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Axiata Group Bhd posted a 27% increase in net profit to RM639.13mil for the third quarter ended Sept 30, 2010 from RM503.66mil a year ago, driven by positive net profit contribution from Dialog Axiata Plc and Robi Axiata Ltd.

It told Bursa Malaysia yesterday, revenue was up 14.8% to RM3.93bil from RM3.43bil while earnings per share were 8 sen as compared to 6 sen previously.

As for the nine-months period, the group posted net profit of RM2.38bil versus RM1.15bil, driven by improved net profit contribution in Celcom, XL and Dialog and net gain on partial disposal of equity interest in XL.

Revenue for the nine months was up 21% at RM11.6bil against RM9.6bil a year ago, primarily attributed to higher contribution from XL, Celcom and Robi and also on the back of robust data business in Malaysia and Indonesia, and higher active subscribers and usage in Sri Lanka and Bangladesh.

It also said earnings before interest, tax, depreciation and amortisation (EBITDA) was up by 41% in the same period to RM5.3bil and margin improved by 6.3 percentage points to 45.9%, from better margins across all operating companies.

Year-to-date profit after tax, amortisation and minority interests almost doubled at RM2.1bil, up a strong 95% from the previous corresponding period.

The group said Axiata ended the quarter in a strong financial position, with balance sheet significantly strengthened.

Net debt to EBITDA ratio now at 0.7x from 1.9x at end 2009. Strong growth was seen in regional mobile subscribers with a 38% increase year-on-year to 149 million, it said.

President and group chief executive officer Datuk Seri Jamaludin Ibrahim said the group was very pleased to see Axiata continuing its positive momentum, posting double-digit growth in all financial metrics.

At Axiata, we are focusing on growth whilst balancing it against value creation.

The strong results ultimately put the group in a good position to meet its dividend plans, he said.

Moving forward, he said despite the competitive environment, the group was confident about its prospects for the rest of the year.

We are particularly pleased with the growing success we see in data services and mobile broadband at Celcom and XL. This increasingly important segment will remain the key focus for our more mature markets whilst we capitalise on any opportunities in our under-penetrated markets, he said.

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Axiata Group Bhd posted vastly improved quarterly results with net profit for the three months ended Dec 31 hitting RM558.3mil compared with a net loss of RM515.2mil in the previous corresponding period.

“The higher profit was driven mainly by improved contribution from Celcom group, XL Group, Axiata (Bangladesh) Ltd (AxB) and Dialog Group,” Axiata said in the notes accompanying its statement.

It added that the better performance from its associate and joint venture companies and favourable pre-tax foreign exchange gain also contributed to the higher net profit in the fourth quarter.

In a filing with Bursa Malaysia yesterday, Axiata said its pre-tax profit surged to RM827.7mil from a pre-tax loss of RM668.4mil and earnings per share rose to 7 sen from a loss per share of 9 sen before. Revenue for the period jumped 52.7% to RM3.7bil from RM2.41bil a year ago.

For the year ended Dec 31 (FY09), its net profit swelled 232% to RM1.65bil from RM497.9mil previously, on the back of relentless profit and cost management.

Revenue was RM13.1bil, up 15.5% from RM11.35bil in FY08. The increase in revenue was due to higher contribution from XL Group and AxB. However, intense competition and heavy price cuts in Cambodia continued to impact revenue growth in Telekom Malaysia International (Cambodia) Co Ltd.

According to analysts, Axiata’s results were above expectations. Bloomberg analyst consensus showed net profit at RM1.3bil and revenue at RM12.7bil for FY09. The telco’s net profit exceeded the average forecast of RM1.35bil by analysts polled by Thomson Reuters.

An analyst said Axiata’s balance sheet improved significantly and the group also beat its own internal headline key performance indicators for 2009 from stronger operational execution.

“The results were within ours and consensus expectations. Axiata continued to show quarter-on-quarter improvements especially from XL; Celcom and Bangladesh showed surprisingly strong results as well.

“Going forward, I think 2010 would be another good year with XL as the key earnings growth driver for the group, while Celcom would continue to be the cash cow,” a bank-backed analyst said.

Axiata turned free cash flow positive for the first time, up 265% to RM2.1bil. Its balance sheet was also significantly strengthened during the year, with gross debt to earnings before interest, tax, depreciation and amortisation (ebitda) ratio now at 2.4 times from 4.6 times, below the original target of three times.

The group’s total subscriber base expanded to 120 million, up 34% from a year ago.

At its results briefing yesterday, president and group chief executive officer Datuk Seri Jamaludin Ibrahim said the 18 months of hard work with right strategies and clockwork execution since its demerger from Telekom Malaysia Bhd in 2008 were paying off as reflected in its strong set of results. He said its three operational companies performed very well with Celcom and XL doing better than most competitors.

The group’s ebitda grew 18% to RM5.2bil, while margin increased by one percentage point to 39.3% year-on-year, due to exceptional performance in XL and AxB, where margin improved by three and five percentage points respectively.

“It’s (the results) like a fairy tale for us. However, if we were to have any fairy tale ending, the happy ever after, we must continue to strive further,” Jamaludin said, adding that FY09 had been a “watershed year” for the group.

“We must build a foundation and we did that last year. This year, we’ll harness on this foundation.” he said.

Moving forward, Axiata would be maintaining its tight focus on capital discipline to sustain its strong performance.

Jamaludin said the group was expecting “good growth” on the back of improved macro economic conditions. However, he said the competitive environment in some countries would also be heating up.

Axiata may spend between RM4bil and RM4.5bil on capital expenditure this year mainly for infrastructure, Jamaludin said, adding that the group was still finalising its budget for the year.

To a question, he said the group was not planning a final dividend for FY09 as it wanted to retain the funds for growth. Jamaludin said Axiata planned to expand its overseas operations and infrastructure for mobile broadband services.

He said the group had no acquisition plans for now and would focus on organic growth. “We did look at some opportunities but they did not materialise.” On plans to dispose of non-core assets, group chief financial officer Datuk Yusof Annuar Yaacob said the disposal of some of these assets would be finalised by the first quarter of this year.

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MALAYSIA’S No 2 telecoms firm Axiata (6888) plans to divest its non-core assets to focus on its mobile business to stay ahead of rivals, the group’s chief executive said.

“Divestment of our non-core assets, which are our non-mobile assets, is something we are looking at,” Jamaludin Ibrahim said in an interview yesterday.

Axiata, valued at US$7.6 billion (RM25.92 billion), also operates mobile telecom services in Sri Lanka, Bangladesh, India, Indonesia, Singapore and Cambodia.

Some of its non-mobile assets are Multinet in Pakistan and Samart Corp and Samart I-Mobile in Thailand, Jamaludin did not provide any details on the planned value of disposals.

Axiata is not actively seeking acquisitions and prefers to grow its existing businesses organically, Jamaludin said.

“(Africa and the Middle East) is not high on our priority list. We are focusing on the South and Southeast Asian markets which offer low penetration and high growth potential.”

“We would consider something if the value is right and attractive,” he said.

Analysts said the upcoming listing of Maxis, Malaysia’s leading mobile phone services provider, will lead to a rebalancing of portfolio funds in the domestic sector and some fund managers might opt out of Axiata. – Reuters

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