Axiata’s XL beats expectations

KUALA LUMPUR: Axiata Group Bhd’s (Axiata) 66.4 per cent owned subsidiary, PT XL Axiata Tbk (XL) has beat analysts expectations as the group managed to score a normalised net profit of 740 billion rupiah or RM213.79 million for financial year 2017 (FY17).

This meets consensus expectations by a whopping 196 per cent.

According to MIDF Amanah Investment Bank Bhd (MIDF Research), expectations for XL were rather low for FY17 due to the 209 billion rupiah net loss in FY16.

However, they managed to exceed expectations due to a higher-than-expected severance payment of 400 billion rupiah or RM115.52 million.

Besides that, the group’s FY17 revenue was up by seven per cent to 22.9 trillion rupiah thanks to the 10 per cent higher service revenue of 20.3 trillion rupiah from taller data revenue.

This was partially offset by a softer interconnect revenue of minus 15 per cent due to incoming off-net traffic.

The group’s total customer base increased by 1 million to 52.5 million in 4Q17 with stable blended average revenue per user (ARPU) of 34,000 rupiah, and its smartphone users grew to 38.5 million with 73 per cent penetration rate as opposed to 65 per cent a year ago.

Meanwhile, the group’s EBITDA also improved by 3 per cent with margin declining by 130 basis points to 36.3 per cent as a result of higher interconnection, salary and employee benefits and other direct expenses.

“On a normalised basis, its EBITDA advanced by 7 per cent to 8.7 trillion rupiah with margin flat at 38.1 per cent after stripping off the one-off cost relating to the organization transformation,” explained the research arm.

Looking forward, the research arm is expecting data monetisation and growth from ex-Java to be the key drivers of XL’s revenue growth in FY18.