KUALA LUMPUR: Axiata Group Bhd posts more than RM5.0 billion net loss in 2018, no thanks to huge write-offs and impairments involving overseas units especially in India.
The group said its depreciation, impairments and amortisation totalled RM3.25 billion in the fourth quarter of 2018 and RM7.64 billion throughout the year.
The group made a RM1.66 billion net loss in the last quarter ended December 31, 2018 alone. This pushed its full-year net loss to RM5.03 billion, although group revenue remained stable at RM23.88 billion from the RM24.4 billion recorded in 2017.
Axiata president and group chief executive officer Tan Sri Jamaluddin Ibrahim said the headline numbers at a glance can be alarming and miscontrued, as it was almost all due to non-cash items that were purely accounting treatments as opposed to some fundamental performance.
“On the contrary, the underlying performance is very strong. It is also interesting as the very issue that caused the headlines could materially help us this year and in the years to come,” he said at its results briefing late Friday afternoon.
Still, Axiata can expect a tough trading day on Bursa Malaysia next week as investors respond to the poor results. The stock closed 1.16 per cent lower at RM4.25 on Friday.
A day before the results came out, news leaked that Axiata would be making a total technical impairment of about RM5 billion for the year.
The report by a local daily, quoting an industry source, claimed that the group was taking a hit for "future punch".
Jamaluddin said due to the massive accounting adjustments especially the reclassification of its Indian asset into the balance sheet, Idea Cellular Ltd’s performance would no longer drag its profitability.
“In fact, there are now more upsides given our belief in the long-term future of the merged company,” he added.
Axiata was originally a strategic investor of Idea with about 20 per cent stake over the last 10 years. The merger of equals between Vodafone India and Idea announced in March 2017 diluted the group’s stake at completion to below 10 per cent or 8.17 per cent to be precise.
Following the stake dilution, Axiata recognised a non-cash impairment charge of RM3.33 billion.
Jamaluddin is confident that the group would deliver better performance, barring unexpected and external factors.
Additionally, he said the 2G and other legacy network write-offs were expected to result in depreciation and amortisation savings around RM150 million to RM200 million per year, hence correspondingly improve its profitability.
“All these cloud our strong underlying fundamentals. This is one of the years where all six mobile subsidiaries performed the highest EBITDA growth.
“More importantly, we now have a huge tail wind from both the momentum from the operational successes across the group and the strong balance sheet from the M1 Ltd sale of RM1.65 billion on top of our RM5.1 billion cash balance,” he said.
Jamaluddin said it was allocating RM6.8 billion capital expenditure, which largely will be used to modernise its network and build new towers.
The group also sets key performance indicators of a revenue growth of three to four per cent, and EBITDA growth of between five and eight per cent.