Good afternoon, ladies and gentlemen. My name is Clare Chin, Head of Investor Relations at Axiata Group Berhad. Thank you for standing by, and welcome to Axiata's second quarter results briefing. Today, we have present with us Dr. Hans Wijayasuriya, Joint Acting CEO and CEO Telecom Business. Vivek Sood, Joint Acting CEO and CFO, as well as reps from our operating companies. There will be a short presentation as usual, followed by a Q&A session. Lastly, two housekeeping reminders. You will be on mute throughout the presentation. Also note that we will end the conference call at 6:00 P.M. sharp. Without further ado, I will hand over the conference to Dr. Hans for welcoming remarks.
Thank you, Clare, and welcome everyone to Axiata's second quarter investor briefing. Indeed, a pleasure to have you all, and thank you for taking the time. I will start off the briefing with a short description of the segregation of responsibilities between Vivek and myself. To give you a flavor of how the Joint Acting Group CEOs are managing the company. First of all, it's important to stress that we have the Axiata 5.0 vision and strategy very much anchored, and we are working on the 5.0's strategy, as well as ensuring that it's business as usual as far as operations are concerned. As we all know, there have been headwinds from the external environment during this period as well.
We are managing together with our colleagues in the OpCos to face these externalities, take immediate actions as well as proactive actions for the immediate future, ensuring that the group as a whole tracks on its targets and will carry through to deliver and exceed the expectations for 2022. Back to this diagram. The SLT stands for Senior Leadership Team, and just to spell out that acronym. Both Vivek and I were members or are members of the SLT at Axiata Group, and our accountabilities, which are shown here in the orange box, are in the capacity of our SLT portfolio.
For example, Vivek will be looking after edotco and the digital businesses, Boost Holdings, as well as ADA. In line with my facilitated responsibilities, I will continue to look after Celcom, XL Axiata, MINT, Robi, Dialog, Ncell, Smart, and telecom operations. The separation or creation or establishment of a check and balance is implemented here via the CEO LoA, which we both have separately. We have the full CEO LoA, not between us, but separately. So that the CEO LoA which is with Vivek would be exercised on the areas where I would have line accountability or SLT LoA, and likewise, I would carry the CEO LoA for areas where Vivek carries the SLT or line responsibility.
We believe this enables a check and balance while maintaining the fundamental of a full CEO LoA being carried by both of us. Independent functions such as internal audit and CoSec remain as such with just administrative lines to Vivek and myself respective. We're coming up to the end of the third month of this arrangement and the group is running, as I described, on a BAU basis. The CEOs of OpCos as well as the SLT at Axiata have come together to ensure that operations continue and Axiata 5.0 strategy continues to be implemented, as Azim has said. With that, let me hand over to Vivek to take you through the presentation.
Yeah. Thank you, Dr. Hans. Very good day to all of you. It's my pleasure to announce the results for quarter two, 2022. I'll run through the executive summary. I think I'll spend very little time on this because we've got pretty much all the bullets covered in more detail in subsequent slides. Happy to announce that the results, reported results in terms of top-line growth were good, with a 5.8% growth in revenue and 7.4% growth in EBITDA.
However, the profits was impacted because of the Forex and macro implication, more so Forex, as well as one-off taxes in Sri Lanka and Malaysia paid during the first half. The year-to-date, there was a loss of MYR 149 million versus a profit of MYR 353 million same period last year, and mostly coming out of the unrealized Forex losses. Predominantly coming from Dialog, where the currency so far during the year has devalued by nearly 80% from the levels of 202 beginning of this year to around 360 as we speak now. The other is essentially on account of the losses on the Forex movement between dollar and ringgit, where we have some of the...
Some unhedged dollar positions in the group. Apart from that, if you look at the second slide, when you look at the constant currency and normalized for the Forex, mostly, as I said, unrealized Forex losses, the performance on an underlying basis has been fairly strong. We saw a revenue growth of 8.1% and 7.9%, an EBITDA growth of 8.1% and EBITDA margin nearly 45% with an EBIT growth coming at 34% and underlying PATAMI growth at 37.5%. All this came from extremely good performance from all the opcos except Dialog, for reasons we are aware of, which is the macro situation in that country, and Ncell, where the recovery has been slower than we had anticipated.
The cash flows, which is adjusted operating free cash flow, which is basically the AOCF adjusted to the lease payments, is MYR 96 million, mainly coming from EBITDA growth. The balance sheet is at 3.03. An additional debt being acquired during the quarter for the acquisition of Link Net and the acquisition of towers in Philippines. As you recall, we closed a transaction to buy around 3,000 towers from PLDT sometime in the previous quarter. This number of 3.03x is because while the debt has been acquired, we haven't yet consolidated the performance of the EBITDA coming from these acquisitions. If I adjust for that, we would have an EBITDA.
