Reduced spectrum won’t affect Celcom

KUALA LUMPUR: Axiata Group Bhd, which has allocated its highest ever capital expenditure (capex) of RM5.7 billion for the financial year ending Dec 31, 2016 (FY16), will ensure that its competitiveness is not undermined despite a lowered spectrum allocation for subsidiary Celcom Axiata Bhd.
President and group CEO Datuk Seri Jamaludin Ibrahim said its strategy for Celcom is to strengthen its financial performance which has been hampered by flat growth in the Malaysian market.
This year, he said, Celcom plans to launch more data products and to maintain its leadership position with aggressive rollout of more LTE and data-related network.
"It (spectrum reallocation) won't affect the performance and revenue (of Celcom) because we're determined to spend more than before," he told a press conference after announcing the group's fourth quarter results here yesterday.
Celcom will see a loss of 7MHz of 900MHz spectrum band and 5MHz of 1800MHz spectrum band in the recent spectrum reallocation by the Malaysian Communications and Multimedia Commission.
With less spectrum, Jamaludin said, capital expenditure will be increased, as it needs to spend more to roll out sites and equipment planned.
"We have two choices, whether to moderate our rollout and not have the best network, or to spend more money to get the best network in the industry. We want the latter," Jamaludin explained.
Celcom Axiata is expected to spend an additional RM1 billion to RM2 billion over the next 10 years for sites and equipment required to achieve the company's long-term goal for network quality and coverage.
Jamaludin said Axiata has RM5.5 billion cash that can help fund growth, with gross-debt to ebitda ratio of 2.25 times. He is hopeful that more spectrum will be available in the future for the 2300MHz, 2600MHZ and 700MHz bands.
Jamaludin said its FY16 capex of RM5.7 billion has factored in the proposed acquisition of an 80% stake in Nepal's Ncell Pte Ltd, which has received approval from shareholders yesterday. The exercise will cost US$1.37 billion (RM5.67 billion).
The capex will also be utilised for network and base stations, fibre rollout, as well as IT investments.
"As data continues to grow, it's necessary for us to make those investments," said group CFO Chari TVT, adding that in FY15, Axiata spent RM4.8 billion in capex.
Axiata also announced its FY16 headline key performance indicators (KPI), including revenue growth of 12.2% and ebitda (earnings before interest, taxes, depreciation and amortisation) growth of 16%.
Compared with its FY15 headline KPIs, at constant currency, the group recorded flat revenue growth and ebitda decline of 2.2% year-on-year. At actual currency, group performance was positively impacted by the depreciation of the ringgit.
For the fourth quarter ended Dec 31, 2015, Axiata registered a net profit of RM467.24 million, 22% lower than the RM599.24 million a year ago due mainly to higher depreciation and amortisation charges as well as higher net finance costs, one-off expenses and taxes.
Its revenue however, jumped 11.4% to RM5.36 billion from RM4.81 billion due to better revenue from Indonesia, Sri Lanka, Bangladesh and Cambodia and a weaker ringgit.
For FY15, its net profit increased 8% to RM2.55 billion from RM2.36 billion driven by Sri Lanka, Cambodia and its affiliates in India and Singapore as well as forex translations gains and one-off tower gains in Indonesia. Ebitda grew 4.1% to RM7.3 billion with an ebitda margin of 36.6%.
Revenue rose 6.3% to RM19.88 billion from RM18.71 billion in the previous corresponding period.