XL reports another loss as network costs soar

A sharp increase in infrastructure costs and falling data prices pushed XL Axiata to a
net loss of IDR901 billion ($74 million) for the first nine months of the year.
While its revenue grew 11 per cent to IDR17.6 trillion for the Jan-Sept period, operating
expenses rose 19 per cent to IDR11.2 trillion. A 43 per cent jump in infrastructure costs
was the key contributor, but salary and employee benefits were also up 25 per cent.
In the first half of the year, XL reported a loss of IDR483 billion ($41.3 million), which it
attributed to higher interest on loans related to its March acquisition of Axis as well as
higher forex losses.
The companys EBITDA fell 1 per cent to IDR6.32 trillion and EBITDA margin declined
from 40 per cent a year ago to 36 per cent. AmResearch said the operators margin is
unlikely to return to 40 per cent in the near future, but the latest result was likely the
bottom for XL and it expects a gradual improvement from Q4 onwards.
In an effort to reduce its network expenses, XL announced a month ago it would sell
3,500 telecoms towers to infrastructure player Solusi Tunas for IDR5.6 trillion ($460
million) in an all-cash deal. The transaction isnt due to close until the end of the year.
According to AmResearch, the operator has held back expanding its 3G network until it
has fully integrated Axis network since it preferred to redeploy Axis equipment. The
analyst firm said this has limited XLs ability to capture growth in areas with high 3G
demand.
XL, the second largest player in Indonesia with a 21 per cent market share, said it
completed the integration in Q3.

The number of 3G base stations increased just 5 per cent while 2G sites were up 22 per
cent. Capex during the period actually decreased 9 per cent compare to 2013.
Data revenue during the period rose 43 per cent to ID$4.56 trillion, with data
contributing to 28 per cent of total service revenue. Data traffic expanded 136 per cent,
after it introduced the Internet Super Unlimited plan aimed at new data users, but
revenue per megabyte dropped 40 per cent. Voice and SMS revenue rose 4 per cent to
IDR9.49 trillion.
XL expanded its data connections to 31.2 million or 53 per cent of its subscriber base. It
also increased its postpaid user base by 24 per cent to 412,000 from a year ago but its
prepaid connections were flat at 57.8 million. Its overall connections remained at almost
the same level as last year (58.3 million). Prepaid ARPU fell 4 per cent to IDR25,000
($2.05) while postpaid ARPU declined 13 per cent to IDR118,000 ($10.70).
The company increased its workforce by 9 per cent to 2,190.
Reference:
XL Axiata PT axis capital group telecom jakarta Indonesia