Axiata said its 'Shifting Gear' strategy launched at the end of 2018 is starting to bear fruit, with a solid improvement in Q2 results. Revenues rose 3.7 percent year-on-year to MYR 6.2 billion, EBITDA increased 13.1 percent to MYR 2.3 billion, and net profit improved 12.2 percent to MYR 250 million.
Revenue growth came from all units apart from Celcom in Malaysia and Nepal's Ncell. EBITDA was driven by double-digit growth at Robi, XL, Edotco and Smart, the operator said.
As a result of the good first half, Axiata said it expects to exceed its targets for full-year EBITDA growth and ROIC, which were originally set at 5-8 percent and 5.2-5.6 percent respectively. Revenue growth is still forecast at 3-4 percent in 2019, while capex will likely come in below the initial budget of MYR 6.8 billion due to ongoing capex rationalisation. Axiata proposed a stable dividend of 5 sen per share for the financial year.
The Malaysian subscriber Celcom posted service revenues down 4.1 percent in H1 amid a "subdued industry environment", but still grew EBITDA 4.7 percent year-on-year thanks to cost discipline, Axiata said. Celcom is focusing more on profitable segments and increasing data revenue, which led to a MYR 1 increase in postpaid ARPU in the period and prepaid ARPU up by MYR 3 compared to Q1. The number of customers continued to fall at Celcom, down by 172,000 in Q2 alone to 8.776 million. This included 28,000 postpaid net adds.
Cambodia's Smart performed better, with revenue up 12.3 percent and EBITDA growing 14.6 percent in the first half. Bangladesh's Robi also returned to a net profit and positive free cash flow in the period, with EBITDA up 70.5 percent thanks to synergies from its merger with Airtel and service revenue growing 11.3 percent year-on-year, driven by strong data growth of 30.4 percent.
Nepal's Ncell continued to struggle, with revenue down 5.7 percent after changes in Telecom Service Charges in July 2018 and a 13.7 percent drop in ILD revenue. Network expansion led to a 42 percent fall in free cash flow. Ncell had 16.59 million customers at the end of June, an increase of 167,000 from three months earlier, and ARPU increased to NPR 286 in Q2 from NPR 272 in Q1.
At the infrastructure arm Edotco, revenues rose 20.9 percent to MYR 875 million, helped by acquisitions in Malaysia and Cambodia and organic growth. Adjusted EBITDA grew 29.4 percent to MYR 453 million, leading to a 3.4 point improvement in the margin to 51.8 percent. The towers operator had a stable tenancy ratio of 1.6x, and the increase in EBITDA drove a doubling in free cash flow.
