XL Axiata slips into the red in 1Q15, revenues flat-line

14 May 2015

Indonesia’s XL Axiata has reported a net loss of IDR758 billion (USD57.8 million) for the three months ending 31 March 2015, reversing a net profit of IDR380 billion in the corresponding year-earlier period. XL Axiata said that the lower profit was due to the impact of forex fluctuations and its acquisition and integration of Axis, which was completed in 1Q14. Revenue for the three months under review flat-lined at IDR5.499 trillion, compared to IDR5.526 trillion in 1Q14, of which cellular telecoms services contributed the lion’s share (95%), at IDR5.249 trillion – up 3% year-on-year. The carrier said its mobile performance was boosted by a 29% rise in income from data services, which now contribute 32% of its total turnover, up from 26% a year ago. EBITDA nose-dived 15% to IDR1.877 trillion from IDR2.201 trillion, however, as a result of the impact of consolidation costs related to its Axis takeover, and pre-tax losses of IDR1.011 trillion were in sharp contrast to the IDR592 billion pre-tax profit booked in the first quarter a year earlier. 1Q15 CAPEX stood at IDR1.211 trillion, down 31% y-o-y, of which the focus was on expanding its data infrastructure and mobile services.

XL Axiata closed out March 2015 with a total of 52.1 million mobile users, down 24% from 68.5 million at end-March 2014. Of the total, pre-paid SIMs accounted for 51.7 million connections (down 24%) and post-paid for 425,000 (up 11%). Blended average revenue per user (ARPU) stood at IDR28,000 per month, up from IDR23,000 in 1Q14, with pre-paid ARPU surging 23% to IDR27,000 per month and offsetting an 8% decline in average post-paid ARPU to IDR104,000. The company presided over a total of 52,942 base transceiver stations (BTS) at the start of April this year, up from 45,600 a year before, of which 36,331 (19%) were 2G/GSM, 16,431 (10%) were 3G-enabled BTS and 180 were newly-deployed 4G BTS.

Last month, XL Axiata CEO Dian Siswarini, who has replaced Hasnul Suhaimi at the helm, set out her stall to upgrade the company’s data services and strengthen its brandings – XL and Axis – as it looks to fend off rivals in an intensely competitive market. The newly appointed CEO told journalists: ‘The telco industry is facing a very challenging year, with voice calls and SMS dropping significantly. Therefore, we have to improve our data service in the future,’ before going on to point out that as data services are much more ‘segmented’ than voice services, XL must ‘identify consumers’ needs and how to satisfy them’. According to the cellco’s internal figures, data traffic exploded last year, climbing 126.7% to 123,824TB from 54,615TB in 2013.

Under her stewardship, Ms Dian said that XL plans to carry out a dual-brand strategy, promoting both XL and Axis equally. The move is a shift from its previous position when XL brand & customer management officer Rashad J Sanchez had said that the operator would use the XL branding to target higher income data users demanding high quality data services, while Axis would be aimed more at low-volume users for whom price was the primary concern. XL Axiata plans to spend IDR7 trillion (USD537 million) in 2015 – most of which will be ploughed into 3G and 4G improvements.

Indonesia, XL Axiata