A debt to EBITDA of 2.86. Celcom, very good performance from Celcom, which came from continued growth in prepaid business, as well as some of the new enterprise acquisitions which we did, smaller acquisitions we did, during the year. XL, again, I think you would have heard the announcements from the XL team earlier this week. Extremely good performance, and we also see some level of price hardening in that country. Robi, operationally good performance. However, from a profit standpoint, impacted because of the depreciation of the taka against the dollar. During the quarter, the taka depreciated by around 10% against the dollar. Robi does carry around $100 million of loan, plus their CapEx is mostly dollar denominated.
Dialog, I think, while the impact came very hard on account of the 80% depreciation in LKR, the revenue growth continuing to remain strong, coming from mostly all the segments, mainly coming from the international traffic. EBITDA impacted because around 48% of the OpEx of Dialog is U.S. denominated, as well as the overall impact because of the fuel price increase, as well as the overall inflation in the market, resulted in the impact coming on the EBITDA line and consequently going down with the profits. The Forex loss was around 34 billion LKR during the period. Ncell impacted by continuing ILD deterioration as well as impact on voice revenue because of certain lowering of the interconnect charges.
If I go to the next slide, Smart continued to have steady performance. The business continued to grow at 6.5%. Boost, the revenue from Boost increased in line with the GTV increase as well as acquisition of new customers. Also, continuing build up of the loan portfolio, which Boost has been driving, as a precursor to the digital bank, which will be possibly, probably launched sometime in 2023. Edotco ADA, strong performance, continued strong performance, coming in from customer engagement and e-commerce. E-commerce was coming out of the acquisition we made of Vase.ai last year.
Some challenges on the marketing solution because of lower marketing budgets being allocated by the companies, given the pressures on the inflation side. Edotco good performance, again, coming both from organic and inorganic. Organic essentially in Bangladesh, where new build-to-suit as well as colo improvements, as well as from Malaysia, and from acquisitions coming from the Malaysian acquisition earlier or end of last year from Touch Mindscape, which has been delivering the performance. The Philippines towers have just been consolidated at the end of June, so you may not see much of an impact yet on the performance of edotco.
I'm happy to say the headline KPIs which we had set last year, beginning of this year, which is revenue and EBIT, mid-single digit growth in revenue and around high single digit growth in EBIT, we are likely to exceed, or we are confident to exceed that, the KPIs by the end of this year. Macroeconomic headwinds continue in frontier markets. I think Sri Lanka as well struggled throughout the year. However, things are improving as we see, as we speak, but we are also watchful of the other frontier markets like Bangladesh and Nepal. Dialog has been doing an extremely good job working through this resilience during these difficult times. I'll cover in more details in subsequent slides.
Axiata 5.0 had certain plans on consolidation, value elimination, monetization, and also looking at opportunities in the growth segments like edotco, fiber, et cetera. We continue to deliver on those transactions in line with what was defined under Axiata 5.0. I'm happy to say most of these efforts are now coming to completion, and hopefully most of them would be completed by the end of this year. Dividend, which usually we would declare in quarter two, the interim dividend. We've decided to defer that dividend. Given the macro situation in the markets, we are watchful of how the developments are happening in these markets, and we will come back to the shareholders with dividend in subsequent period.
I'll just quickly run through the reported results for the year and the quarter. Quarter-on-quarter, revenue grew by 3.6%, coming from all the OpCos, as we speak. Year to date, the growth in revenue of 5.8%. EBITDA grew in line with the growth in revenue by 3.9% for quarter and 7.4% on a year-to-date basis. However, as I said earlier, profits impacted because of the Forex impact there. Underlying performance, as you see, on a constant currency basis, quarter-on-quarter revenue growth was very strong at 6.4%, where Celcom, Axiata and edotco were the star performers there. Revenue growth on a year-to-date basis at 7.9%.
EBITDA, in line with the growth in revenue, grew quarter-on-quarter at 5.6% and year-to-date by 8.1%. All OpCos did well on the EBITDA growth, except Dialog for factors I talked about earlier, and Ncell, where the challenge has been on the top line growth and the deteriorating ILD revenue. EBIT, consequent to high growth in EBITDA, EBIT grew at 10.2% for the quarter and 34% year-to-date, resulting in the PATAMI growth of around 37.5% on a year-to-date basis. This just reflects the waterfall on underlying performance. If you look at the table on the top, it basically compares the year-to-date 2021 versus year-to-date 2022.
If you look at from 521 to 716, coming mostly out of the growth in EBITDA, but offset by increased finance costs because of the higher interest rates as well as higher leverage, during this year. Taxes, MYR 165 million taxes, MYR 100 million is on account of the one-off taxes in Malaysia, which is the prosperity tax, as well as the surcharge tax in Sri Lanka. If I look at the reconciliation between reported PATAMI and the underlying PATAMI, large part which we can see here, 799 is on account of the movement in Forex. Of which nearly around 600 million is, or in fact 630 million is on account of unrealized impact. Balance would come as a realized impact. Adjusted OCF.
This is basically reflective of OCF minus the leases. Improved for the first half from MYR 867 to MYR 966, which is a 23% improvement. Mainly again coming from EBITDA improvement and marginally from lower spend. Lower spend is essentially on account of the timing. If you look at the reconciliation between the adjusted last year versus this year, mostly is improvement in Axiata. Axiata improvement is mainly because of the improvement in EBITDA as well as the CapEx from a timing perspective and Robi.
