TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
XL books net losses on forex losses, ballooning costs
Publicly listed XL Axiata, the countryâs second-largest mobile operator, saw its first-quarter bottom line end in the red, mainly because of mounting expenses and losses on foreign exchange (forex) triggered by its huge US dollar debts after acquiring Axis Telekom Indonesia
Change Size
P
ublicly listed XL Axiata, the country's second-largest mobile operator, saw its first-quarter bottom line end in the red, mainly because of mounting expenses and losses on foreign exchange (forex) triggered by its huge US dollar debts after acquiring Axis Telekom Indonesia.
According to its latest financial release, XL Axiata reported Rp 766.94 billion (US$58.78 million) in net losses in the first three months of the year, a steep fall from last year's first-quarter net profit of Rp 378.98 billion.
The net losses were an extension of XL's annual net losses of Rp 891.06 billion in 2014, a significant drop from its Rp 1.03 trillion net profits in 2013, further putting the brakes on the company's upward trend witnessed in 2007-2012.
'We recognized net losses ['¦] mainly due to the weakening of the rupiah. The lower profit yoy [year-on-year] from the same period last year stems from the forex impact and also the impact of the Axis acquisition and integration completed in late Q1 of 2014,' the company said in its statement.
XL acquired Axis in March last year for $865 million, with funds raised through loans from its parent company, Axiata Group Berhad, and a number of banks.
XL's US-dollar denominated loans in its first-quarter report stood at $1.56 billion, up from $1.43 billion during the same period last year, while its local-currency debts rose from Rp 9.95 trillion to Rp 12.25 trillion.
With the rupiah weakening by around 15 percent in the past year, the surging debts incurred Rp 1.05 trillion of losses on forex in the company's January-March financial result, in contrast to Rp 477.67 billion of gains in the same period of the previous year.
XL saw its net revenue slightly corrected to Rp 5.48 trillion in January and March this year, from Rp 5.51 trillion in the first quarter of last year, further making it difficult for the company to mitigate the currency's volatility from affecting its bottom line.
A traditional low season in the industry and its weaker user base, down by 24 percent yoy to 52 million subscribers, played a part in the company's slow top-line growth.
Voice revenue ' according to the statement ' remained the company's financial backbone, but sales stayed flat at Rp 1.87 trillion. Meanwhile, its short message service and cell interconnection and roaming service sales plunged by 8 and 18 percent to Rp 1 trillion and Rp 642 billion, respectively.
Its data and value-added services, on the other hand, generated the company's Rp 1.67 trillion of sales during the first quarter, up by around 31 percent yoy, as its customers shifted to data-based services from traditional voice and SMS-based services.
The rising demand, however, led to the company recording around a 25 percent yoy increase in infrastructure expenses to Rp 2.25 trillion during the first quarter, further contributing to XL's net losses.
'This is due to higher rental expenses from network expansion to cater to the rise in data demand as well as higher frequency costs stemming from the Axis acquisition and integration,' the company said.
KDB Daewoo Indonesia, in its recently published research, said it was upbeat that XL could book a better margin in upcoming quarters and that the net losses were a brief post-AXIS acquisition disruption.
