Good afternoon, ladies and gentlemen. My name is Clare Chin, Head of Investor Relations at Axiata Group. Thank you for standing by and welcome to Axiata's fourth quarter 2023 results briefing. Apologies for the slight delay. Today we have present with us Vivek Sood, Group CEO of Axiata Group; Dr. Hans Wijayasuriya, CEO of Telecom; Nik Rizal Kamil, Group CFO; as well as representatives from our operating companies. There will be a short presentation followed by a Q&A session. So without further ado, I will now hand the conference over to Vivek.
Thank you, Clare. Very good afternoon, good morning, good evening, wherever you are. Welcome to the quarter four 2023 result presentation. On my right is Dr. Hans, who heads the telecom business as well as the HES and HED, and on my left is Nik Rizal, who's the new Group CFO, CFO on the block, job which I did some time back. Welcome, Nik. This is your first
Thank you.
Presentation for the, for our results. Let me go through first couple of slides, and then I'll hand over to Nik, and then Hans will take over from Nik to go more into details if required. 2023 has been an interesting year where we did pursue some of the strategies which we had put in place, and some of those things are still work in progress, and some of them have been executed well. Having said that, the business actually now looks a little different because of the fact that two of the markets we decided to exit. One, as you're aware, Nepal on 1st December, we sold the operations of Ncell, and now we've decided to exit EDOTCO Myanmar, while from an overall Axiata standpoint, it is less than 3% of net assets. However, from EDOTCO perspective, it was a substantial co-contributor.
But the reason of exiting these two markets has been the uncertainty and deteriorating operating environment in these two countries. I mean, as you'll remember, Nepal, we did say that uncertainty and unfavorable environment for foreign investors. Similarly, we do think the current situation would further deteriorate the operating environment in Myanmar. Having said that, we expect us to exit over the next 12 months period. Because of that, we do talk about our results for 2023 into two parts. One is the continuing operations, which is excluding Ncell and EDOTCO Myanmar, and combined operation reports, which is basically looking at the financial numbers based on how that has been reported to the stock exchange, as well as underlying results, which is after adjusting for the non-cash impairment coming out of these two assets, which we disposed are or are in the process of disposal.
So let me start with the continuing operations. I think, our businesses have been quite resilient and have been quite strong in their performance in 2023. The revenue growth on continuing businesses was 9.9%, and the EBITDA growth was 11.7%. Other than the, digital businesses where the priority focus has been around profitability and also now investments coming into the digital bank in Malaysia, all other businesses, telcos specifically, did extremely well. And all the telcos, saw, increase in market share as well as improvement in monetization through increased ARPU, which in a way is reflective of, market structure improvement in most of our, markets. Having said that, profits were impacted because of higher DNA, in the EDOTCO business as well as the investments into Link Net. These are essentially, investments, early before we can actually start corresponding seeing corresponding cash flows coming from these investments.
And of course, [the] effect of high finance cost, consequent to increased investment in these businesses as well as the increased interest rates in most of the markets. Also, the impact of the fact that in Sri Lanka as well as in Bangladesh, we reduced our dollar debt given the uncertainties, and that resulted in higher interest costs because the local interest local debt was with higher interest rates. Combined operations is been impacted, largely because of the impairments coming in from disposal of Ncell and disclosure of EDOTCO Myanmar as held for sale. EDOTCO Pakistan has been a small impairment, but that's because of the macro situation in Pakistan at this point in time.
But also the effect of the, while the revenue and EBITDA growth has been good, the effect of lower share of CelcomDigi versus 2022 has been also the factor for lower results versus last year. Underlying performance adjusting for these factors are fairly strong, with revenue at 10.3%, but PATAMI impacted because mainly because of the lower share of CelcomDigi, where we, back in December 2022, we had classified this as an associate where our ownership is now 33% versus CelcomDigi earlier was 100% subsidiary of Axiata. On a cash flow, which has been one of the important areas for focus for us, we've seen adjusted operating free cash flow. Adjusted is a measure which we closely monitor, which is basically OFCF minus the lease payments, which is positive MYR 1 billion coming out of strong EBITDA growth as well as reduced CapEx intensity across markets.
I think we done from 26% of revenue CapEx intensity in 2022 to around 21.6%, which is a substantial improvement on the investments there. Cash balance, I think we did repay around MYR 2.2 billion debt in 2023, which has delivered a saving of MYR 82 million for us. Balance sheet remains resilient. Having said, there is an impact on the higher gross debt to EBITDA coming because of deconsolidation of EDOTCO Myanmar. I'm happy to inform our performance against the headline KPIs for 2023 were better, ahead. If you recall, we had guided the market with mid-single digit growth in revenue and high -single digit growth in EBIT, but we've ended up with around 7.8% growth in revenue ex-devices, and EBIT growth of 18.4%, which is ahead of the headline KPI.
