Axiata’s Q3 net profit falls 21% as Celcom, XL stumble

Axiata’s Q3 earnings fell sharply and revenue was down slightly as its two largest units, Celcom and XL, both faced declines in profits and revenue.The operator’s Q3 net profit decreased 21 per cent to MYR607 million ($181 million) while its revenue was down 2 per cent to MYR4.65 billion. The company said in constant currency terms its revenue was up 4.2 per cent.Voice revenue fell 6 per cent to MYR2.32 billion and now accounts for 58 per cent of total revenue. SMS revenue also fell -- dropping 15.7 per cent to MYR489 million. It now accounts for just 12.3 per cent of revenue. Data revenue expanded 29.5 per cent to MYR931 million, accounting for 23.4 per cent of revenue (up from 18 per cent a year ago).Celcom, which represents 45 per cent of the group’s EBITDA, saw EBITDA decline almost 17 per cent and revenue decrease 3.4 per cent from the same quarter a year ago. EBITDA was down 8.6 per cent at XL, which generated 34 per cent of Axiata’s total EBITDA. Its revenue was up 9 per cent.Axiata said Celcom faced “challenges in the quarter” and was impacted by “system related issues”. It noted the Malaysian operator started a two-year IT transformation programme two years ago and has faced problems that affected customer service and dealer operations. Specifically, it was unable to launch new products and services, but it is close to completing the upgrade.The company also said XL’s integration of Axis weighed on its earnings due to higher interest on loans for the acquisition. It said the integration has now been completed.Its other regional units performed much better. Dialog in Sir Lanka posted a 5 per cent increase in EBITDA and a 5.5 per cent rise in revenue, while Robi in Bangladesh saw EBIDTA rise 3.1 per cent and revenue increase 3.5 per cent. Smart in Cambodia reported a 9 per cent increase in EBITDA and a 10 per cent jump in revenue quarter-on-quarter.Its regional affiliates also had strong performances. For the first nine months of the year, Idea in India had 18 per cent revenue growth and 24 per cent EBITDA growth, while M1’s EBITDA grew 7 per cent as it added 22,000 postpaid customers during the period.Axiata expanded its capex 38 per cent to MYR975 million and it represented 21 per cent of total revenue. XL’s capex accounted for 45 per cent of the company’s total of MYR2.75 billion for the first three quarters.Its EBITDA declined 11.3 per cent to MYR1.7 billion and its EBITDA margin fell to 36.5 per cent from 40.4 per cent a year ago.