TA Research said recent flooding in the South Asian nation could be another threat to Robi, Axiata’s 61.82% owned subsidiary.
PETALING JAYA: The shutdown of mobile services in Bangladesh for 11 days following recent social unrest there could have an impact on Axiata Group Bhd
’s revenue of about US$10mil.
TA Research said recent flooding in the South Asian nation could be another threat to Robi, Axiata’s 61.82% owned subsidiary.
Robi is the second-largest mobile network operator in Bangladesh.
“Despite all the ongoing challenges, especially in Bangladesh, Axiata’s management maintained its headline key performance indicators for revenue growth of mid-single digits and earnings before interest and tax growth in the mid-teens, based on continuing operations.
“Meanwhile, capital expenditure (capex) remained on track at RM6.1bil,” stated TA Research in a note.
RHB Research, meanwhile, said that while prepaid reloads have normalised in Bangladesh, some downside is expected in the third quarter of 2024 from ongoing floods affecting multiple regions.
On Edotco Group Sdn Bhd, Axiata’s telecommunication tower business, RHB Research said that management sees some respite on the timing of the recapitalisation plan, given better operational momentum, moderating capex, and the likelihood of lower interest rates.
“The impact from decommissioning of CelcomDigi Bhd’s 6,000 to 7,000 sites is expected to be compensated for by lease extensions and new built-to-suit orders.
“Management sees upside to co-location revenue with the second 5G entity riding on Digital Nasional’s network where close to 30% of sites are on Edotco,” the research house said.
Axiata owns a 33% stake in CelcomDigi.
According to Kenanga Research, Edotco is negotiating a mutually beneficial settlement with CelcomDigi in anticipation of the decommissioning of about 6,000 sites following CelcomDigi’s merger.
Although there may be a short-term financial impact, the settlement is expected to be cash-flow neutral for Edotco in the long run.
“This is underpinned by CelcomDigi’s organic expansion of 2,000 to 2,500 new sites over the longer term, which will result in new lease agreements for Edotco.
“Additionally, the financial impact will be partially mitigated via compensation for early termination of leases, contract extensions for remaining tenancies, and the replacement of terminated leases with new leases at a specified ratio,” the research house added.
Commenting on Axiata’s results for the first half of its financial year 2024 (1H24), Kenanga Research said the normalised net profit of RM371mil exceeded its expectations but was within consensus.
“The earnings beat our forecast, mainly attributed to the better-than-expected contribution from Edotco.
“Earnings expansion in 1H24 was largely driven by XL Axiata in Indonesia, and Smart Axiata in Cambodia, as the latter was lifted by subscriber growth, average revenue per user (Arpu) expansion and lower direct costs.”
UOB Kay Hian Research, which upgraded its call on Axiata to “buy”, described the telecommunication giant’s performance in the second quarter of 2024 (2Q24) as “solid”.
“Normalised earnings before interest, tax, depreciation and amortisation for 2Q24 grew 3% quarter-on-quarter and 13% year-on-year to RM2.83bil, largely contributed by XL Axiata, Smart, Robi and Edotco.”
