Axiata's profit takes a sharp dive in Q3 2016

  • Celcom registered quarter-on-quarter growth in service revenue, but profits continue to decline
  • XL managed to return to black, thanks to refinancing its USD debt  to rupiah

Axiata's profit takes a sharp dive in Q3 2016

AXIATA Group Bhd, a regional telecommunications group, suffered a 70% decline in its third quarter net profit at RM256.56 million, partly due to the weakening ringgit and higher depreciation charges.

The group, which nine months net profit fell by 60% to RM813 million, was also affected by higher net finance costs, lower contribution from its associates, among others.

Nevertheless, the group managed to grow its nine-months revenue by 8% at RM15.78 billion (versus RM14.52 billion a year ago). It also posted its best-ever quarterly revenue at RM5.46 billion. 

"Our quarter-on-quarter topline inidicators improved due to Ncell's first full quarter contribution as well as improvements in service revenue across all markets, including Malaysia and Indonesia," said Axiata president and group chief executive officer Jamaludin Ibrahim in a statement. 

"However, 2016 remains challenging for the group across most of our markets particularly in Malaysia, Indonesia, Singapore ad India where fiercer competition and rising capital expenditure (capex) have weighed in on overall performance and profitability."

Recovery at Celcom?

Celcom Axiata Bhd, the group's wholly-owned subsidiary, registered a revenue of RM1.63 billion for the third quarter lower than the RM1.68 billion posted in Q2 2016 and RM1.8 billion in Q3 2015. For the nine month period, its revenue fell by 10% at RM4.98 billion.

However, if were to look at the service revenue alone -- the company actually posted a quarter-on-quarter increase of 1.2% at RM1.5 billion. 

"Furthermore, its postpaid segment saw a recovery, tracking its second consecutive quarter of quarter-on-quarter growth from data-led products. 

"Year-to-date mobile data revenue grew by 8.3% fueled by 18.9% increase in mobile Internet revenue for the quarter," said Axiata in a statement.

Despite the group's improvement in postpaid revenue, its subscriber base continued to decline.

As at September 30, 2016, Celcom's total customer base declined to 11.15 million, from 11.23 million in second quarter and 12.51 million third quarter last year.

Axiata's profit takes a sharp dive in Q3 2016It is also one of the rare quarters where both its postpaid customer base and prepaid customer base suffered a quarter-on-quarter decline.

Its average revenue per user improved to RM41 in the third quarter (versus RM39 in Q2 2016) -- the first time this year it exceeded the RM40-level.

Nevertheless, Jalamudin remained optimistic that Celcom will regain its momentum.

"In the mid-term, we expect to regain our foothold in terms of stronger performance especially at Celcom as the refreshed management team executes on its turnaround plans and at XL with better implementation of its dual-brand strategies. 

"Our group-wide cost optimisation plans will further help to improve profitability," said Jamaludin (pic right).

XL showing traction

During the nine months period, XL Axiata managed to return to black at 160 billion rupiah, from net loss of 507 billion rupiah a year ago. This is mainly driven by the foreign gains as a result of refinancing XL's USD debt to rupiah.

The third quarter also saw XL's service revenue improved by 1.6% at 4.54 trillion rupiah driven by strong growth in data revenue. 

Its subscriber base continue to be on the uptrend -- as it grow its base to over 44.97 million subscribers, of which 44.46 million are prepaid users. 

Other entities

Besides XL, other units that are registering an improvement in profit were Dialog, Smart and Ncell. 

Dialog's nine months revenue and net profit jumped 18% and 70% at 63.97 billion SLR (Sri Lankan rupee) and 7.79 billion SLR, respectively. Its subscriber base improved to 11.31 million during the quarter (from 10.96 million in Q2 2016 and 10.31 million in Q3 2015). 

Ncell's nine months revenue and net profit improved to 44.3 billion NPR and 15.42 billion NPR, from 43.46 billion NPR and 13.18 billion NPR a year ago. Customer base improved to 14.39 million, from 13.01 million a year ago, of which 41.9% are active data users.

Robi, which registered RM134 million during the first nine months last year, managed to register a profit of RM22 million.

"In South Asia, barring regulatory changse, we expect our operating companies to continue its momentum of excellent performance. We also see our investments in the transition of Axiata into a digital company taking shape and beginning to bear results," said Jamaludin.


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XL Axiata enters the black with US$12.25 mil net profit, revenue declines


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