Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on August 30, 2019

KUALA LUMPUR: Axiata Group Bhd, which posted a second straight quarter of profit in the second quarter ended June 30, 2019 (2QFY19) after slipping into the red in 4QFY18, expects this year’s headline key performance indicators (KPIs) for earnings before interest, taxes, depreciation and amortisation (Ebitda) growth, as well as return on invested capital (ROIC), to come in above its guidance.

The KPIs for Ebitda and ROIC were guided at 5-8% and 5.2-5.6% respectively. Year-to-date, the group’s Ebitda has increased 10.4% to RM4.52 billion.

The telecommunications group also guided that revenue growth will remain in line at 3% to 4% for the financial year ending Dec 31, 2019 (FY19).

With ongoing capital expenditure (capex) rationalisation, 2019 capex will, meanwhile, likely to be below guidance of RM6.8 billion.

Axiata swung to the black in 2QFY19, posting a net profit of RM204.09 million from a net loss of RM3.36 billion a year ago, on better performance and discontinuation of losses related to its investment in India.

This resulted in an earnings per share of 2.2 sen for 2QFY19 from a loss per share of 37.1 sen for 2QFY18.

Revenue for the quarter rose 4.9% to RM6.15 billion from RM5.87 billion a year ago on better performance by all its operating companies apart from its mobile operations in Malaysia and Nepal.

The group also declared a dividend of five sen per share for FY19, with the option for shareholders to use the dividend under its Dividend Reinvestment Scheme to purchase more of its shares.

The two profitable quarters led the group posting a net profit of RM913.15 million in the cumulative six months (1HFY19) from a net loss of RM3.5 billion a year ago. This was on the back of a 4.2% increase in revenue to RM12.1 billion from RM11.62 billion in 1HFY18.

On prospects of the telecommunications industry, Axiata president and group chief executive officer Tan Sri Jamaludin Ibrahim (pic) said conditions should remain status quo.

“We don’t think it is going to be worst that what it is today, but we also don’t think it will get a lot better than what it is today,” he told a media briefing to announce Axiata’s 2QFY19 results yesterday.

“The industry is highly saturated… almost everyone has a handphone today. Consumption has gone up yearly and yet data price has come down,” he added.

He said Axiata’s focus for the year will be on increasing its profit and free cash flow. Free cash flow improved by 61% year-on-year to RM1.8 billion in 1HFY19.

“Our job is to reduce our cost, so that we become profitable, even if the industry is flat,” he said.

As such, the group will be focusing on cutting its network operating costs.

Its group chief financial officer Vivek Sood said there are a lot of opportunities to improve on the network costs, which currently account for 21% of the group’s revenue.

In comparison with the industry, he said there is still an 8-9% gap in network costs.

In line with improving network costs, Axiata also intends to improve Ebitda margins by 3-4% over the next two to three years, said Sood.

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