Business

Friday August 28, 2009

Axiata posts best quarterly profit since listing

By YEOW POOI LING


KUALA LUMPUR: Axiata Group Bhd’s net profit rose 43.6% to RM526.8mil for the second quarter ended June 30 versus RM366.6mil in the previous corresponding period, its best quarter since its listing in April last year.

The improved performance was attributed to better operational contribution, with PT Excelcomindo Pratama Tbk (XL) and Axiata (Bangladesh) Ltd (AxB) performing exceptionally well, and favourable foreign exchange (forex) gains.

Excluding interest charges on bridging loan (RM23mil), Idea Cellular Ltd’s financing costs (RM56mil), accelerated depreciation at Dialog Telekom Ltd (RM159mil) and forex gains (RM343mil), the adjusted net profit rose 3% year-on-year.

Revenue rose 8% to RM3.2bil versus RM2.9bil a year ago due to contributions from Celcom (M) Bhd, XL and AxB. Total mobile subscribers jumped 98% to 99.2 million from 50 million previously.

For the first six months, adjusted net profit was down 4% to RM764mil while revenue rose 7% to RM6.03bil.

Axiata’s domestic mobile operations under Celcom (M) Bhd contributed close to half of group revenue and 69% of net profit, while the rest was derived from its overseas operations including Indonesia, Sri Lanka and Bangladesh.

Celcom’s net profit grew 3% to RM367mil in the second quarter from the first quarter while revenue rose 5% to RM1.5bil, its best quarterly growth in two years, due to expansion in prepaid and postpaid as well as mobile broadband segments.

“We expect Axiata’s full year revenue and ebitda (earnings before income tax, depreciation and amortisation) growth to be towards the higher end of our KPIs (key performance indicators) and for ROE (return on earnings) to be moderately above what was earlier guided.

“This is subject to forex fluctuations or other external factors,” president and group chief executive officer Datuk Seri Jamaludin Ibrahim told a media briefing yesterday.

Axiata’s KPIs for the year ending Dec 31 (FY09) included revenue growth of 6% to 11%, ebitda growth 4% to 6% and ROE of 4%.

Overseas, XL achieved 5% year-on-year growth in revenue to 3.3 billion rupiah while net profit surged more than 100% to 1 billion rupiah from a year ago as it derived higher quality subscriber base.

Sri Lanka’s Dialog saw improved operational performance especially in ebitda and cost management.

Net earnings, however, were impacted by the accelerated depreciation from the network modernisation. AxB, meanwhile, continued to remain profitable after its turnaround in the first quarter.

Jamaludin said with the improving economic conditions, the group was likely to make new organic investments like increase spending in Celcom’s broadband segment, which could boost revenue further in FY10.

On the possibility of paying dividend, he said the group could consider it as it was likely to be in “good cash position by end 2010”.

He added that Axiata would continue the group-wide cost management programmes and refocus on major revenue growth opportunities.

Axiata, nonetheless, does not expect to re-list Celcom on Bursa Malaysia as the subsidiary is the group’s cash cow.

Chief financial officer Datuk Yusof Annuar Yaacob said it might not be easy to tap Celcom’s funds if it were listed, as it would involve other shareholders.

It was also not in a rush to dispose of non-core assets in all its operations although it’s “actively talking to several parties.” he said, adding that the portion was small against its overall operations and did not have an material impact.

Jamaludin said competition was stiff especially in Sri Lanka and Cambodia, which has nine players.

“We have a new management team in Cambodia to drive the business,” he said, adding that the group was open to consolidation if there’s an attractive and viable candidate.

Yusof said Axiata was not looking to buy Millicom International Cellular’s assets in Cambodia and Sri Lanka.

Earlier this month, it was reported that Millicom planned to sell its Cambodian operations for US$346mil cash to The Royal Group, its partner in the country.

The Luxembourg-based mobile group, which also owns 100% of Celltel Lanka Ltd, the second largest mobile player in Sri Lanka, and 74% in Millicom Lao Co in Laos, plans to dispose of its Asian mobile assets by next year.

Meanwhile, Axiata expects impact from forex to be neutral for the full year despited being severely hit in the first quarter as volatility had somewhat eased.

Yusof said the group was in the midst of beefing up its treasury division to manage the forex risks more effectively.


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