Axiata profits decline in 2Q16 despite higher revenue

26 Aug 2016

Malaysia-based Axiata has published its financial results for the three months ended 30 June 2016, revealing a drop in net profit, despite increased revenues and EBITDA.

Bolstered by the consolidation of Nepal’s Ncell, in the quarter under review Axiata generated a total turnover of MYR5.310 billion (USD1.32 billion), representing year-on-year growth of 12.8% and an increase of 6.0% against the previous quarter. EBITDA meanwhile totalled MYR2.066 billion in Q2 2016, having grown by 10.1% quarter-on-quarter and more than 20% against the corresponding period in 2015. Despite these positive trends, Axiata reported a slump in profit after tax (PAT) to MYR633 million, with the company attributing the 45.7% y-o-y decline mainly to operational performance at its Malaysian, Bangladeshi and Indian units, while also pointing to higher depreciation and amortisation (D&A), net finance costs and forex losses.

Commenting on the quarterly performance, Axiata Chairman Tan Sri Azman Hj. Mokhtar noted: ‘In spite of a challenging industry environment in several core markets, Axiata’s good spread of portfolio assets contributed significantly to the Group’s solid performance. The inclusion of Ncell further demonstrates the positive effects of our strategy to reposition the Group portfolio for growth and diversification. This is evident with over 67% of Axiata’s revenue being generated outside of Malaysia today, making the portfolio both more resilient and positioned for growth in selected markets.’

Meanwhile, The Star Online reports that Axiata is set to boost capital expenditure to more than MYR6 billion in its current fiscal year, up from earlier guidance of between MYR5.5 billion and MYR5.7 billion. A significant chunk of the company’s spending is expected to go towards network improvements in Bangladesh, Indonesia and Malaysia, with significant increase in investment in its domestic unit; the company is expected to spend around MYR1.5 billion to enhance its infrastructure in Malaysia this year, up from MYR850 million it spent in 2015. With regards to the investment plans, Axiata’s president and group chief executive officer Tan Sri Jamaludin Ibrahim was cited as saying: ‘We expect our CAPEX to be higher, close to MYR6 billion this year, primarily for LTE rollout in Malaysia, Indonesia and Bangladesh.’

Malaysia, Axiata, Celcom Axiata