Balance sheet, I think that's where you see a blip during the quarter from a 2.49 gross debt to EBITDA, moving up to 3.03, and largely coming out of the new acquisition or new debt for the acquisition of Link Net, for the acquisition of PLDT Towers, and also debt coming consequent to the consolidation of Link Net into the portfolio, which the transaction got completed on 22nd of June this year. Having said that, we still have a fairly strong cash position with around MYR 6.6 billion, mostly in Celcom, edotco, and XL, as well as the holding company. You would see the increase in the short maturity debt, and most of that is coming on account of the acquisition of Link Net as well as the towers in Philippines.
Both of them are either being paid down as we complete the merger between Celcom and Digi, or would be converted into long duration, you know, bond issuance. Both edotco as well as XL Axiata have been in the process of carrying out that activity. I'll hand over to Dr. Hans to talk about the digital telcos' performance.
Thanks, Vivek. I'll start with Celcom. Stellar performance from Celcom. Dato' Idham and team are also online, a great job by them. Revenue grew 4.2%, driven mainly by prepaid and also, as Vivek explained, incremental revenues coming in from the new subsidiaries Bridgenet and Infront, which are ICT solutions providers acquired by Celcom during this period. Also, significantly improved performance in OpEx, sales and marketing as well as reduction in bad debt, which has led to EBITDA increasing by 13% and hardening of the EBITDA margin by five points.
Likewise, EBIT grew by more than 100%, due to the EBITDA flow-through, but also due to the benefit accruing from the absence of accelerated depreciation current year relative to the accelerated depreciation recorded in the previous year. However, even if we correct for this anomaly, EBIT grew by over 40% on an underlying basis. EBIT margin increased by 14 points and on an underlying basis by approximately 7 points. So overall, all the way from revenue to profitability, Celcom did deliver an excellent result at half year. PATAMI in absolute terms, MYR 542 million, driven by EBIT flow-through as well as, or rather, also offset somewhat by the higher taxes as Vivek explained, the Prosperity Tax being charged during this period.
EBITDA flow-through has also led to FCF growing by 17.9%. Year-on-year CapEx has been flat, giving rise to increased cash flows coming from Celcom. Moving on to XL Axiata. Also excellent performance by Ibu Dian and team in XL Axiata. Revenue grew by 8.5%, driven by post-liberation opening of segments of economy, and also very importantly, price hardening in the market, which has also led to increase in ARPU from IDR 31,000 to IDR 38,000. This is on the backdrop of traditionally a hyper-competitive market, and these are very positive trends we see in terms of the top line.
However, EBITDA and EBIT lagged revenue growth with some OpEx increases in sales and marketing deployed and invested to drive revenue growth and also some increase in depreciation and amortization. EBITDA accordingly grew by 3.8%, albeit lagging revenue growth, and margins were compressed by 2 points at EBITDA level. EBIT grew by 4.4%, with a flat margin at around 12%. PATAMI, however, was contracted by 14.1%, driven mainly by higher finance costs and also the lower one-off gains this year relative to the previous year. This year, the gains were recorded to do with the sale and leaseback of towers, whereas the previous year were to do with Picotel sell-off.
This reduction in one-off gains has also led to the PATAMI contraction. Free cash flows increased by 63.1%. Flow-through of EBITDA plus CapEx reduction of approximately 21% relative to the corresponding period in the previous year. Moving on to Robi. Solid operational performance, however, unfortunately impacted by Forex loss, the devaluation of the currency.
Riaz and team have delivered a 3.2% growth in revenues and very importantly, also an OpEx reduction, where lower direct and staff costs have led to EBITDA growing at 9.1%, outstripping revenue growth of 3.2% and EBIT growing by 12.1%, which again outpaced revenue growth. The EBITDA margin improved by 3 points and EBIT margin by 1 point. From a profitability perspective, a great outcome in Bangladesh with revenue growth being expanded at a profitability level. PATAMI, however, contracted by 65.8% due to the Forex loss arising from US dollar denominated borrowings, as Vivek also explained earlier, and also due to higher finance costs relative to the corresponding period in the previous year.
Free cash flows grew by 31.9%, driven mainly by EBITDA flow through, as well as a degree of CapEx reduction as of the half-year mark by 19.6%. Moving on to Dialog. Solid performance at the top line. Supun and team is also on this call, and be available to discuss the specific challenges that they're facing from the macroeconomy later on. Cost escalations were driven mainly by inflation again, accruing from the devaluation of the currency, both direct and indirect consequences of which have led to inflation across multiple inputs to the business and the economy at large. Depreciation and amortization has also increased accordingly.
This has led to contraction on the EBITDA front to -1.4% relative to the corresponding period in the previous year. EBIT contracting by 25.3%. EBITDA margin and EBIT margin both compressed by six points relative to 2021. PATAMI suffered a reduction of greater than 100%, with Forex losses alone accounting for LKR 34 billion. If we were to exclude this Forex loss, PATAMI contracted by 36%. Free cash flows likewise contracted by 76.4%, driven largely by a 3x increase in CapEx relative to the corresponding period.
