XL Performance is Promising in First Quarter 2016

Dian Siswarini (dok)

JAKARTA (IndoTelko)  – PT XL AxiataTbk (XL) announced its audited results for the first quarter ending March 31st 2016.

President Director/CEO of XL, Dian Siswarini said “We have made a promising start to 2016 with further improvements in our operating and financial performance and we hope to build momentum as we execute on our Transformation Agenda.”

XL posted revenue growth of 2%YoY in 1Q 16driven by growth in the core usage revenue of 5%YoY with a solid performance by the Data (up 23%YoY) segment.

The biggest improvement was in Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) which increased 17% YoYto Rp2.2 trillion resulting in an EBITDA margin of 39% up 5 percentage pointsYoY. The increase was mainly due to positive impacts from the reshape of the customer base to focus on the more profitable subscribers as well as efforts to improve profitability of the product portfolio. This is also the fourth consecutive quarter of EBITDA and EBITDA margin improvement.

4G LTE is a key part of XL’s mobile internet leadership strategy to meet consumer’s demand for high-speed internet. Thus XL’s 4G LTE footprint is now at 3,286 sitesas at end 1Q 16 with presence in over 36 cities and areas. XL also continues to invest in improving its network quality and coverage with more than 18,000 3G Node Bs at the end of March 2016 taking total BTS site footprint to 59,040.

In line with this strong take-up of 4G LTE and the increased adoption of data enabled phones have led to continued strong growth in data traffic. Data traffic grew by 94%YoY in 1Q 16 compared with the same period last year with total Data users at 22.8 million or 54% of the total base.

The growth of smartphones has continued to drive the increase in Data adoption in Indonesia. XL’s smartphone penetration has grown to a penetration of 48% of its base as at end of 1Q 16. XL smartphone users grew 19%YoY and reached 20.5 million users.

During the quarter, XL increased its choices forHotRod 4G packages which offer LTE quotas at affordable prices so that customers can experience high-speed quality internet services. Throughout the year, XL also continued to drive customer adoption of 4G enabled handsets in-line with its transformation agenda of targeting higher-value subscribers by offering bundling options with various smartphones from Apple,Samsung, Xiaomi, Alcatel, Lenovo, LG, and Sharp

XL during the quarter also relaunched its Postpaid product offering as XL Prioritaswhich offers simplified data-centric plans with 4G LTE quotas as part of a bundled offering to appeal to the higher value customers and to further elevate XL’s brand positioning in the market. XL also increased its suite of services to include content through partnerships with Tribe and MNC’s Indovisionto offer attractive streaming services for Indonesian content and popular content such as Korean dramas as well as live sports to its customers.

During 1Q 16, XL had a paid capex of Rp1.1trillion on efforts to expand its Data infrastructure and mobile services which was funded via internally generated funds. Total debt decreased to Rp25.2trillion from Rp30.2 trillion a year ago while Net Debt/EBITDA decreasedto2.6xfrom2.8x.

For the 1Q 16 period, XL recorded a net profit of Rp 20 billion which was positively impacted by the strengthening of the Rupiah against the USD.

In tandem with the improved financial metrics, XL has successfully continued to execute on its Balance Sheet Management objectives to both reduce gearing and minimize the impact of forex fluctuations. This is through the announcement of the rights issue which has been approved by shareholders to repay the USD shareholder loan from Axiata as well as the second tranche of agreed sale of 2,500 towers to Protelindo for Rp 3.6 trillion which will be used to repay IDR debt. The completion of both exercises in the 1H of 2016 will see XL’s gearing levels move back to pre-Axis levels

XLis in year two of the implementation of its“3R – Revamp, Rise & Reinvent” transformation agenda implemented at the start of 2015. To recap, the transformation involves: Revamp - to shift subscriber acquisition (from largely ‘no value’ to ‘value’ subs) & distribution strategies as well as a total overhaul of the product portfolio to improve yields. Rise – moving the XL brand up the value ladder and via a dual-brand strategy with Axis to address different segments of the market. Reinvent – going beyond today’s business model.

The rationale for this transformation is to adapt to the changing market dynamics and focus on value creation as XL seeks to build a more sustainable business for the future.(es)