Indonesia’s XL Axiata reported a net loss of IDR891.06 billion ($70.66 million) in 2014 as costs associated with the acquisition of Axis last March and increased forex losses cancelled out solid revenue gains in all business lines.
The operator said it borrowed IDR29.6 trillion to purchase Axis. The weakening of the rupiah against the US dollar led to a forex loss of IDR1.29 trillion in 2014, compared with a forex loss of IDR1.04 trillion the previous year. The company posted a net profit of IDR1.03 trillion in 2013.
XL, 66.5 per cent owed by Malaysia’s Axiata Group, is the country’s second largest operator and at the end of the year had almost 51 million connections, for a 19 per cent share of the country’s 308 million connections.
Revenue increased 10.3 per cent to IDR23.6 trillion, with strong growth in data and value-added services, supported by marginal growth in voice and SMS. But operating expenses were up 17.5 per cent to IDR23.03 trillion.
Data usage jumped 127 per cent year-on-year as smartphone penetration expanded to 28 per cent from 17 per cent a year ago. Smartphones sales increased 58 per cent to 16.1 million units. But data prices continued to remain soft, resulting in a 4 per cent fall in blended ARPU from a year ago.
Data and VAS revenue expanded 42.6 per cent to IDR6.27 trillion, while both voice and text revenue rose 3 per cent to IDR7.94 trillion and IDR4.7 trillion respectively.
Adjusted EBITDA was up 4 per cent to IDR12.2 trillion.
Its capex target of IDR7 trillion for this year is at the same level as the last two years.
Its adjusted EBITDA margin fell almost 3 points to 52 per cent. The margin decline was mainly due to margin dilution following the acquisition of Axis, which reported negative EBITDA, said Moody’s analyst Nidhi Dhruv.
He expects margins to contract slightly this year due to lower revenues from XL’s higher-margin tower leasing operations after the sale of 3,500 towers to Solusi Tunas Pratama last year.
Dhruv said he expects the company will use a majority of the proceeds from the IDR5.6 trillion sale to pay down debt, which will help lower its leverage (measured by adjusted debt/EBITDA). Its leverage jumped to 4x from 2.6x due mainly to the debt-funded acquisition.
Moody’s outlook for XL remains stable.