A major part of this, again, is due to the revaluation of booked CapEx, based on currency devaluation, in the rupee books, resulting in the increase in booked CapEx in LK items. Ncell, led by Andy and team, had a challenging period, with shortfall in voice revenues in particular driving down profits. The revenue stack in Ncell needs a little bit of dissection. The core revenues comprise of voice revenue and data revenue and is supplemented with ILD revenues. The behavior of these three revenue segments is somewhat disparate, and let me just split it up for you. Voice revenue contracted by 11.3%, driven largely by a reduction in interconnect rates in the market which took place during the period.
The data, however, performed excellently at and delivered growth of 17.6%. The net of voice and data dynamics led to core revenues contracting by 1.9%. Moving on to ILD, exhibited a contraction of 15.4%. Revenue overall therefore contracted by 4.4%. The main driver here being domestic voice, which is a key component of core revenue. Revenue reduction was compounded with cost escalation in network and sales as well as marketing expenses, leading to EBITDA contracting by 10.9% and EBIT by 18.8%. Both the EBITDA and EBIT margins were compressed in the range of 4-5 points on a year-to-date basis.
PATAMI at -24.1%, however, did benefit from some lower taxes during the year. Free cash flows at -19.1%. CapEx was increased during the period by 31.9%, mainly due to the LTE L900 deployment to compensate for lower band asymmetries in the LTE network relative to competition. Of course, negative EBITDA flow through also led to the contraction of free cash flows. Smart, excellent performance, steady momentum as always, consistent. Fairuz and team delivered a 6.5% growth in revenue. It's significant that data grew by 11.7%.
Some direct cost increases, featuring mainly regulatory expenses, leading to an EBITDA growth of 5.3% relative to the revenue growth of 6.5%. EBIT grew by 20.9%, driven in addition to EBITDA growth by lower depreciation and amortization, since in 2021, there was a one-off of an impairment of the financial services business in Sri Lanka. PATAMI grew by 14.2%, boosted by the EBITDA flow-through. However, if we were to exclude the one-off, PATAMI contracted by -2% due to mainly due to increased taxes. Free cash flow of -67.9%, driven mainly by a CapEx reduction of 33.1% as well as EBITDA flow. I'm sorry, FCF grew by 67.9%.
I'll pass on to Vivek, to carry on with the digital business.
Yeah. Thank you, Hans. Let me start with Boost first, which is the digital financial services. I think Sheyantha and team has been doing well in terms of building the Boost credit portfolio, and that is the one which has been driving growth for the Boost business with around 11.9%. Also, the growth happening on GTV by around 27% as well as user increase on Boost Life by around 10.5% to around 10.1 million customers. The impact on the EBITDA has been, or the losses have been on account of higher OpEx, built up coming from the depreciation of the platform, as well as the increased staff cost to serve the growing customers in the portfolio.
Cash flows as well as the profits pretty much remain flat compared to last year. ADA, which is the advertising digital and analytics business, has continued to show good growth in revenue and mostly coming out of the A2P SMS business, which is customer engagement as well as e-commerce enablement business. There's been flattening of the marketing solution business in the first half with the marketing budgets in the customer's end, which we could see. Having said that, the growth in revenue of around 15%. EBITDA impacted because of the higher OpEx, mainly coming out of the higher staff cost as well as increased marketing spend.
That's basically resulting in lower profit this year, first half than compared to last year by around 17.6%. edotco, the infra business of ours, I think the team, Adlan and team has been extremely busy both on the organic as well as inorganic front during this first half. The business showed a improvement or growth in revenue, extremely good growth of 23.7% coming out of increased colo opportunities and even build to suit in Bangladesh as well as the inorganic impact of the inorganic acquisition Touch Mindscape end of last year resulting in the top line improvement as well as improvement in the EBITDA line by around 32.5% resulting in EBIT growth of around 37.4%.
Free cash flow, you can see a significant dip on free cash flow because here we've also considered the acquisition of the Smart PLDT Towers as CapEx, which is around MYR 1.9 billion. If you exclude that, the free cash flow would be pretty much in line with what was there last year in the same period of time. PATAMI flat, mainly coming out of the increased finance cost required for these new acquisitions. edotco continues to build its portfolio in line with what is the direction under the Axiata 5.0. Let me go forward on how we look at the year ahead of us. As I said earlier in my opening executive summary, that we are likely to exceed our headline KPIs.
We are guiding the market to a higher outcome during the year from our KPIs of mid-single-digit and high-single-digit, mid-single-digit revenue growth and high-single-digit EBIT growth. CapEx, we are expecting it to be in line, if not marginally lower, but it's more a timing issue because so far against MYR 7 billion, we've only spent MYR 2.7 billion. I think we alluded to the continuing macro challenges in some of the frontier markets, specifically Sri Lanka, Nepal, Bangladesh, where we see a much stronger headwind. More so in Sri Lanka, I think we've talked about it, and Bangladesh. Nepal is still relatively okay because we are a net dollar-earning company in Nepal.
