Axiata’s income drops 13% on rising costs at XL and Celcom – Mobile World Live

Axiata’s income drops 13% on rising costs at XL and Celcom

21 MAY 2015

Malaysia’s Axiata Group reported a 13.3 per cent drop in its Q1 net profit as operating costs rose and growth slowed at its two largest units – Celcom and XL.

The group’s net profit for the quarter fell year-on-year to MYR585 million ($163.5 million), with the company noting that Q1 was a challenging start for the year as the group performed below headline KPIs.

Overall revenue rose 5.2 per cent during the January-March period to MYR4.75 billion, with revenue growth at Celcom slowing to less than 1 per cent to MYR1.92 billion and XL facing a 0.5 per cent drop in turnover to MYR1.55 billion.

XL posted a loss of MYR143 million (from a net profit of MYR70 million a year ago) due to higher depreciation charges, increased operating costs arising from the integration of Axis as well as higher network expansion costs.

Axiata said that after the integration of Axis, XL revamped its product portfolio, which led to a 24 per cent drop in its subscriber base. The sale of 3,500 towers in December lowered tower rentals, which slowed overall revenue growth.

XL’s data revenue increased 29 per cent year-on-year and now accounts for almost a third of service revenue. Voice revenue was stable. Smartphone adoption increased 54 per cent to 17.2 million users, giving it a smartphone penetration rate of 33 per cent.

Axiata said Celcom faced rising costs due to its on-going IT transformation project that is now at the final stages of being resolved. Its net profit was down 18 per cent to MYR376 million primarily due to higher device sales and changes in its revenue mix. Data revenue expanded 36 per cent and account for 26 per cent of total revenue compared to 19 per cent a year ago.

Jamaludin Ibrahim, Axiata president and group CEO, said the first quarter continued to be challenging for Celcom, affecting the group’s results. “However, I am happy to note that there are many positive signs as they resolve most of the IT system issues whilst recovering dealer confidence. I am confident that with these initiatives in place, Celcom will be back on track to finish the year in a position of strength.”

Celcom’s contribution to group EBITDA fell from 45 per cent a year ago to 40 per cent, while XL’s dropped from 35 per cent to 33 per cent. Sir Lanka’s Dialog boosted its share of EBITDA to 9 per cent from 6 per cent in Q1 2014.

Dialog saw revenue grow 6.1 per cent to SLR17.3 billion ($127 million). Data revenues increased 62 per cent and accounted for 11 per cent of total revenue.

Robi’s revenue was up 4 per cent despite political unrest in Bangladesh and stiff competition. The increase was mainly driven by 171 per cent growth in data.

Smart in Cambodia saw sales jump 40 per cent, as voice turnover rose 21 per cent and data revenue more than doubled. Total data subscribers increased to 2.1 million, representing 31 per cent of its subscriber base.

Its associate companies also experienced strong growth. M1 in Singapore posted a 23 per cent increase in revenue to SGD294.8 million ($222 million). Non-voice revenue rose 6.9 points and now accounts for 52 per cent of service revenue. Idea Cellular in India reported a 62 per cent increase in net profit and a 19 per cent rise in turnover. Idea contributed MYR97 million to group net profit in the quarter.

Capex during the quarter was up 5.4 per cent to MYR1.09 billion and represented 23 per cent of revenue.

XL’s capex fell 39 per cent to MYR398 million and accounted for 37 per cent of the group’s total – down from 54 per cent a year ago. Celcom’s capex spending expanded 35 per cent to MYR189 million during the quarter, while’s Robi’s rose 52 per cent MRY326 million. Smart’s more than doubled to MYR82 million.

The group’s EBITDA margin fell 2.9 points to 36.7 per cent.

Its guidance for fiscal 2015 is 4 per cent revenue growth and 4 per cent EBITDA growth, which the company said would be a challenge.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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