I'm also happy to announce our second dividend payment of MYR 0.05, which will bring the FY 2023 dividend to MYR 0.10. The cash flows at the group as well as dividend flow coming from our operating companies has supported our ability to pay the dividend, the second dividend of MYR 0.05. Let me go through individual companies. Let me see the first one. Okay, let me start with XL. XL, I think, has seen a good strong market structure improvement, market repair, which supports a double-digit growth. Also the fact that the home business as part of our home fixed-mobile convergence has seen nearly 50% growth year-on-year. And that has translated into the improved EBITDA as well as slowdown to strong PATAMI development of 14.6% over previous year. I think good news is the market has seen uplift of ARPU.
We do expect that to continue, going forward in 2024. Robi had an extremely good year, with all cylinders firing well, with the revenues growing at around 16%, EBITDA growth of 19.3%, EBIT growth of 27.9%-28% coming from growth in subscribers as well as improved ARPU of around 12%, from BDT 126 to around BDT 142. This has also been supported by strong structural cost improvement as operational performance. In addition to that, the business has also been seen as, you know, a strong brand position in the market with both Robi and Airtel as well as improved quality of experience for the consumers and also a reduced customer improved customer satisfaction index. Dialog seen successful maneuvering amidst the prolonged Sri Lankan crisis.
I think the market is relatively stable now with the currency having been relatively stable as well as the inflation is coming down and interest rates lowering. Having said that, the base itself has worsened from what it was pre-crisis, and we've also seen certain cost escalation, specifically in energy costs, which doubled in 2023. Despite that, the business continues to focus on its cost rescaling initiatives, where LKR 19 billion has been taken out from the cost in the year. That's basically led to a strong profit number. Also Dialog has been managing to reduce its exposure on dollar debt by converting some of this into local debt. That's a downside effect with higher interest cost incurred for them, because of local debt being much more expensive than the dollar debt.
Smart continues to be a strong performer with strong cash flow generations, revenue growth of 1.3%, but that's also coming from the fact that last year we did have a one-off revenue coming from the scratch cards in 2022. But if you normalize for that, it would be around 4% to 5% revenue growth coming in in the year. But that translating in a very strong slowdown to EBIT as well as profit. And the company continues to focus on the cost efficiency measures. In fact, 2023 was the highest profit year for this company, and also the highest cash flow year. Link Net, I think we do struggle with multiple things being done at the same point in time and also the market structure a little bit changing from a fixed broadband standpoint.
I think long-term we do see big opportunity here because the penetration levels are still low, but this business has seen a little bit of a downturn coming post-pandemic where people are now consolidating their connections. We've also seen the little bit of price erosion in the market, albeit Link Net has been able to hold on to the ARPUs, and in fact improve. But we've also seen relatively higher churn and also the effects on some of the cost, including the impairment of receivables coming from some of the legacy issues which this company had. In addition to that, I think the transition from being a pure ServCo into a fiber wholesale provider has also been one of the one of the focus areas for this company. But that's one area which remains an important priority for us to fix as we go into 2024.
EDOTCO, I think, strong contribution coming from both inorganic, from Philippines and Indonesia, but also the fact that colocations improvement in Malaysia and Bangladesh. In Malaysia, they're being the largest recipient of the new colo orders coming from DNB as DNB rolls out the 5G network. And I think as the markets move to the second wholesale provider, EDOTCO should be the beneficiary of that development. EBIT got little bit impacted because of the higher D&A coming from Philippines and Indonesia. Philippines acquisition was treated as a fixed assets, and all that has been now depreciated into the P&L line. And that's going to be a continuing impact when we look at the P&L of the Philippines business here. PATAMI impacted by higher finance cost, as well as the impairment of Myanmar, which is, as I said earlier, has been classified as held for sale.
Boost, I think, focus remains on paths to profitability. Having said that, I think, we've seen marginal dip in revenue growth, which is coming from the merchant discount rate, being slightly impacted. But overall, the organic business development has been good, and there has been now investments coming into the startup of the digital bank, or the Boost Bank in, in Malaysia. So for last year, around MYR 40 million would have been our investments into setting up this particular, bank. And this would continue to be an area for focus, going into 2024. ADA finished strong, continued to remain profitable. Having said that, been marginally impacted because of the, A2P business where we've seen, the trend downwards, which is a highly profitable business. And but that's true, across, the globe where we've seen these trends, coming down.