The impact coming out of energy cost increase, higher interest rates, strengthening of US dollar across, as well as, the overall pocket of the consumers in these markets is something which we are cognizant of. However, we are seeing of late yield improvement in most of the markets. More specifically, as you heard Hans talk about hardening of prices in Indonesia, we've seen a similar trend in terms of improving yield in Bangladesh. Some of the other markets, I think it's basically regulated pricing. I think regulators are also fairly open to discuss the increase in prices. That's what we are working on at the moment. M&A transaction, I think ongoing discussions on 5G, a single wholesale network. I think we are progressing well in terms of our discussion with DNB.
Hopefully at some point in time, we would be able to close both the transaction related to the investment in that company as well as the access agreement. CelcomDigi merger, I think, is progressing well. The fact that we got the no objections from MCMC is. The next few steps are now to be carried out. We are working towards the timelines of completing it this year. Link Net MTO, which is the mandatory tender offer, should be done by October, and we should be buying in November, around that time should be completing the rights issues in XL Axiata. I think supply chain issues specifically relating to the SIM supplies remains a concern.
We do see some delays on the other equipment, but not something we would be extremely worried of at this point in time. This is just a quick slide on where, how do we rate our, you know, from a risk standpoint the macro impact in some of the markets. I think it's clearly visible here on this chart. Sri Lanka is one big concern, but most of it is actually already built in. We think now the developments happening in Sri Lanka in terms of government formation as well as the dialogue with the IMF and the likelihood of the credit facilities from IMF and eventually funding by IMF should bring some stability in that environment.
The other market as I said where Bangladesh I think we've seen some bit of turmoil on the Forex BDT over the last couple of months, but now it's kind of stabilizing and stabilizing at levels of 95. Nepal essentially again to do with the overall net negative current account impact. Nepal less concerned because most of the debt is through bilateral agencies, so which are fairly long-dated debt. Myanmar, I think, the business which is edotco business which is just 5% of their portfolio is doing, I mean impacted by high inflation, but as such the business continues to do well. The only challenge for us in Myanmar is inability to convert into Forex US dollar and repatriate it.
I think we just thought we should highlight little bit around what is being done in Dialog because we see this while on the face of it is a macroeconomic crisis with the high inflation, high interest rates, US dollar depreciation and the impact on the overall economy. The fact that this also brings in an opportunity to reset the organization and build resilience for future effective operations here. The company has been focused a lot on continuing to grow top line, and this continual growth is coming from more from an efficiency standpoint, not necessarily putting more capital. Rescaling of costs which is really looking at cost on a zero-based budgeting. For example, I think looking at how do you optimize the organization as such.
The balance sheet resilience, balance sheet restructuring which is really looking at how do you, how do we manage the vendor currencies in which we pay to the vendor? How do we restructure the debt which is on the balance sheet? Modernization of network is essentially focused around looking at faster shutdown of 3G, consolidation of data center, insourcing of some of the operations which were hitherto to third parties and some of them were dollar-denominated operations. Converting most of the dependency on fuel being reduced by bringing in green energy, setting up lithium batteries, solar sites, et cetera, to drive that efficiencies in resilience in this current environment. Also looking at how digitization and analytics could be maximized to simplify and eliminate friction in the operations.
Localization of businesses, for example, instead of buying CPEs for the fixed wireless business they're looking at refurbishing CPEs. Converting some of the dollar-denominated AMCs into local LKR-based AMCs. A lot of activities are being done to make the company resilient in this current environment of macroeconomic challenges. As I said earlier, we do see this crisis as a placeholder for opportunities to come in future years. That's pretty much what we wanted to cover now, so I'll hand over to Claire.
Okay, thank you, gentlemen. We'll move on to the Q&A session. Just a reminder, you have two options to ask your questions. Option one is basically to ask the question verbally. You can click on the Raise the Hand button. Remember to unmute your line, ask your question, and mute the line again. The other option is to type your question in the chat box, and we will pick it up from there. As usual, we have the OpCo's representatives joining us. We have colleagues from Celcom, CEO Dato' Idham, CFO Yap. From XL Axiata, we have Pak Budi on the line.
This time we also invited Dialog CEO Supun, as well as Robi Acting CEO Riyaaz, in anticipation that you may want to also better understand our operations on the ground. Feel free to direct your questions to them if you wish. I think we can start the Q&A session. Yes, please go ahead. We do see in the queue is Foong from CIMB. Foong, please go ahead.
Yeah. Hi, good afternoon, everyone. Thank you so much for the call. Couple of questions from me. Firstly, for Celcom, the revenue, you know, has done quite well in the first half. How do you see the outlook moving into the second half of this year? In particular, do you see any risks of perhaps revenue softening a little bit from the end of the Jaringan Prihatin program? That's question number one. Question number two on Dialog. How is the top line doing so far into July and August? And I understand that you are trying to get approval for price increases. Any updates on that? And is there a risk that the regulator will not allow for it? And how much price increase are we planning for?
