KUALA LUMPUR (May 25): Axiata Group Bhd posted a net loss of RM42.97 million for the first quarter ended March 31, 2022 (1QFY22), against a net profit of RM75.56 million a year ago, on foreign exchange losses due to a weakened Sri Lankan rupee and ringgit.

In a filing with the bourse on Wednesday (May 25), the telecommunications group said the foreign exchange losses amounted to RM476.9 million — RM387.4 million or 81.23% of which was contributed by its mobile operations in Sri Lanka, primarily from US$ denominated loans and liabilities.

Revenue was however 6.69% higher to RM6.47 billion in the quarter under review, versus RM6.06 billion in 1QFY21, supported by improved contributions from all of its operations, except for Nepal.

The group did not declare any dividend.

Compared to the immediate preceding quarter, Axiata had posted a net profit of RM116.02 million in 4QFY21, while revenue fell by 6.28% from RM6.9 billion.

In a separate statement, Axiata chairman Tan Sri Shahril Ridza Ridzuan said as part of the group’s rigorous governance standards, it regularly assesses business, operational and financial risks.

“In view of significant headwinds, board attention will be trained on steadying the group through current and future uncertainties affecting Dialog [Axiata PLC]’s business in Sri Lanka, as well as the negative effects of supply chain shocks and global inflation,” he said.

Axiata president and group chief executive officer Datuk Izzaddin Idris noted that the group is “cautiously optimistic” of its outlook for the remainder of 2022, whilst externalities may persist in the medium-term.

“In addition to exercising prudence in our existing businesses through cost and operational efficiencies, we are doubling down to extract value from our deals. These involve the expansion of edotco’s tower business in the Philippines, Boost’s digital bank licence from Bank Negara Malaysia (BNM) and in Indonesia, the Hipernet Indodata and proposed Link Net acquisition,” he added.

In terms of risks, Izzaddin noted that Axiata remains vigilant of the impacts from inflationary pressures, increased energy cost, higher interest rates and currency volatility on macroeconomic factors, as well as sustained supply chain issues.

“Regionally, Sri Lanka could be facing increased taxes, higher inflation, and forex volatilities, whilst in Indonesia, there is likely a need for opex (operational expenditure) reinforcement to navigate the hypercompetitive mobile telecommunications market,” he cautioned.

Shares of Axiata closed one sen or 0.31% lower to RM3.19 on Wednesday, giving it a market capitalisation of RM29.27 billion.