KUALA LUMPUR: AXIATA Group Bhd’s net profit dropped 77 per cent to RM564 million for the financial year ended December 31 2016 from RM2.55 billion previously. This is despite the group posting a record RM21.56 billion revenue, a growth of 8.4 per cent from RM19.8 billion in 2015.
Axiata president and chief executive officer Tan Sri Jamaludin Ibrahim said the lower profit was due to a combination of factors.
These included foreign exchange (forex) losses on US dollar debts, lower contributions from its associated firm Idea Cellular, merger and acquisition (M&A)-related costs in operating companies and poor performance of Celcom Axiata Bhd.
Jamaludin said Celcom’s full-year net profit eased to RM976 million from RM1.3 billion previously.
“The full-year does not paint a good picture,” he said of Celcom, adding that he was not happy with its under-performance despite higher post-paid subscriptions.
Axiata’s quarterly results showed a net loss of RM309 million, compared with RM467 million net profit in the corresponding period previously.
Revenue in the final quarter was RM5.78 billion, up eight per cent from RM5.36 billion.
On market talk of a possible merger between United Kingdom’s Vodafone and Axiata’s 19.8 per cent-owned Idea Cellular in India, Jamaludin did not confirm it but said “assuming it happens, it will be good for the industry”.
He explained that a Vodafone-Idea merger could create the largest telco in India and third-largest in the world.
Meanwhile, Axiata said in a statement it will continue with strategic investments and M&As for long-term growth despite incurring financial costs.
The group comprises Celcom, XL Axiata (Indonesia), Smart (Cambodia), Dialog (Sri Lanka), Ncell (Nepal), Robi (Bangladesh) and associates Idea M1 (Singapore).
Jamaludin also said Axiata has set aside RM6.6 billion capital expenditure this year, with a significant portion going towards plugging Celcom’s weak presence in strategic markets in Malaysia.
He said between RM1.2 billion and RM1.4 billion will be spent to strengthen Celcom’s data and connectivity capabilities.
He said the RM819 million spent on its recently-acquired broadband spectrums was in addition to the 2016 capex of RM5.8 billion.
Axiata received a boost in capital-raising via subsidiary edotco’s maiden equity raising exercise, the largest global tower sector private placement for the year at US$600 million (RM2.7 billion).
Jamaludin said edotco now has the capacity to execute growth strategies.
With 17,000 towers at present, edotco aims to be the top 10 tower company in the world.
“We do not have any immediate plans to list edotco in the near future,” he said.
On the forex issue, Axiata acting group chief financial officer Yap Wai Yip said most of its dollar borrowings are sourced in Malaysia. The total dollar loans are US$2.7 billion, of which US$1.1 billion is not hedged.
Jamaludin explained Axiata needs dollar loans to invest overseas.
“As a rule of thumb, we tend to hedge 50 per cent of our dollar loans,” he said, adding that the group will reduce loans as much as possible.
Axiata declared a final dividend of three sen per share, bringing the total dividend to eight sen.