Axiata Group records Q2 net loss of RM3.3 bil

KUALA LUMPUR: Axiata Group Bhd recorded a net loss of RM3.32 billion for the second quarter ended June 30, 2018 (Q2 FY18) versus a RM479.08 million net profit in the previous corresponding period due to a one-off impairment of RM3.38 billion.

Revenue declined to RM5.87 billion from RM6.06 billion in the same period last year.

In a filing with Bursa Malaysia today, Axiata said for the six months ended June 30, 2018, it incurred a RM3.41 billion net loss compared with a net profit of RM741.11 million in the corresponding period of 2017.

“Profit after tax, and profit after tax and minority interest (Patami) registered more than 100% decline (from Q2 FY18 compared with Q2 FY17) due to a one-off non-cash impairment provision of RM3.38 billion,” it said.

(The provision was a result of the de-recognition and reclassification of Idea Cellular Ltd.)

Meanwhile, in a separate statement, president and group CEO Jamaludin Ibrahim said the group-wide cost optimisation programme successfully delivered RM800 million in savings and was on-track to achieve the full year target of RM1.4 billion.

He said the quarter had been eventful where the group’s associate company in India, Idea Cellular Ltd, is at the final stages of obtaining regulatory approval for its merger with Vodafone India Ltd to create the largest telecommunications (telco) company in India and one of the largest in the world.

“But it was also a quarter where the group’s reported financials was clouded by the non-cash, technical impairment due to the reclassification and derecognition of Idea, adverse impact from the strengthening of the ringgit by approximately 10% against all our operating companies’ (OpCos) local currencies and changes in the Malaysian Financial Reporting Standard accounting standards,” Jamaludin said.

However, he pointed out that operationally, the group’s OpCos showed strong underlying growth in revenue and earnings before interest, taxes, depreciation and amortisation.

“Celcom was the only operator in Malaysia to record growth in service revenue and total revenue for the quarter.

“Similarly, XL also performed best in the market in comparison to its competitors as the industry faces adjustments with the recent massive SIM registration exercise.

“It was also a quarter where the success of one of our three major digital companies was validated with a significant investment from Sumitomo Corporation for an implied valuation of US$109 million,” Jamaludin said.

Moving forward, he said the group would continue to build a sustainable business portfolio as a mid-to-long-term strategy to address competition, costs and digital disruption in order to ensure continued growth and profitability in its digital businesses.

“By picking the right winning digital investment models and strategic partners, we have doubled down on our investments in three core areas.

“Namely, we have built one of the largest financial technology companies in Asia to provide five microservices, established the largest independent digital agency in the region with over 200 large cap clients, and set up a global Application Programming Interface business through hubs with other telco groups where we now have a reach of 3.1 billion people over 110 mobile network operators,” Jamaludin added.

In light of its half-year performance, Axiata’s board of directors declared an interim dividend of five sen per share, representing 86% of its half-year reported normalised Patami (profit after tax and minority interest) of RM526.2 million being returned to shareholders for the financial year ending Dec 31, 2018.