- Cost optimisation initiatives delivered savings of RM1.3 billion
- Proposed full year dividend of 8.5 sen, translating to a payout ratio of 64%
AXIATA Group Bhd announced stellar results in its audited full year performance for the financial year ended Dec 31, 2017 (FY17).
The group achieved all its headline KPIs and exceeded revenue and Ebitda (Earnings Before Interest, Tax, Depreciation and Amortisation) targets as the turnaround at Celcom and transformation at XL performed as planned and group-wide cost optimisation initiatives delivered above expectation.
Full year 2017 results
With a 13.2% growth, Axiata registered its highest revenue at RM24.4 billion compared to RM21.6 billion in the previous year (FY16), from strong contributions across all its mobile Operating Companies (OpCos).
The group also recorded a 15.2% increase in Ebitda to reach RM9.2 billion compared to RM8 billion in FY16 while Ebitda margin improved by 0.6 percentage points to 37.8% for the year on the back of higher revenue and cost optimisation initiatives.
Profit after tax (PAT) jumped by 76.9% to hit RM1.2 billion compared to RM657 million in FY16, despite significant losses from Idea, due to unprecedented, super-aggressive competition in India.
Axiata president & group chief executive officer Jamaludin Ibrahim (pic) said, “Coming off a very challenging 2016, we were determined to make 2017 one of our best performing years. The group has met all its KPIs for FY17, recorded the highest revenue and ebitda in our history with all our OpCos and businesses performing strongly. In fact, all OpCos performed better than industry while some performed the best in their respective markets.
“We also kicked off our biggest ever cost optimisation programme. With RM800 million in opex and capex saving targeted for 2017 while working towards a RM1.5 billion goal in 2018 and 2019. The group has successfully delivered RM1.3 billion in saving within 2017.
“Our two largest operations, Celcom and XL, delivered as planned. Celcom’s turnaround has been the key focus for us this year and I am pleased with the improvements made on all indicators to demonstrate that a firm turnaround is on track. XL’s transformation agenda has brought tangible results from its dual brand strategy and network expansion. As encouraging as these results may be, we are always mindful that we have a lot more work to do.”
Year-on-year results (4Q17 vs 4Q16)
Axiata also recorded a good performance on a year-on-year (y-o-y) basis with 8.1% growth in revenue to RM6.3 billion in 2017 compared to RM5.8 billion in 2016 while ebitda rose 17.5% to RM2.3 billion in 2017 comparison to RM2 billion in 2016.
PAT for the group improved 137.6% to RM102 million in 2017 against losses of RM272 million in 2016.
Given the group’s performance, the Board of Directors declared a higher full year total dividend of 8.5 sen per ordinary share, including the interim dividend of 5 sen per ordinary share paid in 2017.
Total dividend for FY17 translates to a 64% dividend payout ratio (DPR) compared to 50% in FY16.
While the group’s gross debt/ebitda is within a very healthy limit of 2.1x with a strong cash balance of RM6.8 billion, the Board remains prudent to ensure resilience against any market volatility and to support future strategic investments including spectrum, for long term growth.
The group expects to return to the dividend range of 2015 within the year.
Good improvements were recorded in FY17 in the group’s Asean markets. Celcom marked improvements in all turnaround elements and key performance drivers to record a full year of positive growth in a more stable competitive environment.
Celcom delivered FY17 revenue, Ebitda and Patami growth of 0.6%, 2.9% and 8.5%, respectively.
Anchoring on customer experience as a differentiator in capturing high-value customers, Celcom’s FY17 ARPUs were up with postpaid growing RM6 and prepaid improving RM2. Competing in a data-centric market, Celcom improved its network experience considerably especially with the expansion of its 4G and 4G LTE-A population coverage to 87% and 74% in 4Q17.
Other key operational improvements in Celcom includes simplified product portfolio, improved sales and distribution channels, and enhanced organisation and culture transformation through digital and agile ways of working.
Similarly, XL demonstrated continued progress in its transformation agenda that resulted in its success to date in the demographic and geographic segments.
FY17 revenue improved 7% led by significant growth in data. Normalised Ebitda increased 7% while normalised PAT returned to black and at its highest since FY13.
High smartphone penetration of 72% and data users at 73% of its subscriber base supported FY17 data revenue growth of 60.9%, accounting for 57.2% of XL’s FY17 total revenue.
XL’s dual-brand strategy has been successful with both XL and Axis brands continue to gain traction in their respective market segments.
Further 4G network coverage expansion has significantly improved data traffic and monetisation of data opportunities for XL.
Smart continued its good performance in spite of intense price war. FY17 revenue, ebitda and PAT growth was at 5.4%, 5.5% and 7.7%, respectively. Data revenue grew by 28.4% for FY17 as data accounted for 51.5% of Smart’s total revenue.
Infrastructure and digital businesses
edotco saw strong growth from portfolio expansion and operational efficiencies. For FY17, edotco accounted for 6.3% and 7.4% of the Group’s revenue and ebitda, respectively.
edotco recorded revenue improvement of 11.8% for FY17, driven by higher tenancy across all footprints and maiden contributions from Tanzanite in Pakistan.
At end 2017, edotco owned 16,500 towers, an increase of 9.3% y-o-y and manages 10,900 sites, a growth of 7.3% y-o-y while its tenancy ratio rose to 1.57x compared to 1.44x a year ago. Its proposed acquisition of Deodar Private Limited in Pakistan is expected to be completed by mid-2018.
The group’s digital businesses, Axiata Digital and Axiata Business Services (Xpand), with a portfolio of digital companies and business units since early 2017 have been refocusing primarily on i) digital financial services (DFS) ii) digital advertising iii) enterprise/IoT and iv) enablement platforms.
Its recently launched DFS product, Boost, continues to build its presence and ecosystem with approximately 1.7 million users and 8,000 payment touch points to date, is beginning to make a contribution to revenue while other business units to look for asset monetisation opportunities.
Outlook for 2018
“We have created a strong momentum and expect our core mobile operations to perform well. The proposed merger of Idea and Vodafone in India will make it the largest telco in India and one of the largest in the world, signifying a new era for all. We believe in the intrinsic value of Idea, however, consequent of the merger, there will be a significant technical impartment, which is a non-cash, purely accounting adjustment and not reflective of actual performance.
“In our newer business portfolios, the completion of edotco’s proposed acquisition in Pakistan will see material impact with an immediate profit accretion, while our investments in key digital businesses such as fintech and enterprise/IoT is expected to make significant inroads during the year,” concluded Jamaludin.
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