Then my third question, I guess for Vivek on, in terms of the leverage for the group, gross debt to EBITDA at 2.86x, do we need to consider doing an equity fundraising or do we just sort of wait for the CelcomDigi merger to be completed and cash there will resolve the issue? My final question, on the MTO for Link Net, you mentioned that it's expected to be completed in October. If I can just ask for a bit more granularity here. Is that going to be by the end of October or earlier? And is my understanding correct that the MTO itself will have to be launched a month before that? Yep, those are my four questions. Thank you.
Thank you. Thank you for the questions, Foong. On Celcom, may I request Dato' Idham to throw some light?
Hi. Hi, Dato' Idham. Please go ahead.
You're on mute, I think.
Maybe we circle back, perhaps. Shall we circle back?
Yes.
Maybe we get.
Supun.
Yeah.
Supun can take the second question on the top line and, also, thoughts on the regulatory.
Yeah. Thank you. Good afternoon to all of you. Second quarter and thereon, we are seeing somewhat of a slowdown in the top-line growth because on the back of heavy inflation coming in the second quarter. However, we continue to outperform the market and then sustaining the core revenue growth, especially in our data business, enterprise business, as well as our international business. We see a slowdown, especially in voice business. In terms of the price increase, the price increase has been technically approved by the regulatory commission. However, it requires approval of the minister in charge, in this case, the president of the country. We are hopeful that it will get approved in the coming weeks.
The price increase that has been approved by the commission, pending president's endorsement, is 20% for telco services and 25% for our pay TV services. 20% on telco and 25% on pay TV, and it will be applied across the industry by all operators.
Dato' Idham, yes.
Dato' Idham, can you hear us? No, we can't hear you.
No.
Maybe we have to.
Okay. Let me take the last two questions, and in case we are not able to get Dato' Idham, then probably I'll answer that question on Celcom, right?
Okay.
Well, from the balance sheet at 2.86, we are reasonably confident that we should be able to go through the merger between Digi and Celcom. As you know, around MYR 4.4 billion, which is around $1 billion of the money would come as part of the repayment of the shareholder loan, as well as the settlement amount on equalization within a period of six months from the completion of that transaction. That's, I think, clearly an agreement which is gonna bring down the leverage for us.
Second, we also did talk about when we actually acquired the towers in the Philippines, we did look at getting investors to partner with us, either Philippine level or at the group level. I think we are at edotco. That's something which is also being evaluated at this point in time, and then we should be able to guide the market in terms of how we're gonna deal with that. We don't see the need for equity infusion at this point in time. Even if you look at the rating agencies, I mean, I think we did get because most of the investments is actually going through the tower business, which they understand is better from the cash flow standpoint and more guaranteed cash flow.
Moody's had given us around 3x headroom for us from a rating standpoint. S&P did put us on a credit watch mostly to do with the merger between Celcom and Digi, not based on the credit profile we have. I think we are fairly comfortable at this level when it comes to the leverage of the balance sheet. Having said that, the merger as well as looking at our partners on the edotco side are the two major activities we will carry out which should bring down the leverage for us. The MTO, as we speak, we got the final approval from OJK to carry on the MTO.
Once we have, then we need to complete within 30 days time. It should be some time early part of October, in my view.
I think, Celcom is online, Dato' Idham. No.
No. I think, I mean, so far as we get into August, I think there's no major surprise for us in terms of the revenue development. Having said that, I think the improvement is obviously coming from a lower base last year. I think from that perspective, the run rate we may not see that kind of changes happening. So far, I think the business has been performing in line with how it has performed in the earlier part of the year. Yeah.
Okay. Thanks for that. If I can just throw in some follow-up questions. Firstly for Supun, right? In terms of the price increases that you're planning for, does that, you know, will that resolve the issue in terms of covering the increased cost? Or do you think that, you know, consumers may find issues paying, you know, that much increase in the price of the service, and you might have some, you know, reduction in the demand there. Secondly, just to reconfirm, Vivek, with regards to the MTO, you mentioned early part of October to complete the MTO or to launch the MTO?
Well, MTO is open for a period of 30 days. If we announce or commence after our announcement, as I said, we got the final approval. Let's say we announce in early part of next week, then it'll take 30 days. It'll be open for a period of 30 days for the minorities to participate. Eventual payment period would be maybe another week from there. We're talking about the whole process getting over by around first week of October.
Understood. Yeah. Okay.
Yeah. On the price increase, in terms of elasticity, the last indication we have is on the tax increase. There was a value-added tax increase in the month of June, which was passed on. What we saw was that in that case, there was no real reduction in demand. Then it was completely translated to incremental top line. In this case, again, we are not expecting a significant drop per se because it's the packs that we are increasing. Mostly the standard packs they are used to. The pay-as-you-go rates will not have impact. Overall, we are expecting about 0.75 elasticity in terms of that price increase flowing into EBITDA.
