Notes

XL Axiata Reports Net Loss in 1Q 2015


A net loss of IDR 758 billion (USD57.8 million) has been reported to be the total net loss of XL Axiata, a subsidiary of Axis Capital Group and one of the three biggest telecommunications network in Indonesia along with Indosat and Telkomsel for the first three months of 2015 ending on the 31st of March.

XL Axiata said that the lower profit was due to the impact of forex fluctuations and its acquisition and integration of Axis, which was completed in the first quarter of 2014. Many believe that the move to sell some of its towers on the latter part of 2014 was already a warning on its own that the company is having issues in maintaining its cash flow.

Revenue for the three months under review flat-lined at IDR5.499 trillion, compared to IDR5.526 trillion in the 1st quarter of 2014, of which cellular telecoms services contributed the lion’s share (95%), at IDR5.249 trillion – up 3% year-on-year. The carrier said its mobile performance was boosted by a 29% rise in income from data services, which now contribute 32% of its total turnover, up from 26% a year ago. EBITDA nose-dived 15% to IDR1.877 trillion from IDR2.201 trillion, however, as a result of the impact of consolidation costs related to its Axis takeover, and pre-tax losses of IDR1.011 trillion were in sharp contrast to the IDR592 billion pre-tax profit booked in the first quarter a year earlier. 1Q15 CAPEX stood at IDR1.211 trillion, down 31% y-o-y, of which the focus was on expanding its data infrastructure and mobile services.

On April, 2015, XL Axiata CEO Dian Siswarini, who has replaced Hasnul Suhaimi at the helm, set out her stall to upgrade the company’s data services and strengthen its brandings – XL and Axis – as it looks to fend off rivals in an intensely competitive market. The newly appointed CEO told journalists: ‘The telco industry is facing a very challenging year, with voice calls and SMS dropping significantly. Therefore, we have to improve our data service in the future,’ before going on to point out that as data services are much more ‘segmented’ than voice services, XL must ‘identify consumers’ needs and how to satisfy them’. According to the cellco’s internal figures, data traffic exploded last year, climbing 126.7% to 123,824TB from 54,615TB in 2013.

Despite the constant increase in the number of subscribers especially in Jakarta, analysts say that the company has to deliver new and fresh strategies to reach wider subscribers. XL’s competitions have already reached some of the most remote places and island in the archipelago and many people believe that the company will do the same soon. The focus will also be on the improvements on both 3G and 4G data developments.