Axiata’s Covid-19 programme a boost for digital business

KUALA LUMPUR: Axiata Group Bhd’s (Axiata) recentlyannounced financial assistance programme has been viewed positively by analysts as will boost its digital business.

On Wednesday, Axiata, together with its subsidiaries Celcom Axiata Bhd (Celcom), edotco Group (edotco), and Axiata Digital announced the launch of a RM150 million cash fund to provide financial assistance to micro-SMEs. Axiata’s Covid-19 Assistance Programme includes an initial contribution of RM20 million from the Ministry of Finance.

“We view this mildly positive initiative as part of the group’s efforts to capitalise on the current situation to boost Axiata Digital’s micro-credit and e-wallet operations, which have yet to be profitable at this stage,” said the research team at AmInvestment Bank Bhd (AmInvestment)

“This development follows the group’s expanded mobile data plans for Celcom as well as its regional operations in countries which have been impacted by the Covid-19 pandemic,” it added.

Of note, Axiata Digital will offer syariah-compliant microfinancing on its Aspirasi digital platform in the range of RM1,000 to RM10,000 on favourable terms such as suspended repayment requirements and concessional interest rates to reach an estimated 150,000 micro-SMEs within Boost, Aspirasi and the Celcom ecosystem, together with its e-commerce and other telcos/e-wallets.

Additionally, AmInvestment noted that the programme would also bundle microinsurance coverage under

Aspirasi to protect micro-SME proprietors and merchants with emergency income, accidental death and Covid-19 assistance.

“Currently, micro-SMEs account for the majority of SMEs in Malaysia and include the B40 segment which tends to have minimal savings and cash flow to sustain daily requirements.

“As the sums involved account for less than one per cent of Axiata’s market capitalisation, this development, which will be partly funded by the government, will not have any substantive impact on the group’s earnings nor gearing.

“Furthermore, the microfinancing programme, which is not a donation, involves delayed repayments with profit-sharing terms,” it added.

All in, AmInvestment maintained its ‘buy’ call on the stock.