Overseas sales, one-off gain help lift Axiata profit

Published: 2010/05/28

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MOBILE phone network operator Axiata (6888) yesterday reported better-than-expected first-quarter net profit, helped by higher sales from overseas units and a one-off gain.



Axiata, which owns telco assets in fast-growing Asian countries like Sri Lanka, Indonesia, Bangladesh and India, net profit rose 14-fold to RM921.5 million for January-March, versus RM63.9 million a year ago.



Axiata's earnings were bolstered by net gains of RM307.5 million from the partial disposal of Indonesia's PT XL Axiata. The ringgit's depreciation against the rupiah also helped to boost revenue, it said.



First-quarter net profit accounted for about half of the RM1.96 billion consensus estimate for the full year.

Axiata said it was on track to meet its financial performance targets for the year ending December 2010.



"A prudent approach focusing on cost management and operational improvements will continue to be the key focus as the group sees execution benefits of such a strategy amid an uncertain environment," the company said in a statement.



Indonesia's XL Axiata and Colombo-listed Dialog Telekom recorded strong revenue growth in the first-quarter.



Axiata owns 67 per cent of XL and 84 per cent of Dialog.



XL expects to overtake rival Indosat this year as the No. 2 mobile phone operator in Southeast Asia's biggest economy, driven by strong subscriber and revenue growth, a senior executive said in March.



Some analysts say high capital requirement demands from Axiata's regional operations may delay its plan to pay out its first dividend since it was demerged from fixed-line operator Telekom Malaysia Bhd in 2008.



India's Idea Cellular, a 20 percent-owned associate, this month won third-generation (3G) spectrum in 11 circles for US$1.3 billion (RM4.3 billion). Idea, India's fifth-biggest mobile operator, currently operates a total 22 circles in India.



Prior to the earnings, 14 of 23 analysts tracked by Thomson Reuters I/B/E/S rated Axiata as a "buy", with seven calling it a hold.



Shares of Axiata have gained 21 per cent so far in 2010, compared to the 0.3 per cent loss in the benchmark FBM KLCI. - Reuters





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