However, this wouldn't completely resolve the margin dilution that got impacted, or EBITDA that got impacted due to inflation and currency devaluation. If you look at, we have seen about a 12-13 percentage point drop in margins due to cost escalation, and that cannot be fully resolved through the price increase. That's why we are aggressively driving the resilience program, which Vivek explained, to get back the EBITDA margins to about 45% by next year. It's a mix of top-line growth, and through price increase, as well as focused initiatives on reducing the cost base.
Okay. Understood. Thank you so much, everyone, for your response.
Dato' Idham, is there any additional comments you would like to share on the first question from Foong? Understand you're online. No. Okay, never mind. Let's move on then.
I mean, Celcom has done a good job, good performance, so you need not answer, right?
Okay. All right. Next, in the queue is Ranjan. Ranjan from J.P. Morgan, please go ahead with your question.
Hi, good afternoon, and thank you for the presentation. I know it's a pretty tough macro environment, but maybe I can just ask two related questions. Firstly, how should we think about your interest expense going forward, considering your big actual position, rising debt, and the other macro challenges that you talked about? Secondly is like, how should we think about the impact of the global chip supply shortages that you have alluded to. Thank you.
Let me take the first question, which is on the interest. I think first of all, Ranjan, we have a fairly large debt of ours, which is on fixed coupon. If you recall, nearly around $2 billion of our debt out of the total dollar debt of around close to $3 billion total at this point in time. Around $2 billion is on fixed coupon, which is for a period of until 2026, 2030, as well as 2015. We will not have any impact on account of that. 50% of that is actually hedged, so we would have. That's hedged into ringgit. To that extent, we are protected both in terms of fixed interest rates on dollar as well as the hedge.
When it comes to local currencies, local interest, I think a 5%, the interest rates increasing, well, I mean, let's say 1% would have an overall impact of around close to MYR 80-90 million for us. So it's not that material when we look at from this point in time. However, having said that, you know, how the things develop in future is something which we are watching out. In fact, even in Indonesia, they've recently gone for the sukuk, which actually provides them the interest coupon between around 6.5% or somewhere between up to around 8.5%, which is locked in for a period of three years to around 10 years. This is all IDR denominated.
Which is pretty much in line with what they are paying at this point in time, interest rate. What the second question was?
Global chip supply.
Chip supply, I think, I mean, we do see from the equipment standpoint, I think there has been some issues in some of the markets where they've been delayed, but it hasn't impacted big time projects. For us, there have been some delays. The major impact has really come on the SIM cards supply, which now is kind of easing out and we of course have taken a long view on that by procuring in advance. I think the issue has been that they've been procured at pretty much, you know, three times or four times higher than what has been the kind of ongoing price.
So it's more an impact on the prices of SIM cards versus o f SIMs versus availability of these the SIM cards, yeah. I think that's really the impact for us. We understand, you know, some of our vendors are also Chinese vendors which are now getting equipped to have domestic supply starting from next year.
Yeah. That was going to be my follow-up question. On the radio equipment, are you facing any shortages or is this only on the SIM supply?
No. We are facing delays, I would say. I mean, for example, we've got a project going on in Indonesia which is really about you know, swapping part of the region with Central Java. Now, that obviously is getting somewhat delayed project implementation because of the delay in supply of equipment, radio equipment. There've been project delays for sure, but nothing that you know, has been impacting the rollout plans for us as such at this point in time.
Okay. Thank you.
All right. Thank you, Ranjan. Let's move on. We have, Izzati on the line from Macquarie. Izzati, please, ask your questions.
Hi. Good afternoon. Can you hear me?
Yeah.
All right. Just one question from me. You know, given the fact that the conglomerate structure of Axiata means it's unlikely for the investors to see fair value materialize, has management previously or currently considered to propose to the board of Axiata basically to privatize it, and then for shareholders to then be given stakes in the individual entities. Has that been part of a discussion?
Well, I mean, I would say that, you know, these are things which are discussed in various strategic forums, and there are various options which we evaluate with the board. There's nothing concrete I can talk about, but there are many other options also we debate, discuss with the board as part of our strategic retreat with them. I think I will probably just say that at this point in time.
All right. Any comments, Dr. Hans?
That's okay. I think Vivek covered it. I think it's a topic certainly discussed. At this stage, we leave it here as the answer by Vivek.
All right. Thank you.
Okay. Thanks. I don't see any further questions online. There's one from Amir, I understand. Okay. So the question is, we would like to inquire when can dividend payment be reasonably expected again? That's the first question. Secondly is, retained earnings have been on opposite trends at Holdco and Group. How big of a concern does management think this is to dividend sustainability? Third question is, does the management deem edotco ready for an IPO? Lastly, what kind of level of capital injection is expected for Boost if it's needed moving forward?
So I think, first of all, let me start with the first question, which is, I think we will review this in the end of next quarter in terms of the position for us to be able to pay dividend.
We can't commit, but I think we will review it. I think the reason why this has been deferred is because we are watchful of the macro developments in some of our frontier markets, as well as the requirements for some of the other operations. Second question of yours, in terms of the dividend sustainability because of the retained earnings. I mean, retained earnings has been a concern, of course, because it has depleted over a period of time, mainly coming out of some of the impairments which we've taken. Having said that, I think we still fairly comfortable given the flow of dividends coming in and also the corporate center recoveries coming in, various OpCos, which is part of the plan, which we have in place.
