Malaysia’s second-largest mobile phone company Axiata Group Bhd is considering paying a dividend from 2011 as improving business conditions have helped bolster its balance sheet, its chief executive said yesterday.
A likely payout to shareholders would be the first dividend from the company since its listing in 2008 after it was demerged from Telekom Malaysia.
“We have not made any decision … However, given the strength of our balance sheet, especially our cash and debt position, we are in good position to consider it from 2011 onwards,” Axiata chief executive officer Datuk Seri Jamaludin Ibrahim told Reuters in an interview.
Axiata’s 2009 net profit tripled to RM1.66bil, helped by strong performance of its overseas subsidiaries in Indonesia and Bangladesh.
Jamaludin Ibrahim … ‘good position to consider it from 2011 onwards’
The firm, which has a market value of US$9.5bil, turned free cash flow positive for the first time in 2009 and slashed its gross debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio to 2.4 times from 4.6 times.
Axiata recorded an EBITDA margin of 42.2% in the quarter ended December, up from 31.7% a year earlier, and compared with 41% recorded by Singapore Telecommunications, South-East Asia’s biggest telecom firm.
“We believe we could maintain the EBITDA margin. Of course the pressure point would come from the competition and also our own investment in mobile broadband.”
Axiata has 120 million mobile subscribers across Asia, up 34% from a year earlier, with a presence in a number of countries including India, Indonesia, Singapore, Bangladesh, Cambodia, and Sri Lanka.
The company has a 86.5% stake in Indonesia’s third largest mobile phone operator XL Axiata, which could become the number two player in the world’s fourth most populous nation, after growing aggressively last year.
XL Axiata has a free float of only 0.2% as Emirates Telecommunications Corp controls another 13.3% stake in the Indonesian firm.
Jamaludin said Axiata would always review the possibility of increasing the free float of its Indonesian unit but declined to comment further on the timeline.
“We have said back at the end of 2008 that we are open at possibility in increasing the float up (to) 15%-20%. It is something that we are always looking at, and right now we also looking at it, perhaps more seriously,” he added.
Axiata share price has gained around 27% since the start of the year, outpacing a 1.1% rise in the broader Kuala Lumpur index.
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