M1's largest shareholders, which also include Malaysia's Axiata(pic) Group, had considered but eventually called off a strategic review of their holdings in the telecommunication provider last year, saying parties interested in buying those stakes did not meet certain criteria.
KUALA LUMPUR: Axiata Group Bhd
's results this quarter will set the stage positively for the future with the group's operating companies (opcos) expected to see solid performances for the remainder of 2018, said Tan Sri Jamaludin Ibrahim, president and group CEO of Axiata.
"Celcom’s core focus ahead is to continue to improve its margins through cost efficiency initiatives. We also expect industry recovery following price wars in Cambodia and the SIM registration exercise in Indonesia while our South Asian operations and edotco are expected to continue their strong performance," he said.
Axiata's underlying performance for Q2 ended June 30, 2018, saw improvements in both revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) over the previous corresponding quarter.
The group's reported earnings results, however, reflected a net loss of RM3.36bil in the quarter due to a technical, non-cash accounting adjustment from the de-recognition and reclassification of Idea Cellular Ltd from associate to simple investment.
Axiata had on July 27 announced a merger between Idea and Vodafone India Ltd, which effectively dilutes Axiata's stake in Idea to 8.17% from 16.33%, resulting in the reclassification.
In a statement, Axiata said revenue, on a constant currency basis and excluding the application of MFRS15 and 9, increased 4.6% to RM6.3bil from RM6.1bil in the same quarter last year.
"The growth in revenue is attributed to all of its mobile operating companies’ successfully capturing gains in revenue and revenue market share, while edotco increased contribution to 7.3% of Group revenue," it said.
EBITDA rose 4% year-on-year to RM2.4bil as a result of greater cost efficiencies.
"Overall cost optimisation initiatives delivered RM800 million in savings Group-wide for the first half of the year and is on track to meet its target of RM1.4 billion for 2018. However, given the nature of start-up digital businesses EBITDA has been diluted as planned," said Axiata.
The group recorded a lower normalised profit after tax and minority interest (PATAMI) of RM263.7mil from RM462.6mil in the previous year due to higher depreciation and amortisation charges.
For the purpose of performance comparison, the normalised PATAMI excludes operational losses from Idea, non-cash technical impairment and loss in dilution, forex gains/losses, XL tower gains and one-off impairments of digital services non-core businesses.
The group's balance sheet strengthened to RM6.2bil from RM5.7bil in the previous quarter with gross debt/EBITDA at 2.3x below its debt covenant of 2.5x.
Year-to-date, the group's underlying performance saw revenue growth of 5.1% to RM12.6bil while EBITDA rose 4.6% to RM4.6bil.
Axiata said its group-wide optimisation programme delivered RM800mil in savings, on track to its full-year target of RM1.4bil and RM5bil target over the next five years.
The board of directors declared an interim dividend of five sen per share.
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