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KUALA LUMPUR: Axiata Group Bhd has earmarked a higher capital expenditure (capex) of RM7.1bil this year mainly to expand its mobile operation in Indonesia and Bangladesh.
President and group CEO Datuk Izzaddin Idris expects Axiata’s Indonesia operation PT XL Axiata Tbk to be the group’s main revenue contributor as it bets on the country’s population size.
“Once we do the Celcom-Digi merger, Indonesia will be our core revenue base because we own a majority stake of 61% in XL.
“We will continue to accelerate our investment in Indonesia. That is what we did last year. We still see opportunities for footprint expansion in that market, which has been doing very well for us,” he told reporters after Axiata’s financial year 2021 (FY21) results briefing yesterday.
The current market share of XL in Indonesia is about 18%, with total subscribers of 58 million, according to Izzaddin.
Last year, Axiata’s XL acquired a 66% stake in Indonesia’s PT Link Net Tbk for a total cash consideration of 8.72 trillion rupiah (RM2.55bil).
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Izzaddin said the acquisition of Link Net would enhance the group’s strategy to expand its footprint and market share in Indonesia.
“We are looking ahead on how that market will develop two to three years down the road and we are constantly monitoring other opportunities as well,” he added.
Izzaddin pointed out that Axiata is also looking to spend its capex on its Bangladesh operation, as well as looking for potential merger and acquisition opportunities.
When asked if Axiata is considering listing its subsidiaries, namely edotco Malaysia Sdn Bhd and Boost Holdings Sdn Bhd, Izzaddin hinted that the group is not in a hurry to go into the initial public offering (IPO) market at the moment.
“For edotco, it has invested in Myanmar, we are not quite sure how the market will perceive an IPO involving Myanmar. So we need to tackle that matter first,” he said.
He explained that edotco is able to raise capital for its expansion without going into the market.
“We have seen the acquisition of Touch Mindscape Sdn Bhd for RM1.7bil, RM1.4bil debt and RM300mil from its internal resources. “So there is no restriction or limitation for us to list edotco (which) was meant to raise capital,” Izzaddin said.
As for Boost, he said the group would wait for the announcement on the digital banking licence by Bank Negara, which is expected to be awarded next month.
“The value of the company will certainly be enhanced if we have the digital banking licence. It will take awhile,” he added.
Axiata closed its FY21 with strong operating performance thanks to its digital arm and telco operations in Malaysia, Indonesia, Bangladesh and Sri Lanka.
Axiata group CFO Vivek Sood said the revenue of its digital arm doubled to RM980mil in FY21 mainly driven by Axiata Digital Advertising Sdn Bhd (ADA) from improvement in its customer engagement business, coupled with acquisition of new users and merchants at Boost.
He added that the net loss for the unit has narrowed by 62.1% to RM112mil arising from lower marketing expense at Boost and higher profit at ADA.
Overall, Axiata’s net profit for FY21 more than doubled to RM818.9mil from RM365.16mil in FY20, on the back of a 7% jump in revenue to RM25.90bil from RM24.20bil previously.
Earnings before interest, tax, depreciation and amortisation (Ebitda) rose to RM11.4bil, which was 7% higher than in the previous year.
The group attributed the growth of its topline and bottomline to lower accelerated depreciation recorded for 3G assets and lower finance costs, which partially offset by higher foreign exchange losses, higher taxes and, one-off impairment of goodwill of mobile operations in Nepal amounting to RM338.4mil.
IN FY21, Axiata recorded opex and capex savings of RM696mil and RM1.3bil, amounting to a total of RM2bil.
For the fourth quarter FY21, Axiata returned to the black with net profit of RM116.02mil compared with a net loss of RM255.96mil in the previous year, while revenue was up 10.2% to RM6.9bil.
The board declared a second interim dividend of 5.5 sen per share, which brought the total 2021 dividend payout to 9.5 sen or RM871.5mil.
Izzaddin expected higher revenue growth this year for Axiata in the “mid-single digit”, pending the Celcom-Digi merger.
On the merger, Izzaddin said Axiata is working with the regulator the Malaysian Communications and Multimedia Commission (MCMC) through various engagements.
“We are hopeful to get a decision from MCMC in due course,” he said.
The merger between Celcom Axiata Bhd and Digi.com Bhd was announced last April under a new joint entity named Celcom Digi Bhd.
Upon completion, the merger will result in Axiata owning a 33.10% stake in the merged entity.