Axiata posts net profit for 2Q19; reassures Telenor tie-up is progressing

30 Aug 2019

Malaysia’s Axiata has reversed the net loss it recorded in the second quarter of 2018, reporting a net profit of MYR204 million (USD48.3 million) for the three months ended 30 June 2019, citing a combination of ‘strong operational performance’ and ‘tangible results from cost efficiencies’ as factors.

In the three-month period under review Axiata recorded consolidated turnover of MYR6.15 billion, up almost 5% from MYR5.87 billion in 2Q18, with the group saying that all of its units – bar its domestic subsidiary and its operations in Nepal – had seen positive revenue growth. Axiata’s reported that second-quarter EBITDA stood at MYR2.67 billion, up from MYR2.04 billion in 2Q18, with net profit of MYR204 million representing a significant improvement from the MYR3.36 billion loss the company reported in 2Q18.

On the back of the results, Axiata noted that it is now likely to exceed its headline KPI forecasts for EBITDA growth and return on invested capital (ROIC); it had previously said it expected EBITDA to rise between 5% and 8% this year, with ROIC growth expected to be between 5.2% and 5.6%. However, Axiata has said that revenue growth, which had previously been forecast at between 3% and 4%, is still expected to be in line with those figures. Additionally, the company has said it now anticipates FY19 capital expenditures to be below its previous guidance of MYR6.8 billion, as a result of ongoing CAPEX rationalisation.

Meanwhile, with regards to the proposed tie-up between Axiata and Norwegian telecoms giant Telenor Group, the Nikkei Asian Review cites Axiata’s CEO Jamaludin Ibrahim as saying that the two companies still expect to sign a definitive merger agreement ‘within the estimated time frame’. The executive was responding to local media reports that had suggested the deal might be stalling due to regulatory hurdles and a complex shareholding structure. Calming concerns, Jamaludin was cited as saying that around 70% of the due diligence process on the proposed merger has now been completed.

Malaysia, Axiata, Telenor Group