Axiata remains resilient amid challenges

Group to focus on completing M&AS, tower acquisition

“Value chain issues such as global chip supply shortages and increased energy costs remain on our radar although our operating companies have been mitigating impacts effectively in their markets.” Tan Sri Shahril Rizda Ridzuan

KUALA LUMPUR: Despite the prevailing macroeconomic headwinds, Axiata Group Bhd’s performance is expected to remain resilient, as it moves closer to the completion of its pending mergers and acquisitions (M&AS), says group chairman Tan Sri Shahril Rizda Ridzuan.

“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,” Shahril said in a statement.

The Celcom-digi merger is due for completion by the end of financial year ending Dec 31, 2022 (FY22), while the ISOC Philippines tower acquisition by edotco is well on track to completion, eventually, making it the leading independent Towerco in the Philippines.

Axiata declared an interim dividend of five sen per share for the third quarter ended Sept 30, 2022 (3Q22).

The group recorded a net loss of Rm52.4mil, or 0.6 sen per share, in 3Q22 due to significant foreign exchange losses as a result of the strengthening US dollar against the local currencies of its operating companies, and higher finance costs.

This compared with a net profit of Rm349.56mil, or 3.8 sen per share, in the corresponding quarter last year.

For the quarter under review, the telco’s revenue rose 11% to Rm7.26bil from Rm6.54bil in 3Q21 on higher contributions from its operating companies.

Year-to-date, Axiata posted a net loss of Rm201.76mil compared with a net profit of Rm702.88mil in the corresponding period in 2021.

Revenue for the nine-month period was Rm20.43bil compared with Rm19bil in the previous corresponding period.

Axiata joint acting CEO Vivek Sood said the group is working closely with its operating companies in frontier markets, namely Sri Lanka, Bangladesh and Nepal, to manage 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 operating companies have been mitigating impacts effectively in their markets,” he said.

Joint acting CEO Hans Wijayasuriya added that Axiata’s 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.

Axiata achieved a total savings of Rm1.2bil through Rm755mil in capital expenditure and Rm490mil in operational expenditure year-todate.

On the group’s balance sheet, it reported a temporary uplift in gross debt/earnings before interest, tax, depreciation and amortisation (ebitda) at 3.19 times, primarily due to financing for Link Net and Philippine 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.