But the business now kind of pivots more toward the data transformation or data analytics business as we go forward. So that's pretty much the summary of our businesses. So I'll now hand over to Nik. He will talk about the financial results for 2023.
Okay. Thank you, Vivek. Assalamualaikum, good afternoon. We will start with this slide where I will talk on the continuing operations results. Here, continuing operations is defined to exclude the disposal operation in Nepal as an 80% subsidiary of Axiata Group, and also EDOTCO Myanmar, which is classified as an asset held for sale. CelcomDigi Berhad is treated as a 33.1% associate and Link Net effective stake of 92.83% from third quarter 2022. On the continuing operations, as alluded to by Vivek, Axiata remains well positioned for the next phase of growth.
In FY 2023, revenue and EBITDA grew by 9.9% and 11.7% respectively. This was contributed by all OpCos and in particular XL and Robi, on the back of market repair driven by higher subscriber growth, market capture and also ARPU expansion. There was also inorganic contribution in EDOTCO from Philippines that contributed to the results with also increased colocation in both Bangladesh and Malaysia. On EBIT, that grew by more than 100% to MYR 2.4 billion from the revenue and EBITDA flow through. EBIT in the prior pre-previous year was also impacted by impairments at XL and Dialog to the tune of about MYR 1.5 billion. On PATAMI, we reported losses of MYR 125 million on the back of higher net finance costs and also forex losses.
For the combined report, this essentially assumes Ncell continues to be included as an 80% subsidiary of Axiata Group and also the inclusion of EDOTCO Myanmar. If we go to the next slide, so for reported results, revenue grew 8.2% year-to-date or full-year, on the back of strong contribution from XL, Robi, EDOTCO, and also consolidation of Link Net for the full year. And as such, EBITDA grew in tandem by about 10% year-on-year. On PATAMI, however, the reported losses was largely impacted by the loss on disposal of Ncell of about MYR 356 million, the impact of the impairments of assets and goodwill for Ncell, EDOTCO Myanmar and EDOTCO Pakistan, totaling MYR 2.2 billion, and also higher net finance costs of approximately MYR 551 million and a lower share of results of CelcomDigi Berhad.
FY 2022 figures also reported a one-off gain from the disposal of Celcom Group of approximately MYR 13.5 billion. For underlying performance on a constant currency basis, revenue ex-device grew 10.3% to MYR 23.7 billion, supported by continued growth from all OpCos except for Boost and Ncell. In Boost, this was impacted due to the charging of merchant discount rates in 2023, whereas for Ncell it was only reported 11 months of contribution following Axiata's exit in December 2023. Underlying EBIT reported a strong 20.9% growth year-on-year, supported by Dialog reaping the benefits from its cost rescaling initiatives, which included network optimization, manpower right-sizing, and also change to local vendors, whilst Robi and XL was boosted by cost savings on top of the revenue growth, which I alluded to earlier, primarily from sales and marketing, lower sales and marketing, and also direct costs.
UPATAMI, however, saw a decline of 64.9%, mainly driven by the increase in net finance costs, coming from EDOTCO and Link Net, primarily, and also smaller contribution from CelcomDigi share of results of about MYR 550 million, compared to its PATAMI contribution as a subsidiary in the same period last year of, approximately, well, of about MYR 1.3 billion . On the next slide, on adjusted, operating free cash flow, adjusted OFCF, increased by more than 100% to, MYR 1 billion. This was largely supported by higher EBITDA, lower CapEx, and taxation, however, offset by the increase in net finance costs, where cost of debt increased by approximately 50 basis points, and also, higher ROU depreciation.
The higher EBITDA was largely contributed by XL, Robi, EDOTCO, and Dialog, and also full-year consolidation of Link Net, whilst the lower CapEx was largely on the back of control or constrained CapEx from in EDOTCO, XL, and also Dialog. On an OpCo basis, as you can see, both EDOTCO and XL saw increases of more than 100% on the back of higher EBITDA and lower CapEx. Dialog increased by more than 100%, supported by higher EBITDA, lower CapEx, and also taxes where there was one offset charge, tax in prior -year. On the balance sheet slide, net debt -to -EBITDA ratio increased from 3.17 x in quarter three 2023 to 3.36 x in quarter four 2024. This is mainly due to the reclassification of EDOTCO Myanmar as asset held for sale.
The EBITDA of Myanmar accounted for approximately MYR 280 million or approximately 2.6% of the group EBITDA, whereas as you can see from the table above, the EDOTCO debt is at MYR 631.7 million. The cash balance of Axiata WholeCo is lower quarter-on-quarter to MYR 1.6 billion. This is due to the dividend payment and the one-off OpEx, which relates to the MSS costs in quarter four 2023. Positively, there was debt repayment of MYR 2.2 billion in FY 2023, which delivered interest savings of MYR 82 million. This is very much in line with Axiata's strategy to reduce borrowings and also to reduce WholeCo costs.
