Release Date: November 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Axiata Group Bhd (AXXTF, Financial) reported a significant improvement in leverage, with net debt to EBITDA reduced to 2.59 from 3.36 at the beginning of the year.
- The company achieved a 37.7% improvement in earnings before interest and tax, driven by strong operational performance and effective cost management.
- Axiata Group Bhd (AXXTF) reported strong cash flows of nearly 2 billion, supported by disciplined CapEx and OpEx management.
- The company successfully executed a merger between Dialogue and Intel in Sri Lanka, progressing ahead of schedule.
- Axiata Group Bhd (AXXTF) experienced strong growth in its digital bank, Boost, with a year-to-date revenue growth of 18.8% and a significant reduction in losses.
Negative Points
- The company faced challenges in Bangladesh due to social unrest and internet shutdowns, impacting revenue.
- Axiata Group Bhd (AXXTF) reported a decline in revenue in Indonesia due to heightened competition and market softness.
- The company is experiencing intense market competition in Malaysia, affecting its market position.
- Axiata Group Bhd (AXXTF) is facing macroeconomic headwinds in Sri Lanka and Bangladesh, which continue to pose challenges.
- The company is dealing with higher net financing costs and taxation, partly offsetting the gains from forex and operational improvements.
Q & A Highlights
Q: Can you clarify how much of the debt reduction is from repayment and how much is from the stronger Ringgit? Also, with the USD strengthening, will we see higher total debt in the fourth quarter?
A: The repayment done this year was 1.2 billion Ringgit, accounting for about 20% of the net debt movement. The remaining 80% was due to the strengthening of the Ringgit. The stronger Ringgit negatively impacts translation for us, affecting both the debt and EBITDA. With the Ringgit weakening this quarter, the impact will be seen on the debt. (Answered by CFO)
Q: With monetization efforts, will the focus be on returning cash to shareholders or on de-gearing the balance sheet?
A: The primary objective is to pay down debt and maintain a sustainable balance sheet to generate steady dividend flow with progressive growth. We aim for sustainable dividends rather than one-time gains. Efforts, including bond buybacks, are focused on reducing dollar exposure at the group level. (Answered by CEO)
Q: What was the startup cost for the digital bank in the third quarter, and how do you see this trending?
A: The digital bank incurred a loss of 45 million Ringgit year-to-date, with the majority in the third quarter. We expect a run rate of 20-25 million Ringgit per quarter in losses, with profitability anticipated in three years. (Answered by CEO)
Q: Can you provide more details on the merger of Excel and C Masss in Indonesia?
A: The due diligence is nearly complete, and we are negotiating the definitive agreement. The process requires approvals from local boards and authorities. While nothing is certain, we are progressing in the right direction. The long stop date for the agreement is March next year. (Answered by CEO)
Q: Considering the macroeconomic headwinds, what is your outlook for Sri Lanka and Bangladesh?
A: Both markets are fundamentally strong with positive market structures. Sri Lanka is stabilizing, and Bangladesh remains a strong second player. However, Bangladesh is in a wait-and-watch phase due to recent developments. We are confident in the resilience built over the last two years. (Answered by CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
