PETALING JAYA: Axiata Group Bhd has earmarked RM7.1 billion for capital expenditure (capex) in 2022, which will be substantially financed with its operations and free-cash flow, mainly for expansion in Indonesia, followed by Bangladesh.
Its president and group CEO, Datuk Izzaddin Idris, said the group will continue to accelerate investment in Indonesia, continuing on the investments it made last year.
“We still see an opportunity of expanding our footprint in the market,” he told the media at Axiata’s financial year 2021 (FY21) results virtual media briefing yesterday.
The capex includes allocation for Bangladesh. Izzadin explained the telco has identified growth opportunities in the two countries due to their low penetration rate of mobile users.
“The bulk of the capex will focus on improving the quality of service as regulators globally would want to ensure telco operators provide the right quality of service and experience to consumers.”
The group CEO stated that there is no need for the group to raise debt to finance the capex based on its current cash flow.
Izzadin said Indonesia will be a core revenue base following the Celcom-Axiata and Digi merger.
He said its Indonesian unit Axiata XL has a current market share of 17-18% with a total subscriber base of 58 million out of the country’s 280 million population.
“As for the growth strategy of Axiata in Indonesia, we’ve been relegated to number three but we believe the convergence story is the way to go,” Izzadin said.
He elaborated that there is opportunity in convergence, which bundles fixed-line and mobile offerings under one product, which was the rationale behind its acquisition of Indonesian telco Link Net.
“The current penetration for fixed line in the country is only 13.4% out of the population base of 280 million, hence the small number indicates a big opportunity.”
Nonetheless, Izzadin acknowledged the archipelago’s geographical spread will prove to be a challenge but there is still an opportunity given there are 200-odd cities in Indonesia with a population of 1-2 million each.
“We are looking ahead and seeing how that market will develop two to three years down the road and we are constantly monitoring the opportunities as well.”
In regard to the merger between Celcom and Digi, Izzadin said he is still waiting for a decision from the regulator, Malaysian Communications and Multimedia Commission. Currently, the two have pooled 85 staff to an integration team to start the first stage of integration. While he did not not give any specific time frame, it is believed to be soon.
As for the possibility of listing Axiata’s Boost and edotco, the CEO said it will not happen this year.
“For Boost, we are in no rush because we think the value will be significantly enhanced with the digital bank licence.”
Izzadin cautioned that the reverse is also true; should the group list Boost on the pretext of having a digital bank licence and get its application rejected, it will be in a bit of trouble.
Meanwhile, for its tower-building unit, he said there is reservation on a listing due to its operations in Myanmar, which saw a military coup last year.
“For edotco, it has invested in Myanmar, we are not quite sure how the market will perceive an IPO involving Myanmar. So we need to tackle those sorts of fundamental issues first,” he added.
For the fourth quarter ended Dec 31, 2021 the group’s net profit stood at RM116.02 million, reversing the net loss of RM255.96 million in the same quarter of the previous year, mainly due to higher top lines, lower depreciation and amortisation as there was accelerated depreciation of 3G assets amounting to RM1.07 billion.
Revenue for the quarter rose 10.2% to RM6.9 billion from RM6.26 billion previously.
For the full year, the group’s net profit came in at RM818.9 million, a more than twofold increase over RM365.16 million in the previous year. Revenue stood at RM25.9 billion, a 7% increase over RM24.2 billion previously.
Axiata declared a dividend of 5.5 sen per share for Q4’21, which translates into a total dividend of 9.5 sen per share for FY21.
Source: The Sun Daily