On the next slide, the headline KPI, as alluded to by Vivek earlier, against headline KPIs, for FY 2023 results, we are pleased to announce that the group exceeded its target of mid-single digit revenue ex-device growth, where we came in at 7.8%. And also, we also beat the target of high -single digit EBIT growth, with an achievement of 18.4%, for FY 2023. CapEx was also lower, as I alluded to earlier in the OFCF slide, where the CapEx spend for 2023 was MYR 5 billion against a target of MYR 7.1 billion. With that, I will hand over to Vivek to take us through the forward guidance.
So in line with our performance and the positive momentum on our existing continuing operations, we would like to guide the market with continued mid-single digit growth in revenue and mid-teens growth coming in EBIT, which is on the baseline numbers of revenue of MYR 22 billion and the EBIT of MYR 2.4 billion. CapEx has been lowered from the last year guidance to around MYR 6.1 billion, and largely coming out of the infra businesses, which is EDOTCO, the Link Net, as well as Bangladesh and Indonesia. Okay. That's it. I'll hand over back to Clare for Q&A.
Yep. Okay. Thanks, Vivek and Nik. So we will proceed as usual to the Q&A session. General housekeeping, to ask your questions, you may choose to do this verbally. Just raise your hand and wait till your name is called out for your turn. Otherwise, you can also type your question in the chat box. We will start the Q&A session now. I see that Foong from CIMB has his hands raised. So could you please unmute your mic and proceed with your questions? Thanks. Foong, can you hear us? Foong, can you unmute your line, please?
There's a technical issue.
Okay. Maybe we move on first.
Maybe, Foong, you can type it on the chat box if by the time I think we take up the other questions and then.
Yeah. Yeah. We can move on. Let's secondhand.
Hi, Clare. Sorry. Yeah. Finally, I got to unmute my mic. Yeah. Thank you so much, yeah, for the call and the opportunity to ask some questions. I've got just four quick questions. On EDOTCO Myanmar, have we started the sale process approaching potential buyers for this asset? Secondly, for Boost, I see that it has broken even in the fourth quarter of last year. And usually, the losses here is about MYR 30 million to MYR 40 million. So I'm wondering why the improvement. And is this sustainable going forward? As for the losses from the digital bank, right, also, where will this be accounted for in the P&L? And then my third question on Ncell, if the Nepal's government does not approve the sale and that causes the buyer to back out, what do we do in that instance?
Do we walk away from the operations or do we have to continue? And also on Ncell , have we now fully written off the book value and also the currency reserve, such that yeah, there will be no further impairments there? And finally, on the CapEx, can you guidance of MYR 6.1 billion, can you just give us a breakdown in terms of the respective OpCos? Yep. Those are my questions. Thank you.
Okay. Foong, I think there was way too many. So let's go one by one. So let's start with the first one.
Yeah. So on Myanmar, I think the decision was made to exit for reasons which I said earlier. And we did start the process of finding the buyer for the operation. So the discussions are currently on with the buyer, and we would make necessary announcements as and when we are able to conclude. Having said that, I think the realizable value which will be used for the purpose of impairment is based on the indicative values which we have in place at the moment. What was the second one? No, so Boost, I think, you know, there are in Boost business, if you go even earlier years, there are some annual contracts which are there on basically the fees business, which we have with some of the corporate, corporate partners. And that typically comes at the end of the year and gets recognized once in a year.
For example, we have it with Mastercard, right? So that, I think, is one-time blip, which you see in quarter four and that you've seen in, oh, even the previous quarters. So I don't think this is something which is normal. Having said that, I think we do see, going forward, focus on improving profitability. Boost has gone through some restructuring in both Indonesia as well as Malaysia, which reduces the operating cost. They've also been very focused on the marketing spends on building their digitalized business, which is a wallet business. Mostly focused now is to build on services which can feed into the bank. So that, I think, is something which we should see. I think target is by 2025, early 2025, we should be breaking even on non-bank business.
But there will be still losses coming as we invest into building that digital bank. Now, accounting for the digital bank losses, so far, it has been mostly on the Boost Holding side, which is the parent company, because that's been supporting the building of the bank. But going forward, now that the bank is up and running, the future cost would be built in the bank. And some of these costs would also be transferred back to the bank once we are able to, you know, agree on what needs to be transferred. And at that time, point in time, the 60% of the ownership of the bank would go into the P&L of Boost Holding it. Was there other questions?
