Axiata Q2 pre-tax profit up 57.9pc

From The Business Times:

AXIATA Group Bhd's pre-tax profit for the second quarter ended June 30, 2009 rose 57.9 per cent to RM878.621 million from RM575.382 million in the corresponding quarter of 2008.

Its revenue increased eight percent to RM3.163 billion from RM2.930 billion previously.

For the six-month period, its pre-tax profit fell to RM1.070 billion from RM1.214 billion in the corresponding period of the previous year.

Revenue, however, rose to RM6.030 billion from RM5.651 billion previously.
In a filing with Bursa Malaysia, Axiata said its revenue for the second quarter, grew due to the higher contribution from Celcom and Axiata (Bangladesh) Ltd (AxB).

In local currency, Axiata said its Indonesian operations recorded a positive quarter-on-quarter revenue growth.

But in terms of ringgit translated results, XL’s revenue in the current quarter declined by two per cent against that of the corresponding quarter in 2008 due to the depreciation of the Indonesian rupiah against ringgit.

In local currency, its Sri Lankan unit, Dialog, and Telekom Malaysia International (Cambodia) Company Limited (TMIC) recorded a quarter-on-quarter revenue decline of 3.5 per cent and 17.4 per cent respectively.

A downward tariff revision by Dialog in the fourth quarter 2008 continued its adverse effect on revenue in the second quarter of 2009, it said.

TMIC’s operations continued to be challenging with nine operators in the market.

The major operators face intense competition on pricing and new operators are offering free SIM cards and minutes to capture market share, it said.

The strengthening of the ringgit against domestic currencies of operating companies (OPCO) has unfavourably affected the Group’s translated revenue in the second quarter 2009.

At constant currency, the second quarter 2009 revenue would have registered a growth of 8.6 per cent, it said.

On prospects, it added the macro backdrop for 2009 is one of weakening economies and uncertainty.

It stated that as such, the Group would adopt a prudent approach by focusing on cost management whilst continuing to lay the foundation towards achieving long term aspirations of becoming a regional champion.

The Group also indicated it would continue to have a strong focus on continued operational efficiencies at the major subsidiaries whilst preserving the momentum of sequential improvements.

Bangladesh is an anomaly for a country export oriented south east Asia. Personal consumption takes up 75% of GDP. Personal consumption generally isn't as volatile as exports. Therefore it does make sense that Bangladesh would not be as affected in the downturn and would rebound strongly.

Sri Lanka has been trying to get itself out of a civil war and may also have incredible growth potential. Cambodia is more of the typical run of the mill export oriented south east asian economy and therefore has suffered. Overall for Axiata, it is hard to say, I haven't looked deep into where their revenue comes from. Although, it's hodgepodge of companies may actually perform better than at first glance.

Most people will say, Axiata's southeast Asian telecoms will all do horrible. South East Asia is hit the hardest in the crisis. But looking at the favorable outlook for Indonesia, Sri Lanka, Bangladesh, Axiata might perform better than expected.