Axiata losses widen on write-offs

Malaysian telco Axiata boosts income and EBITDA in most of its regional operator affiliates, despite widening losses due to write-offs.

Robert Clark, Contributing Editor

August 29, 2023

2 Min Read
(Source: Davidovich Mikhail/Alamy Stock Photo)
(Source: Davidovich Mikhail/Alamy Stock Photo)

Axiata Group losses widened in Q2 on heavy depreciation charges and the loss of income following the sale of its Malaysian cellular business. It reported a deficit of 576.2 million Malaysian ringgit (US$124 million), down from MYR502.4 million ($108 million) a year ago.

Depreciation costs rose 64% to MYR2.7 billion ($581 million), including a MYR703 million ($151 million) impairment charge from its Nepal business after the company lost a legal dispute over a capital gains tax. The telco also reported MYR298 million ($64 million) in foreign exchange losses, mainly because of the depreciation against the dollar.

But the underlying business grew strongly, with contributions from most of its regional affiliates. It boosted revenue by 5.3% to MYR6 billion ($1.29 billion), with earnings before interest, taxes, depreciation and amortization (EBITDA) up 17% to MYR2.7 billion ($581 million).

It also received a MYR403 million ($87 million) one-off payment from former mobile subsidiary Celcom, partly offsetting the loss of income from its merger with Telenor's Digi.com last November.

Axiata is one of southeast Asia's biggest telcos, with controlling stakes in half a dozen operators across the region. It said its biggest mobile affiliate, XL Axiata in Indonesia, reported improvement in a market that is still recovering from a period of extreme price competition. It hiked revenue 14% to MYR2.5 billion ($538 million), but high depreciation costs held profit at MYR138 million ($29.7 million), 4.6% higher.

Cash generation

Axiata's Indonesian fixed broadband business, Link Net, which was acquired a year ago, recorded a loss of MYR21 million ($4.52 million) on revenue of MYR300 million ($64.57 million), thanks to high borrowing costs as it invests in expanding its fiber network.

“Cash generation, an improved balance sheet and capital expenditure to chase growth opportunities have been the focus of the first half of 2023 and will remain so for the rest of the year,” said Axiata Group CEO Vivek Sood.

He said the “strong revenue and stable margins” were a result of the improved competitive environment, the focus on growth and cost management. Together these had helped offset the impacts of the higher depreciation costs and the merger.

The company said it was on course to meet its full-year targets of mid-single digit revenue growth and high single-digit EBIT (earnings before interest and taxes) growth.

Axiata's stock rose 1.2% on the Kuala Lumpur exchange Tuesday. It has fallen 17% since the start of the year.

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— Robert Clark, Contributing Editor, special to Light Reading

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About the Author

Robert Clark

Contributing Editor, Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. 

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