For Celcom, GST has a nice ring to it

KUALA LUMPUR (Sept 12, 2013): Celcom Axiata Bhd is looking forward to the implementation of the goods and services tax (GST), which is widely expected to be announced in the upcoming Budget 2014 to be tabled in Parliament on Oct 25.

For one, telecommunication companies (telcos) like Celcom will save some money as they no longer have to pay the government out of their own pocket for the service tax that were supposed to be collected from the sales of airtime through pre-paid top-ups.

"The impact for us is positive. Today, we have to absorb the service tax and we won't be able to claim it back. But with the implementation of GST which we expect to happen in 2015, it's going to be value added to us," its CFO Chari TVT told reporters yesterday.

Telcos are at a stalemate over the service tax (on prepaid lines) issue, with some operators wary about raising prices amid rising competition, Celcom CEO Datuk Seri Mohamed Shazalli Ramly said.

"Some players want to use this as a competitive advantage (by absorbing the 6% service tax for pre-paid users) and some players want to pass it to the customers. We have not come to the position on how best we can do this and which route we want to take," he told a press conference to announce the group's latest quarterly results.

Shazalli said telcos are aggressively lobbying for more incentives and rebates to be included in the budget.

"We normally ask for incentives once we execute our programmes such as digital services and other new businesses.

We should be able to get some form of rebate to allow us to be a catalyst of digitising the whole Malaysia," he said.

Smartphone ownership on Celcom's network climbed to 3.57 million units in the first half this year, driven by aggressive sales of new device launches and bundles which pushed device sales to RM128 million.

"I would like to see a lot more digitisation effort in the country, to make sure the benefit is translated directly to Malaysians," Shazalli said.

Celcom, a unit of Khazanah Nasional Bhd-controlled Axiata Group Bhd, said quarterly sales sailed through the RM2 billion mark for the first time in the three months ended June 30, 2013 after it expanded 5% from RM1.92 billion a year ago.

It also marked the 29th continuous quarterly revenue growth for the group.

Net profit during the second quarter grew 4.3% to RM555 million from RM532 million previously.

On a six months basis, revenue increased 4.3% from RM3.83 billion to RM3.99 billion, while net profit grew 2.1% from RM1.05 billion to RM1.07 billion.

Earnings before interest, tax, depreciation and amortisation (ebitda) stood at RM1.78 billion, with a margin of 44.5%.

Shazalli said the target is to sustain full-year ebitda margin level at between 40% and 45%.

"We want to be the most profitable telco, as there is no point comparing who is bigger than the other based on revenue."