Axiata’s earnings to be supported by monetisation
PETALING JAYA: Axiata Group Bhd ’s earnings are expected to be supported by its excellent prospects of monetising its multiple businesses, says AmInvestment Bank Research.

On a year-on-year basis, Axiata’s 66.5%-owned XL Axiata’s (XL) average revenue per user (Arpu) rose by 8% to 43,000 rupiah.

This was against the backdrop of XL Satu’s home subscribers increasing 91% year-on-year (y-o-y) to 235,000 with the acceleration of coverage penetration which increased to 75% in financial year 2023 (FY23) from 37% in FY22.

XL Satu’s coverage widened to 86 cities from 30 cities in FY22.

“Quarter-on-quarter (q-o-q), XL’s profit after taxation and minority interest for the fourth quarter of FY23 (4Q23) slid 26% to 266 billion rupiah despite a revenue growth of 4% due to an 88 billion rupiah one-time prior tax adjustment in 4Q23 besides a higher infrastructural charge (up 12% q-o-q) and overhead cost (up 174% q-o-q).

To account for XL’s commendable FY23 net profit of 1.28 trillion rupiah (up 15% y-o-y), which is 14% above AmInvestment Bank Research’s estimate, the research house raised its forecast for Axiata’s FY23 to FY25 earnings by 9% to 27%.

“The upbeat results stemmed mainly from an impressive revenue growth of 12% y-o-y from a successful monetisation strategy encompassing price adjustment of starter packs and enhanced digital customer experience.

“The number of monthly active users of myXL apps and AXISnet apps doubled to 29 million users from 15 million in 2021, supporting a healthy traffic growth of 21% y-o-y and retention of 58 million quality subscribers,” the research house said.

Going forward, AmInvestment Bank Research said XL is guiding for high-single -digit revenue growth, earnings before interest, taxes, depreciation and amortisation margin of 50% and capital expenditure (capex) of eight trillion rupiah for FY24.

“Nevertheless, the guidance does not take into account the upcoming contribution from LinkNet’s retail broadband subscribers.

“XL’s acquisition of LinkNet’s 750,000 retail broadband customers is still subject to Otoritas Jasa Keuangan’s approval and slated to be completed in the first half of 2024,” the research house said.

AmInvestment Bank Research said it views Axiata as a regional operator with excellent prospects of monetising its multiple businesses, given that XL accounts for 17% of Axiata’s sum-of-parts.

“We remain cautious on Axiata’s prospects amid rising macro-economic headwinds as the group’s finance costs would still increase due to additional debt financing for Link Net’s fibre rollout, digital banking start-up losses and capex expansion of edotco in the Philippines,” the research house said.
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Axiata Group Bhd’s earnings are expected to be supported by its excellent prospects of monetising its multiple businesses, says AmInvestment Bank Research.