The operator, a subsidiary of Malaysia-based Axiata, blamed the increased loss mainly on the weaker rupiah while attributing the drop in revenue to the sale of 3,500 towers to Solusi Tunas Pratama (STP) in December.

XL president Dian Siswarini, however, noted that the company began to see positive signs in Q2, with revenue increasing 2 per cent quarter-on-quarter. She said the re-launch of the Axis brand was having an impact.

After losing 11 million mobile connections between Q2 2014 and Q1 2015, the operator added more than 1.2 million connections in Q2, bringing its total to 52.4 million, according to GSMA Intelligence. Its market share has dropped from almost 21 per cent to 16 per cent over the past year.

Mobile service revenue was down 2 per cent to INR10.6 trillion during the period, with voice turnover falling 2 per cent to IDR3.86 trillion and SMS revenue dropping 14 per cent to IDR1.9 trillion.

Data and VAS revenue grew 16 per cent to IDR3.37 trillion and accounted for 37 per cent of usage revenue, up from 32 per cent a year ago. Data traffic expanded 65 per cent year-on-year in H1, with data users (28 million) making up 61 per cent of the total base.

ARPU increased almost 15 per cent to IDR31,000 ($2.24) from Q4.

Other service revenue fell 35 per cent to IDR514 billion due to the sale of the towers to STP, which now leases them back to XL.

Operating expenses fell 1 per cent to IDR7.2 trillion, led by a 24 per cent drop in sales and marketing costs driven largely by its strategy to improve traditional marketing channels. Infrastructure expenses increased 15 per cent as a result of higher rental from its network expansion. Spectrum costs were also higher after the acquisition and integration of Axis.

Interconnection costs decreased 29 per cent due to sharply lower off-net SMS traffic.

EBITDA for the first six months of the year dropped 9 per cent to INR3.9 trillion and its EBITDA margin slipped 2 points to 35 per cent. The company said the decline was mainly a result of its Axis consolidation (acquired in March 2014), so the impact wasn’t fully reflected last year.

Capex was cut 37 per cent to IDR2.3 trillion from H1 2014. It expanded its base station sites by 14 per cent over the past year to more than 54,000.

XL began rolling out 4G in the beginning of the year and now has launched in eight areas/cities: Medan, Bogor, Jogjakarta, Lombok, Surabaya, Bandung, Bali and Jakarta.