Axiata stays positive on Opcos performance amid headwinds

KUALA LUMPUR: Axiata Group Bhd chairman Tan Sri Shahril Rizda Ridzuan believes the group's operational performance is encouraging despite the prevailing macroeconomic headwinds and as the group moves towards the completion of its pending mergers and acquisitions (M&A).

"The rate of completions for M&As including the Celcom-Digi merger and the expansion of edotco’s tower portfolio all point to the group’s agility in navigating the current macroeconomic climate and delivering balanced results.

"In view of the strong operational performance, we are pleased to declare a five sen interim dividend for the third quarter ended Sept 20, 2022," said Shahril in a statement.

The telco group recorded a net loss of RM52.4mil in the third quarter ended Sept 30, 2022, as it experienced significant foreign exchange losses from the strengthening of the US dollar against the local currencies of its operating companies (Opcos) and higher finance costs.

This represented a loss per share of 0.6 sen as compared to a profit of 3.8 per share in the same quarter last year.

Despite the weaker bottomline, the group's Opcos contributed towards a revenue of RM7.2bil, 11% higher from 3Q21.

"Revenue ex-device and EBIT growth are projected to be ahead of headline KPIs, with further uplift from the consolidation of Link Net’s financial results from 3Q22 onwards.

"On the back of sustained performance, the group is cognisant of managing macroeconomic headwinds, regulatory conditions and the sustainability of pricing environment in key OpCo markets to reach its goal," it said.

For the quarter under review, earnings before interest, tax, depreciation and amortisation (Ebitda) and earnings before interest (ebit) increased 12% and 25.9% respectively.

The group also said it achieved a total savings of RM1.2bil through RM755mil in capital expenditure and RM490mil in operational expenditure.

On the group's balance sheet, the group reported a temporary uplift in gross debt/Ebitda at 3.19x, primarily due to financing for Link Net and Philippines tower acquisitions.

"This will be normalised as proceeds from completed mergers and acquisitions are used to pare down debt and full Ebitda impact of acquisitions is consolidated," it said.

The group reported a cash balance of RM7.7bil.

Year-to-date, Axiata posted a net loss of RM201.76mil as compared with a net profit of RM702.88mil in the same period in 2021.

Revenue for the nine-month period was RM20.43bil compared with RM19bil in the 2021 period.

According to Axiata joint acting CEO Vivek Sood, the group is working closely with its Opcos in frontier markets, namely Sri Lanka, Bangladesh and Nepal, to manager risks associated with deteriorated macroeconomic conditions.

"Value chain issues such as global chip supply shortages and increased energy costs remain on our radar although our OpCos have been mitigating impacts effectively in their markets,” he said.

Joint acting CEO Hans Wijayasuriya added that the overall focus moving into the final quarter would be to sustain its strong underlying performance in order to exceed its target and complete the pending M&As.

"We are very excited to leverage Axiata’s enhanced digital and technological capabilities, improved network experience and execute next level growth strategies for the Group as we champion digital inclusion and progress for communities across Asia,” he said.

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