Foong, could we trouble you to ask the question number three?
Yeah. The question?
Yeah. Nepal, sorry. From Nepal, I think it would be clear we disposed of with full indemnities relating to the approval required from the regulator. So there is no liability as such which flows back to Axiata. So it's been a clean exit from Nepal market. We do not have any exposure as it stands with the buyer, because he's provided the full indemnity for us to exit from this market. And we sold off the offshore entity, which was the Reynolds, which was the entity owning Ncell with full indemnities in place here. On the currency, on the write-off of book value, I think in quarter four 2023, we flushed out everything, including the forex reserves, which were there in the books. If you recall, when we did the disposal, we did talk about potential flushing of our forex reserves.
That's been done. We don't see anything else on the Ncell account.
Right. Okay. And the last question, the CapEx breakdown, yeah, if you can, if you could?
Okay. Let's, there's a favorite answer of Clare. Clare, can you provide?
Yeah. Okay. I think, CapEx-wise, essentially, we are doing, in Indonesia, about IDR 7 trillion. Also, let's circle back on this. We're just getting the numbers. Maybe we'll circle back on this.
Okay. Sure.
So yeah. Let's circle back on this because I think, well, oh, okay. I just got the answers. Okay. So I think, XL is IDR 8 trillion . So in total, perhaps just to recap for the whole group, we are guiding for MYR 6.1 billion. XL is MYR 8 trillion . For Smart, Dialog, to the tune of about MYR 300 million each, Robi is about MYR 800 million, EDOTCO MYR 1 billion, Link Net is about MYR 900 million. And the rest would be corporate center as well as the digital business.
Okay. Got it. Thank you so much, Vivek and Clare.
Okay. Thank you. Okay. I think now we can move on to [Lui]. [Lui], would you unmute your line and raise your questions, please?
Hi. Good afternoon and thanks for the call. I had three questions. The first two on EDOTCO Myanmar and the last one on Link Net. On the first question is, we noticed that the EDOTCO impairment amounts to about MYR 489 million in the fourth quarter, but EDOTCO booked a loss of MYR 733 million. What accounted for the difference? The second question related to that is, with this reclassification of Myanmar as a for-sale asset, is that is that indicative of any progress you're making towards value crystallization for EDOTCO? As if I recall, it used to be a hindrance for the IPO in the past. Can you get a sense of the timetable for that exercise? And last question is, just to confirm that the Link Net losses we see in the fourth quarter, is there any one-off or accelerated DNA in those numbers, or it's pure operational?
Has it plateaued already, the losses, for this quarter, in your view?
Nik, you want to take the?
Yeah. I can take the impairment. So, [Lui], the losses at EDOTCO level of MYR 733 million in quarter four is mainly due to the EDOTCO Myanmar asset impairment of about MYR 770.7 million and also Pakistan Goodwill impairment of MYR 40 million. This comes to a total of about MYR 816 million. So at the Axiata Group level, the PATAMI impact of these impairments is the MYR 489 million that you quoted and MYR 25 million accordingly. So in total, it's actually MYR 514.9 million, as Axiata holds 63% of the EDOTCO group.
Thank you.
Yeah. So if you were to exclude the impairments, EDOTCO in quarter four is actually making a small operational profits.
Okay. Great.
So on the second question on, you know, we have said earlier that, EDOTCO would require funding, for its growth plan as well as for paring down some of the debt, which it has. And that process is currently underway. And you are right. As part of that process, Myanmar was one of the hindrances. Hopefully, we can complete the process of disposal of Myanmar, then that would become much easier for us to execute on.
Any timetable in mind, second half of the year or?
So, I think in terms of a process to get new investors, I guess, you know, Myanmar exit is not an easy process. Even if we are able to sign the definitive agreement, the regulatory approval would take time. I mean, you've seen with some of the other exits, which have happened that it does take a while for the approval to happen. So, I don't expect the Myanmar process, even if we are able to close with a buyer, to complete very soon. Having said that, the next part of fundraising for EDOTCO is being run in parallel; we do expect something to come out in the next 12 months here.
Thank you.
Anything else?
Oh, yes. The last question was on Link Net.
The third question on Link Net.
This is on the, yeah. Dr. [Suriya].
Yeah. No, no. One answer: impairments at Link Net. The escalation in DNA as well as finance charges relates to the transformation to a fiber core and the rollout of Home Passes in advance of revenues flowing through. And, of course, also the impacts of the loss in customer base during the early part of the year. So it's all organic.
Yeah. Dr. Hans, do you think it's plateaued already with the fourth quarter, or are we going to see some improvements, going into this year?
