Axiata slips into the red in Q2 on impairment provision

PETALING JAYA: Axiata Group Bhd fell into the red in the second quarter ended June 30, 2018 with a net loss of RM3.36 billion against a net profit of RM407.21 million in the same quarter last year, due to a one-off non-cash impairment provision of RM3.4 billion as a result of the de-recognition and reclassification of Idea Cellular Ltd from associate to simple investment.
Revenue for the quarter under review declined 3.16% to RM5.87 billion from RM6.06 billion on the back of the impact of foreign exchange translation due to the strengthening of the ringgit against the local currencies of its operating companies.
The telco has proposed to declare an interim dividend of 5 sen per share for the quarter under review.
Axiata president & group CEO Tan Sri Jamaludin Ibrahim said the approvals for the merger between Idea Cellular and Vodafone India Ltd is at its final stages and all of its operating companies have shown particularly strong underlying growth in revenue and earnings before interest, taxes, depreciation, and amortisation (ebitda).
"Our PATAMI (profit after tax and minority interest ), however, was affected by higher depreciation and amortisation charges due to our aggressive capex (capital expenditure) in data investment in the previous years. I am also pleased to note that our new core digital businesses are starting to contribute to the group's top line," he said.
"Our group-wide cost optimisation programme successfully delivered RM800 million in savings giving us a comfortable runway to achieve our full-year target of RM1.4 billion. Ebitda expanding more than revenue, reflects this. We are committed to staying on this path to ensure we hit the RM5 billion cost reduction target over the next five years," he added.
Barring any unforeseen circumstances, Jamaludin said the group is expecting a positive year with solid performances from its operating companies.
Celcom's core focus ahead is to continue to improve its margins through cost efficiency initiatives. Axiata is also expecting industry recovery following price wars in Cambodia and the SIM registration exercise in Indonesia while its South Asian operations and edotco are expected to continue their strong performance.
"As we have ceased equity accounting of Idea, we expect PATAMI to return to its normalised run rate each quarter. As a pure financial investor in the largest player in the Indian market, the group is better positioned to review and assess the value of its investment in Idea," he explained.
For the first half of the year, Axiata reported a net loss of RM3.5 billion against a net profit of RM646.22 million in the same period last year, while revenue fell 2.72% to RM11.62 billion from RM11.94 billion.