KUALA LUMPUR: Axiata Group Bhd is allocating RM7.1 billion capital expenditure (capex) for the financial year ending December 31, 2022 (FY22) as the telecommunications group accelerates its expansion in Bangladesh and Indonesia.
President and group chief executive officer Datuk Izzaddin Idris said the bulk of the allocation was to improve Axiata's mobile network quality of services.
There was growth opporutnty in markets like Bangladesh and Indonesia due to low penetration rate of mobile users, he added.
"Our capex is substantially financed from our operations and free-cash flow. Looking at the current cash-flow level, there is no need to raise debt to finance our capex," he said at a virtual media conference after announcing Axiata's group FY21 performance yesterday.
Axiata outpaced its headline key performance indicator guidance of low single-digit earnings growth for the year ended December 31 2021.
The group saw its net profit surging 124.3 per cent year-on-year (YoY) to RM818.90 million from RM365.15 million in FY20, while revenue rose 7.02 per cent to RM25.90 billion from RM24.20 billion.
It previously targeted earnings before interest and taxes (Ebit) and revenue growths of 8.5 per cent and 8.3 per cent respectively.
Izzaddin expects Axiata to achieve a middle single-digit revenue growth and high single-digit Ebitda growth in 2022 in view of prevailing tough external conditions.
For the fourth quarter, Axiata returned to the black with a net profit of RM116.02 million, reversing its net loss of RM255.96 million a year ago.
Its revenue increased 10.2 per cent to RM6.90 billion from RM6.26 billion.
Group chief financial officer Vivek Sood said Axiata would continue to accelerate its investment in Indonesia, with good prospect of expanding its footprint in the market.
The group's unit, edotco Group Sdn Bhd, could also require more capex in accordance with the actual orders of tower coming in Myanmar.
Izzaddin said the group's gross gearing level stood at RM19 billion as of December 2021, translating to a gross debt to Ebidta of 2.56 times
He said the group had planned to pare down debt by raising US$1 billion and US$500 million worth of bonds for 10- year and 13-year maturity period.
"Hence, our average debt maturity is around 8.9 years. 37 per cent of our debt matured in 2022 and 2023 respectively, and most of the debt is working capital involving credit in nature and that gets refinance."
Nonetheless, he said the group's current debt level at "comfortable" level.
Vivek said the group's earing on Ebidta stood at 1.95 times, which includes lease liabilities.
"If we were to exclude the lease liabilities, then our net gearing level stood at 1.3 times or around RM10 billion on lease liability."
He said the group would be keen on expansion mode, leveraging on growth coming from key business lines
"These growth should translate into increase ebidta and that should give headroom from the gearing standpoint, allowing us to borrow more to drive growth," he said, adding that the group's net debt to equity stood at 0.8 times, equivalent to RM12 billion.
On the completion of merger between unit Celcom Axiata Bhd and Digi.Com Bhd, Izzaddin said integration was the key.
"We have assembled a team of about 85 personnel between Digi and Celcom. They have been working on the integration plans. This is permissible, although the view has not been approved, or anything like that there are legal boundaries where these people work in, and so on.
"We are careful to make sure that sensitive commercially sensitive information doesn't go across. It's all about planning for integration. We hope the Malaysian Communications and Multimedia Commission (MCMC) will be able to wrap up its evaluation.
"We have been constantly engaging with the MCMC personnel to make sure that all their concerns are addressed. They have got consultants on board, verifying and validating the information."
He said there had been several engagements between the MCMC, Celcom as well as Digi.
"We are hopeful to get a decision in due course. Even I myself have been discussing the progress that MCMC is making with this evaluation of the proposal. So far as that merger is concerned, it is working in progress."
On the potential listing of edotco and Boost, Izzaddin said it would be dependent on the market condition and state of readiness to listing.
For edotco, he said the group was vigilant on ow the market would react in Myanmar
"We try to have a good investor base, good and sustainable valuation. We need to tackle the fundamental issue. Currently, edotco is in good position to raise capital to do share acquisition to this expansion. There is no restriction for edotco to raise capital."
For Boost, he said the value would be enhanced if Axiata secured the digital bank licence.
"However, the reverse will apply. If we list Boost on the pretext of having a digital bank licence and we don't get digital bank licence then we will be in a bit of trouble," he added.
