XL Axiata books first-half loss in wake of Axis purchase

22 Aug 2014

Indonesia’s second largest mobile operator by subscribers, XL Axiata, slipped into the red in the first half of this year, as rising costs, currency fluctuations and the acquisition of indebted fellow operator Axis Telekom Indonesia ate into its bottom line. For the six months ending 30 June 2014, the company reported a net loss of IDR482.52 billion (USD41.26 million), reversing a net profit of IDR670.43 billion in H1 2013. On a positive note, XL said revenue climbed by 12.2% year-on-year to IDR11.55 trillion from IDR10.20 trillion a year ago, which was a sharp increase when compared with the 1.7% growth it booked in H1 2013. Nonetheless, XL’s rising sales failed to offset its rising cost base and the effects of currency volatility, its president director Hasnul Suhaimi said. Operating costs climbed almost 19% y-o-y to IDR7.28 trillion from IDR6.13 trillion in the same period of 2013, with infrastructure costs alone rising 42.7% to IDR4.01 trillion. Furthermore, in sharp contrast to its Q1 2014 performance – where forex gains boosted net income – the group incurred foreign exchange losses of IDR516.1 billion in the second quarter, it said, and net financing costs rose nearly 80% to IDR727 billion due to additional loan funding to purchase Axis. At end-June, XL Axiata’s US dollar-denominated debt reached USD1.57 billion, compared to USD310 million at mid-2013.

Despite falling into the red though, XL says it has increased its subscriber base and boosted data traffic – key factors in the growth of first-half revenue. At 30 June the company reported a total of 62.9 million mobile subscribers, up 16% y-o-y, of which data subscribers stood at 32.2 million (or 51% of the overall total), and smartphone users accounted for 21% (13.3 million).

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