This article first appeared in The Edge Financial Daily on November 29, 2019

KUALA LUMPUR: Axiata Group Bhd’s net profit for the third quarter ended Sept 30, 2019 (3QFY19) dropped 9.4% to RM119.7 million from RM132.07 million a year ago on the absence of contributions from Singapore telco M1 Ltd following its disposal as well as higher taxes in Bangladesh.

The weaker earnings came despite a 3.5% rise in revenue to RM6.21 billion from RM6 billion, amid better performances by most of its operating companies, except for its mobile operations in Malaysia, Sri Lanka and Nepal.

Earnings per share declined in tandem with net profit, to 1.3 sen from 1.5 sen a year ago, its stock exchange filing yesterday showed.

For the first nine months ended Sept 30 (9MFY19), Axiata posted a net profit of RM1.03 billion compared to a net loss of RM3.37 billion for the corresponding period last year, with revenue up 3.96% at RM18.32 billion versus RM17.62 billion previously.

The group attributed its higher revenue to strong data revenue growth and its return to profitability to a better underlying performance across most of its operating companies, foreign exchange gain, discontinuation of losses related to its investment in India, gain on disposal of non-strategic investments and disposal of investment rights in the country, which reflected its portfolio rebalancing strategy.

Axiata president and group chief executive officer Tan Sri Jamaludin Ibrahim said the group’s performance showed that it had successfully “shifted gear” in the first nine months of the year to overtake its regional peers.

“Even as we aimed for profitability and cash generation, we did not sacrifice top-line growth.

“We have been working hard to step up operational excellence across the group and maintain the gruelling momentum since unveiling our 2019-2020 plans. Thus far, our main concern in most of our markets is in regulatory risks.

“Given the current trajectory and barring unforeseen circumstances, we are likely to exceed targeted FY19 headline KPIs (key performance indicators) for earnings before interest, taxes, depreciation and amortisation growth of 5%-8% and return on invested capital of 5.2%-5.6%,” he said.

However, he noted that revenue growth is likely to be below 3% to 4%.

Axiata shares settled unchanged at RM4.26 yesterday, giving it a market capitalisation of RM39.04 billion. The stock has gained 20% in the past 12 months.