Following a briefing at the telco's Analyst & Investor Day, TA Securities Research said in a note that Axiata's Digital Services (ADS) has done well this year with 9MFY21 revenue more than doubling to RM643mil while net losses narrowed 60% to RM97mil thanks to higher revenue from digital analytics unit ADA and lower marketing expense from digital financial services arm Boost.
"Management highlighted that the Covid-19 pandemic has accelerated ADA's growth with its services driving digital marketing and sales transformation for enterprises.
"Towards 2024, ADA's vision is to be the largest digital services provider in the Asia-Pacific region among the top 20 global marketing firms," it said.
TA Securities was also bullish on Boost as the payments and platforms business has seen contribution margins past gestation and turn positive since 3Q21 and is expected to continue climbing into 2022.
It added that disbursements in its lending business is forecast to jump 12-fold to RM135mil into 4Q21 with contribution margin at 22%.
RHB Research said in a report it expects Boost's partnership with RHB Bank to be a leading contender for a digital banking licence, with the outcome expected to be announced in 1Q22.
"We believe the opportunity for Boost lies in the underserved market which management said to be in excess of MYR40bn.
"In addition to digital banking, the growth for Boost will hail from the B2B segment and its regional expansion (ie in Indonesia)," it said.
Meanwhile, Kenanga Research said tailwinds for the digital services segment may be stronger than expected as guided FY21 sales of RM1.1bil exceeded its RM700mil projection.
"Strong sales and increasing scale will continue lifting ADS’ EBITDA growth and expediting Boost's path to profitability," it said.
It added that ADS' e-commerce and digital marketing segments should continue to see strong growth for years to come while continued e-wallet adoption and Boost's healthy loan growth should bring it to be EBITDA positive in FY22.
Axiata recently held its Analyst & Investor Day, where it provided updates on its progress in achieving its goals of becoming a digital champion and high-dividend company by 2024.
At the event, it revealed it remains on track across its key metrics in the execution of its Axiata 5.0 transformation, including achieving a dividend per share of 20 sen, cost per GB of under 10 US cents, a group Ebit margin of over 20% and a higher return on invested capital to working asset cost of capital by FY24.