That's right. Churn rates have fallen. We have a stable subscriber base and an uplift in ARPU as well, which is a strong sign for 2024.
Okay. Great. Thanks, management.
Just to add, I think profit, you will still see an impact because of the slowdown from the fiber bill. As you know, you know, there's already 1 million fiber home passes being billed for XL, and then we will start the other 2 million. Once that happens, you will see some increase in D&A and interest costs on Link Net. So the operational side, BAU, it seems stabilizing, but you will still see some impact coming off the investment in building the fiber core.
Thank you.
Okay. Thanks, [Lui]. I think next up, with a hand raised, would be Prem from CGS. Prem, please unmute your mic.
Hi. Thank you for the opportunity. Really one question from me. With regards to EDOTCO, with the carve-out of Myanmar now there, and you're taking off essentially about 15% of your EBITDA as a result, how quickly do we anticipate that EBITDA gap to be filled up? And, you know, essentially, are the improvements in Malaysia and Philippines sufficient to give us growth this year in EBITDA for EDOTCO, or do we think we have a dip before we grow into 2025, etc.?
Do you have Anis still on the call?
Hi.
Yep.
Hi.
Anis, you take that question, or is it Adlan?
Adlan, I think.
Yeah. Vivek, can you hear?
Yeah. Can you take this? Yeah. Thank you.
Yeah. So, thank you, Prem, for the question. Yeah. I think, yeah, contribution of EBITDA from Myanmar is around 14% to the group numbers. So essentially, I think, this gap, we expect to be covered from our growth market. Potentially, the main one you would expect, Malaysia, because I think what you probably see, Malaysia, with the 5G, orders are coming back quite strongly from the MNOs as well, especially on to cover the capacity sites for 4G, right? So, so we would expect quite good growth coming from Malaysia. Second is also Philippines. There was a little bit of slowdown from Philippines last year. However, I think, beginning of the year, we already seen most MNOs have already firm-up orders, and we already seen quite a strong order book coming from, especially two MNOs, this year, already in the first quarter, right?
So, and lastly, I think you would expect that Bangladesh will continue to contribute quite significantly, right, to cover that gap. In addition to this, I think one of the other growth markets that we are probably looking at is also Indonesia. Of course, I think in Indonesia, our play would probably be a little bit more niche, right, rather than the traditional towers. We are probably be focusing a lot more on the street furnitures, right, and small sales. So, these are probably the three operations that we think that could contribute significantly in terms of covering the gap that's left by Myanmar.
Perfect. So we don't expect a gap this year, right?
Well, I think, if you look at it, essentially, 14%, I mean, if I can it will be able to deliver double-digit growth in terms of my EBITDA numbers, in 2024, right, that could potentially close to cover up the gap, yeah?
Yeah. You've, you've already done 14% in 2023, so I'm hoping you're gonna do the same.
We hope so.
Perfect. And maybe just one follow-up from Vivek. Given what I would see as a slight delay in the EDOTCO recapitalization exercise given the Myanmar situation, are there any changes in our viewpoints with regards to valuations of these assets, or do you think the removal of Myanmar may not have a substantial or it will fix the gap that we've had from the EBITDA to get essentially potentially more money from the rest of it?
No. So I think, obviously, one hindrance having Myanmar in the portfolio was the suitors of EDOTCO was getting constrained, right? So, in that sense, the ability to have greater stress amongst the suitors would improve, which should mean positive realization, right, on value. Second issue is that, even those who were interested were carving out Myanmar from the discussion. So I think this action is obviously gonna help improve that tension amongst the suitors as well as, potentially, better value. Having said that, I think the reason is not necessarily because of the ability to get financing. I think reason is also given the uncertainty and the deteriorating environment, we think it is still prudent for us to exit out of Myanmar market here.
Perfect. Thank you very much.
Thank you. Thank you, Prem.
Thanks, Prem. Okay. Next up, we have Alex Goh, who has his hands raised. Can you please unmute your mic and ask your question?
Yeah. Thanks, Clare. I've got three questions. The first, I suppose, you are in the fourth quarter, so you have done whatever you need to kitchen sink. But I think the question is to be asked, would there be any further provisions that we can see coming over the next this year on or over the next two quarters, from any of your plans to dispose your assets, right? That's my first question. My second question is regarding your current portfolio now. Are there further plans to de-risk your assets? You know, could we potentially be seeing other disposals along the line? And that flows to my third question is regarding your acquisition or your growth strategy. You've always wanted to grow regionally. But, following your experience with Myanmar and Ncell and even the Sri Lankan crisis, are you reevaluating your process of growth or expansion in your portfolio?
