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Axiata Group Berhad | Annual Report 2016
MANAGEMENT DISCUSSION & ANALYSIS
020
Jan
Start of Year Exchange Rate:
4.2920
End of Year Exchange Rate:
4.4862
March 2016:
Sukuk Drawdown
March 2016:
Loan Drawdown
April 2016:
Ncell Acquisition
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
3.900
4.000
4.100
4.200
4.300
4.400
4.500
2016 IN REVIEW: GROUP PERFORMANCE
GROUP FINANCIAL ANALYSIS 2016
In 2016, Axiata faced challenges from both external events and internal operational weaknesses. Despite this, the Group registered its highest revenue to
date and surpassed the RM20 billion mark for the first time. During the year, Axiata also acquired a new mobile operations, Ncell in Nepal and completed the
first telecommunications merger in Bangladesh with the merger of Robi and Airtel. By end of 2016, both companies were integrated into the Group. The year
concluded with the Group's subscribers growing 16.4% Year on Year (YoY) to approximately 320 million.
Group Performance
The Group saw a revenue growth of 8.5% YoY to reach RM21.6 billion. This was mainly driven by higher revenue recorded by Dialog, Smart and Robi, as well
as contribution from Ncell. The fluctuation of the Ringgit Malaysia against all regional foreign currencies during the year had favourably affected the Group’s
translated revenue.
Data continues to see positive traction and drive growth in revenue with 34.7% increase YoY contributing to 29.2% of total Group revenue, a marked
increase of 5.7 percentage points (pp) from 23.5% in 2015, demonstrating that the Group-wide targeted data investment is paying off. This growth dynamic
is expected to continue at a faster pace for the coming years and will drive the future strategic investment of the Group. Mobile Voice services contributed
45.9% to total Group revenue, a marginal increase of 1.7 pp from the prior year.
The Group achieved double-digit growth in its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), increasing 10.0% to RM8.0 billion with
margin improving by 0.6 pp to 37.2%. The increase was mainly due to better contribution from Dialog, XL and Smart. Further to this, the completion of the
acquisition and consolidation of Ncell had contributed RM1.0 billion to the EBITDA of the Group.
The Group’s Profit After Tax and Minority Interest (PATAMI) for the year was RM504.3 million, a decrease of 80.3% YoY. This was attributed to three significant
factors; i) unprecedented external events ii) strategic investments for long-term growth including mergers and acquisitions (M&A) related costs which were
mostly one-offs and iii) underperformance of some OpCos and Associates.
In 2016, Ringgit Malaysia depreciated substantially against all regional foreign currencies and the US Dollar, which had negatively impacted the Group’s profits,
primarily due to US Dollar borrowings for the acquisition of Ncell. Despite disciplined management practices and effectively hedging almost 50% of US Dollar
exposed debt under stringent and forex controlled conditions, the fall of the Ringgit Malaysia against the US Dollar at about 14% during the year, led to net
forex losses of RM685.1 million.
FOREIGN EXCHANGE MOVEMENT OF USD AGAINST RM FROM JANUARY TO DECEMBER 2016
Source : Bloomberg