The IPO, I think, I mean, I would not be specific whether it's IPO or not. I think we quite, you know, as I said earlier in my conversation, that we do see a need for partnership, whether it is coming through the IPO route or whether it is coming through private placement. We do see a need to carry that out given the funding requirements of edotco to expand, specifically in the emerging markets which we've been doing. I think we will look at that. Whether it is IPO-ready or not, I think is all.
will all depend in terms of size and scale, yes, it is, but it'll all depend on the route of funding, financing we prefer at this point in time, given consideration of the markets for a new IPO. The last question is Boost. I mean, we have been quite clear from Axiata's standpoint that Boost capital requirement will have to be met through new investors coming in. There is a requirement of MYR 100 million capital for Boost, the Boost RHB Bank, which would be kind of shared between the two at MYR 60 million from our side, MYR 40 million from the RHB Bank. From Axiata's standpoint, we do not see any future capital injection coming into the Boost.
It will come out of the new partners or strategic investors coming in there.
Yeah.
Amir, is that okay? Or any follow-up?
Yeah. I guess if there's follow-up, then perhaps Amir will type in the chat box. Okay. I don't see any further questions coming through. Yeah, here we do. We have a question from Avinesh. Just to clarify, going by Vivek's comment on the MTO for Link Net closure by early October, can we expect MTO announcement by next week or second week of September? Yeah.
Okay. Okay, that's it.
Claire?
Yes, Dato' Idham ?
Yes.
Uh-huh.
I think you had one question which you managed.
Yes.
to escape.
Okay, please go ahead, Dato.
I was, Vivek, Dr. Hans, I was not trying to buy time. He was, but the Polycom has been acting up a little bit on us, this time around. If I may just look back to Foong. I'm sorry about the delay in answering your question, Foong. Your question about the price pressure that we'll see maybe in the coming quarters. In the past couple of quarters, I think we managed to still remain competitive with our products. I think that we have done quite still able to grow our revenue. We see also from the network, we're seeing improvement also in our network performance. The past two quarters of 2022 has been quite good for us.
The answer to your question is yes, we do foresee there may be some pricing pressure coming up, especially when the subsidy for the Jaringan Prihatin starting to lapse. We have thought about this, and we have prepared ourself with some new packages. You probably see in the market the mix and match that we have introduced. We also introduced new packages for as low as MYR 20 to be able as a starter pack for our prepaid and so on and so forth. Yes, we do think the competition will continue, but we are ready with our plans, and we will execute based on our own plan at our pace, yeah. Thank you.
Thank you very much.
Thanks, Dato' Idham .
Yeah, very nice to hear from you. Maybe just a quick follow-up. In terms of, like, the take-up of the Prihatin type of offers, right, for Celcom, was that a substantial number in the last 12 months or so?
I don't have the exact number with me right now, but in general, yes, their take-ups is quite relatively comparable to the others, but I would not say that it is a majority of our net adds, I would say. I think it's because our existing packages is also quite competitive and a lot more worry-free for the customers.
Okay. I noted on that. Thank you so much, Dato'.
Okay. Thanks. Thanks, Foong. I think we can wrap up. Maybe Dr. Hans has some closing remarks. Thanks.
Thanks, Claire, and thank you, everyone.
Okay. Oh, sorry. There is a follow-up question.
There's one more question.
Sui Fung Tan. This is basically on the comment from our finance minister. No extension will be given to telcos for the DNB stake and the lease agreements by August. Can you please comment? Second question is, given the delay in CelcomDigi merger as well as development in the industry, including DNB and conditional no objection, could you please comment on previously shared potential synergies? Are these synergies still applicable?
Excuse me. All right, Idham, would you like to take?
I will take perhaps the first question. Maybe the second question, something that Azra could help me also. On the no extension on the deadlines from the finance minister's comment. Unfortunately, I can't comment. 'Cause we do have an NDA when it comes to this. What we can say is that as per what Vivek has mentioned earlier, the discussion between us and DNB is progressing well. I think we have made a lot of advancement since the last discussions. Probably have to wait until the government has to make their announcement on this.
On the synergies.
Idham, can I take? On synergies, I think yes, there has been a delay in terms of the closure of the completion of the merger. I think we are now reasonably confident, barring few steps to be completed, the merger should go through. Having said that, I think our synergy number, we believe the MYR 8 billion which we talked about earlier when we actually announced, we should be pretty much there when it comes to the actual delivery of synergy. There's not much of a change into the overall synergy number as we have communicated earlier.
Okay. Thank you. Perhaps just a couple of seconds in case there's any last-minute questions that might pop up. All right. Perhaps we can end the call.
Yes.
Yeah. Thank you very much.
Thank you.
Thank you, everyone, for joining.
Thank you, everyone. Thanks.
Thank you.
Have a good weekend. Thank you.