So maybe I can take that. I think if I look at in 2024, I think, given the performance of the businesses in general in 2023, we do think there is a fair amount of surplus now in versus the carrying cost of these assets. And the outlook looks much better than what it was. Also, with the better macro environment developing in these countries, we do also think see from an impairment standpoint, the discount factors would come down. So we don't see those headwinds there, barring there may be few smaller pluses and minuses, which would happen as business as usual, but nothing which we would see as a significant effect coming in place here over the next, at least not just two quarters, but in 2024. Having said that, I think our growth strategy's been quite clear.
Our priority's been really around consolidation in the markets. Our priority on the telco side has been really around delayering, which is what we are doing in the fiber side in Indonesia. So that's something which we will continue and potential opportunities to consolidate, not just the operations but also the networks, if that's the possibility which is there. So that remains our key priority on the digital telco side. As far as infra is concerned, EDOTCO is more moving exposures out of the frontier markets to more the emerging markets, the opportunity markets like Malaysia, Indonesia, and Philippines. So that's, I think, something which we will keep diverting our capital on those sides versus the frontier market. And those could mean that we take some decisions on some of our presence in smaller frontier market as far as EDOTCO is concerned.
Digital businesses, I think financial service is pretty much focused in Malaysia and Indonesia. We will continue to do that. ADA, which is the digital advertising business, which is low-capital business, and it's pretty much consulting business across different footprints. So those we will look at expanding beyond the regional footprint. For example, I think they are now present in Japan, Korea, etc., and then potentially looking at, you know, the Far West as potential opportunities. So that's, I think, the strategy as far as we are concerned. So mobile businesses or telco businesses pretty much focus where they are, continue to look at consolidation opportunities. I think Sri Lanka, we're doing this. As you know, we announced the potential merger with Airtel in Sri Lanka. So that is something which we will pursue as part of the strategy.
If you look at, if you recall, the presentation which we made in the Investor Day was around five buckets, or five hectares of assets. So I think our priority is really around those five buckets, which is really driving synergies around Sri Lanka or around CelcomDigi, looking at transformation of Indonesia business, which could potentially lead to consolidation of networks, a consolidation of the consumer side, keep focusing on resilience in our frontier markets and managing through the difficult environment which we have, look at EDOTCO more from a sustainable balance sheet for continued growth, and digital businesses, which could potentially mean future monetization opportunities of these businesses. So that's something which we will continue to pursue and look at alternate growth opportunities, whether it's on the on platform solutions or the enterprise business side.
Okay. Thank you. So let's move on. Next, we have Mohamad Ahmed on the line. Please unmute your mic and ask your question.
Hi. Hi. Congrats on your quarterly results. I just have one question. Is Axiata on track on having your net debt -to -EBITDA to 2.5 x by the end of FY 2024? Or if not, is there any immediate steps that Axiata can take to reach the level to that level?
Yeah. Sure. Thanks for the question. Just firstly, I need to clarify the target is to actually have the net debt -to -EBITDA to 2.5x by the end of 2026. So, we still have basically a three-year runway. And as such, we'll be. It won't be any immediate steps because we won't be doing anything drastic. But, obviously, you know, we've already made some moves with regards to reducing debt at the group level. So in FY 2023 itself, we have taken out about MYR 2.2 billion worth of debt. However, because of the deconsolidation of EDOTCO Myanmar, which was very EBITDA accretive, with basically no debt, that ratio deteriorated slightly. However, that said, we will still be pushing on the key strategies which Vivek alluded to earlier.
The improving operational excellence and EBITDA uplift from our operations will be one of the key drivers in terms of us the ability for us to bring down that debt going forward. And obviously w e will also be looking at the increase in contribution from dividends from CelcomDigi Berhad, which is still the largest contributor to the dividend to the Axiata Group. As such, as they continue to execute on their business plan. So at the moment, last year, as I alluded to earlier, the share of contribution from CelcomDigi was a little bit lower, was mainly due to the fact that they are at the early stage of the integration. So quite a bit of integration cost is being spent there. And as they realize the promised synergies, then they should be in the position to then return back to the shareholders some of the synergies that they realize. They can return it to their shareholders in the form of higher dividends going forward.
Okay. All right. Thank you.
Thank you. Okay. Let's move on then. We do have a question coming through from Ranjan from JP Morgan. Ranjan, please unmute your mic and ask your question.
Hi. Good afternoon. Thank you for the presentation. I apologize. I missed half of the presentation. So apologies if some of these things have been addressed. I have a bunch of questions. Maybe I can take them one by one. Firstly, on Boost, the 86% quarter-on-quarter growth in revenues, what's been the primary driver of that?
