KUALA LUMPUR (Feb 22): Axiata Group Bhd, which closed its financial year ended Dec 31, 2021 (FY21) with a 124% on-year jump in net profit to RM818.9 million, is expecting FY22's performance to be similar to FY21's, and has earmarked RM7.1 billion as capital expenditure (capex) for the year.
The capex is slightly higher than the RM6.2 billion it spent last year and will be used to support network demand in a bid to expand its market share in Bangladesh and Indonesia.
President and group chief executive officer Datuk Izzaddin Idris said the bulk of capex will be allocated to improve Axiata's mobile network quality of services as regulators around the world have called on telco operators to provide the right quality of service and experience.
“We will continue to accelerate our investment in Indonesia. That is what we did last year. We still see opportunities for footprint expansion in that market, which has been doing very well for us. The second will be Bangladesh, these are our key markets that we will be investing in,” he told a virtual briefing.
“The current market share of XL Axiata is about 17%-18%, with a total of 58 million subscribers, but therein lies the opportunity because of the integration of Indosat as well as the population base of 280 million,” he said.
The current penetration rate for fixed lines in Indonesia is at 13.4% of the population base, he said.
“That is a small number, therefore the opportunity is big. Granted there are challenges in terms of the geographical spread of the country, but if you look at the opportunities in the number of cities that Indonesia has, around 200-odd cities, and we use the population base of one or two million per city — that is a big number.
“We are quite clear on how we are to pivot the Indonesian business to one which offers a convergence strategy (to push its Indonesia market). For what it is worth, after XL announced the convergence package offerings and bundles to the market, other telcos are also following suit. In a way, that is the competition acknowledging the strategy we have embarked on in Indonesia.
“Having said that, we are looking ahead and seeing how that market will develop two to three years down the road and we are monitoring the opportunities as well. For the time being, the convergence strategy is the way we are pushing the Indonesia market.
When asked about the expected timeline to complete the proposed merger of Celcom Axiata Bhd and Digi.Com's mobile telecommunication network operations, Izzaddin said that is still pending the Malaysian Communications and Multimedia Commission's (MCMC) evaluation.
“We hope the MCMC will be able to wrap up its evaluation. We have been constantly engaging with the MCMC personnel to make sure all their concerns are addressed. They have got consultants on board, verifying and validating the information,” he said.
“We are hopeful of getting a decision in due course. Even I myself have been discussing the progress that MCMC is making with this evaluation of the proposal. So far as that merger is concerned, it is a work in progress,” he added.
Meanwhile, Izzaddin said Axiata’s FY22 financial performance is expected to mirror FY21’s, given the fact that the group's business nature is capital intensive and would require continual investment.
“The challenge for the team is to record a better performance and that is the only way we can pay the dividends that we are targeting, of 20 sen per share.
“The challenges are macroeconomy and regulatory challenges, which certainly are beyond our control.
“But the good news is the core business of mobile telecommunications will remain strong and the opportunities for growth and we are invested in markets like Bangladesh and Indonesia, these are two big opportunities because of the low penetration rates,” he said.
For FY21, Axiata’s net profit surged to RM818.90 million from RM365.15 million a year ago, as its annual revenue expanded 7.01% to RM25.90 billion from RM24.20 billion in FY20. This was on the back of growth across all operating companies except for its Nepalese subsidiary Ncell.
The group also achieved cost excellence through operational and capital expenditure savings of RM696 million and RM1.3 billion respectively, totalling RM2.0 billion.
The positive close to FY21 came after the group posted a net profit of RM116.02 million in the fourth quarter, as opposed to a net loss of RM255.96 million a year ago, mainly led by a higher top line and lower depreciation and amortisation. Revenue for the quarter rose 10.24% to RM6.9 billion, from RM6.26 billion a year ago, on the back of growth across all operating companies except for Ncell.
The group also declared a second interim dividend of 5.5 sen per share, bringing total dividends for FY21 to 9.5 sen.
At 4.30pm, shares in Axiata dropped two sen or 0.51% at RM3.87, bringing it a market capitalisation of RM35.51 billion.