Malaysia's Axiata Boosted by Overseas Business

Malaysia's Axiata says profits rose sharply in the second quarter, thanks to contributions from various overseas interests, and claims to have seen improvements in the markets of Malaysia and Indonesia, where it has been struggling amid fierce competition.

Through its various subsidiaries and affiliates, Axiata Group Berhad serves about 260 million mobile subscribers in Asia, making it one of the region's biggest operators by customer numbers.

Axiata reported a 34.2% year-on-year increase in profits after taxation and minority interests, to 611 million Malaysian ringgits ($147.9 million), following strong contributions from subsidiaries in Sri Lanka, Cambodia and India.

Difficulties in Malaysia and Indonesia triggered a 0.5% dip in revenues over the same period, to MYR4.7 billion ($1.14 billion), but the operator said that Malaysia's Celcom Malaysia had grown its customer base for the first time since the third quarter last year and that Indonesia's XL was also making good progress.

Nevertheless, Dato' Sri Jamaludin Ibrahim, Axiata's president and CEO, said there is still work ahead before the operator could feel satisfied with its performance.

"While Celcom's IT transformation issues are generally resolved and we are making significant progress in regaining some goodwill that was lost last year, there is still more to be done," he said in a company statement.

Axiata blamed declines in the voice and text-messaging businesses for a dip in Celcom's service revenue but also claimed to have added another 61,000 customers to its subscriber base in the quarter.

Having launched a series of new pre- and post-paid tariffs, the operator said it is now "regaining market confidence."

Axiata serves about 12.3 million customers in Malaysia, down from 13.4 million in the second quarter of 2014, but still generates about 38% of its revenues in the country.

Celcom believes that upgrades to its IT systems will help it to compete more effectively against rivals including Maxis Communications Bhd. and DiGi Telecommunications Sdn Bhd. , which appear to have been eating into its market share in recent quarters.

A similar transformation program is under way at XL in Indonesia, where subscriber losses have been even more dramatic over the last year.

Currently Indonesia's third-biggest mobile operator, XL revealed that customer numbers fell to about 46 million in the second quarter from as many as 62.9 million in the same period last year.

In local currency terms, revenues have dropped from 6.1 trillion Indonesian rupiahs ($439 million) to IDR5.6 trillion ($403 million) over the same period.

XL says its current strategy is to focus on serving heavier-spending customers. It has booked a sharp increase in average revenue per user over the past year -- up to IDR32,000 ($2.3) per month from IDR26,000 ($1.87) in the second quarter of 2014 -- despite the overall sales decline.

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Axiata's performance in the much smaller markets of Sri Lanka and Cambodia stood in sharp contrast to the setbacks at home and in Indonesia.

Sri Lanka's Dialog grew revenues to 17.7 billion Sri Lankan rupees ($130 million), from SLR16.7 billion ($120 million) in the second quarter of 2014, and saw its customer base balloon from 9.3 million to 10.1 million subscribers over the same period.

In Cambodia, meanwhile, Axiata revealed that revenues have grown from MYR270 million ($65.4 million) in the first six months of 2014 to MYR420 million ($101.7 million) in the same period this year.

Axiata was also boosted by the performance of Idea Cellular Ltd. , one of India's biggest mobile operators, in which it owns a stake of about 20%.

In its results presentation, the operator indicated that Idea contributed MYR102 million ($24.5 million) to its profit before taxation and minority interests in the second quarter -- about a sixth of the total figure.

Fueled by growth in India's burgeoning mobile data market, Idea reported a 14% year-on-year increase in revenues in the April-to-June quarter.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

nasimson 8/20/2015 | 12:50:35 PM
Back then Axiata made a smart move entering into Combodian, Indian markets.These are likely to fuel the growth atleast for the next few years despite challenges in Indonesian and Malaysian markets.
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