Axiata exudes cautious optimism after tough 2020

Southeast Asian telco group Axiata signaled some relief that it achieved a "better-than-expected recovery" in the second half of 2020 after a coronavirus-blighted performance in the first six months of the year.

However, the Malaysian-based company, which owns mobile operators in six markets including Indonesia and Bangladesh, reported a net loss of 256 million Malaysian ringgits (US$68 million) for the October-December quarter, compared with a profit of RM332.6 million ($82 million) a year ago. Revenue in the fourth quarter (Q4) was marginally lower at RM6.26 billion ($1.55 billion), while EBITDA was up slightly year-on-year at RM2.73 billion ($676 million).

The operator had indicated a significant improvement in net profit in the third quarter (Q3) following its mid-year pandemic slump. The Q4 loss was caused by depreciation costs and write-offs of assets.

In the full year 2020, it said revenue fell marginally to RM24.2 billion ($5.99 billion), while EBITDA rose slightly by 0.4% to RM10.65 billion ($2.6 billion). The annual group net profit fell by a whopping 74.9% to RM365 million ($90 million).

Axiata's full-year guidance is for "low single-digit percentage growth for revenue and EBITDA," which Dato' Izzaddin Idris, president and group CEO, said "reflects our cautious optimism."

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"It is encouraging to see better-than-expected results for FY2020, with revenue and EBITDA holding steady despite extenuating externalities. Our high cash balance of RM7.2 billion gives us confidence to navigate uncertainties and move quickly to capture growth and expansion opportunities," the CEO said.

Measures to combat the effects of the crisis last year included accelerating the shutdown of 3G networks in order to refarm spectrum for 4G.

Edotco to go?

It has also been reported that Axiata Group has shelved plans to sell a stake in its Edotco tower business for more than $500 million.

According to Bloomberg, this is because a military coup in Myanmar triggered concerns over heightened investment risks. However, Axiata also indicated that Edotco's performance in 2020 "was challenged by heightened competition among tower companies, an overall slowdown in terms of planned network expansion and further pressure on margin for its customers."

Edotco, founded in 2012, manages a regional portfolio of more than 32,750 towers across Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka, Pakistan, Philippines and Laos, according to a December 2020 press release on its website. In Myanmar, Edotco runs over 1,800 towers and sites. Axiata owns about 62.4% of Edotco through a special-purpose vehicle.

Axiata is present in Asia through Celcom in Malaysia, XL in Indonesia, Dialog in Sri Lanka, Robi in Bangladesh, Smart in Cambodia and Ncell in Nepal.

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— Anne Morris, contributing editor, special to Light Reading

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