KUALA LUMPUR (May 25): Axiata Group Bhd's net profit declined 35% to RM239.02 million for the first quarter ended March 31, 2017 (1QFY17), from RM368.26 million in the previous corresponding quarter (1QFY16), due to higher depreciation and amortisation charges, finance costs and share of losses from associates.

The fall in profit was despite a 17% growth in revenue to RM5.88 billion from RM5.01 billion a year earlier, which was driven by higher contribution from its operations in Nepal and Bangladesh.

In its filing with Bursa Malaysia, the group said its Malaysian operations saw lower contribution, due to lower value added services revenue, SMS revenue and voice revenue.

However, this was partly mitigated by growth of the data business, with data revenue accounting for about 40% of total revenue.

Operating costs in Malaysia increase amid higher rentals and maintenance costs as well as business licence fees, which have gone up in tandem with the increased number of network sites year-on-year.

In Indonesia, Axiata saw a marginal increase in revenue due to foreign exchange translation impact but added that revenue from the region was 6.2% lower at constant currency, due to lower SMS and voice revenue, while operating costs rose.

For the South Asia markets, the group said its operations continue to deliver strong performance despite regulatory challenges, mainly contributed by higher data revenue.

However, share of results of associates and joint ventures plunged into the red, due to a share of loss of RM25.4 million in India, impacted by a new entrant in the market.

"The first quarter performance has shown some encouraging signs and saw the group pare down RM1.6 billion of loans including its US dollar exposed debts to strengthen its balance sheet," said Axiata chairman Tan Sri Azman Mokhtar in a statement.

President and group chief executive officer Tan Sri Jamaludin Ibrahim was also encouraged with the quarterly performance despite the challenging year, adding that the turnaround at Celcom is progressing on track and showing some stabilisation.

"XL's new strategy, after some challenges last year, is coming together well especially in the data leadership of the XL brand and better results in geographical areas outside Java.

"However, at both companies, there are still lots more required. Our investments in data are being monetized with data revenue at Celcom, XL and Smart accounting for 40% to 50% of total service revenue," he said.

Going forward, Jamaludin said the group remains prudent in managing its finances amid rising capital expenditure, heightened competition and tax and regulatory challenges.

"This is to ensure our investments for growth, data leadership and ambition to become a digital company stay on track. For 2017, the group continues in its commitment to be the clear number one in 4G and data leadership in selected key markets as well as lead in the digital space," he said.

Shares of Axiata closed 23 sen or 4.41% lower at RM4.98 today, with a market capitalisation of RM44.51 billion.