So, I think, Ranjan, you missed probably the question earlier, I mean, answer. Every year in quarter four, we do get one-off fee income from some of the partnership we have. For example, we do have partnership with Mastercard. So that partnership does give once a quarter. So every quarter, last quarter of the year, we do see that effect coming in on the revenue. So it's not something, which is the regular quarter performance, but this is just coming out of one-off. So you could assume that whatever is the run rate in quarter four, three, plus some improvement on organic basis because of the credit business has been growing quite fast. So that would be the normal run rate.
Okay. Thank you. And if I look, second question is on your finance cost. You saw a decline in finance costs from MYR 587 million the third quarter to MYR 571 million. I mean, with the way the ringgit is going, how should we think about the run rate for finance costs in the coming periods?
Just a second.
Ranjan, could you repeat that, please? Is it a quarter-on-quarter difference in finance costs? Is that right?
Yeah. So I'm just trying to understand what the run rate for finance costs could be in the coming periods because I see you have a lot of unhedged foreign currency denominated debt, and the ringgit has been weakening.
Which one is this?
If I'm so unprepared.
So I'm looking at the number MYR 571 million of finance costs reported in your XL's for the fourth quarter.
Yeah. Okay. I think,
Shall I?
Mm-hmm.
Yeah. So, so yeah, you do see a slight decline on a Q on Q basis, which is, I, you're probably referring to MYR 587 million in third quarter vis-à-vis MYR 570 million in the fourth quarter. I think there was also some benefit coming through from the early sort of prepayment we took on the MYR 2.2 billion debt throughout the year. So just to recap what we mentioned earlier just now during the presentation, EDOTCO did an early prepayment of MYR 2.2 billion, resulted in a total of MYR 82 million interest savings throughout the year. The chunk of it came in fourth quarter.
Okay. So what should we think about it as a run rate for 2024 for the finance costs?
Right. Well, I mean, we don't know how the interest rate movement would be. I think that's still speculative. But I don't think we have intentions of borrowing more money other than would be required in Link Net for the fiber build business. So all other operations have been kind of paring down their debt levels.
Yeah.
So we should not, unless the interest rates environment changes we shouldn't see much of a growth happening. If any, it should come down aggressively.
Yeah. And if I can just add to that as well, in terms of group borrowings, 65% is fixed, with the remaining at the floating. So you should expect that, essentially, 2/3 is already fixed. So barring any violent movements in forex, which we don't expect, then it should be relatively stable for the year, just building on top of Vivek's statement that we should not be looking at increasing the debt position for 2024.
So my question was because I see the ringgit has weakened quite a bit already this year.
So, I think, dividend, if you look at, we have around $2 billion of debt at the group level.
Yeah.
Average coupon for that is around 3%-3.5% because a lot of it was locked in for 10 years and 10-30 years at the point in time where the coupons was very low. I mean, we did that in August 2020 when it was the best time, when you look at the spreads. so, so if you're looking at 3.5% of $2 billion, so you're talking about something like $60-$70 million, right? Now, you on that, even if there's a 10%+ fluctuation, it's not going to be material, right? So whatever is going to be impacted essentially is going to come out of the mark-to-market unrealized losses on the movement of currency.
Got it. Thank you. And man, and my last question for EDOTCO, you mentioned you see Indonesia as a growth market. But Indonesia already has number of, tower, tower companies like Mitratel, Protelindo , Bersama. So, where's the growth that you're expecting to come from? Because I guess these guys will also be quite competitive in the market, to bid for assets.
Yeah. Yeah. Okay. Yeah. So, Ranjan, I think you need for Indonesia, I think we are probably looking slightly into the new sector, looking more on street furniture rather than playing the traditional GBT towers. So essentially, this is working with local authorities, right, dealing with street furniture. Because I think if you look at what we're seeing, in the case of Malaysia as well, a lot of the capacity, especially on 5G and all that, will come through poles and the street furniture, right? So that's something that we are working on at this point in time, right? At the same time, we also have some commitment on build-to-suit from XL as well, from DNB deal.
Okay. Thank you. Thank you so much.
Okay. Thanks, Ranjan. I believe there are no more questions. So perhaps I will hand back to Vivek for closing remarks.
Okay. Thanks, Clare. First of all, thank you, everyone, to join this quarter four 2023 results details. I think we are open to take further questions. If there's any, please email it across to Clare or her team. But I think our focus in 2024 continues to be on running the operations, which are the current operations at the KPIs we've set for ourselves, as well as continue to focus on the portfolio adjustments, which do include on each of those five vectors specific actions, which has been currently worked on. So I think stay tuned, stay on with what we are trying to do in Axiata to improve value for our stakeholders. So thank you very much.
All right. Thank you.