Earnings Call: Q2 2021

Aug 27, 2021

Afternoon, everyone. Ladies and gentlemen, my name is Claire Chin. I am Head of Investor Relations at Axiata Group. Thank you for standing by and welcome to Axiata's 2nd quarter results briefing. Today, we have with us Dato Izzardine Idris, Axiata Group CEO and Vivek Sood, Axiata Group CFO as well as representatives from our operating companies. There will be a short presentation followed by a Q and A session. Lastly, 2 housekeeping reminders. You will be on mute throughout the presentation. Also note that we will end the call promptly at 4:30 p. M. As we understand, there is another results call, which you may need to attend at. So without further ado, I hand the conference over to Datu Izzaddin. Please. Hi, Claire. Thanks, Claire. Hi and good afternoon. Thank you for joining our second quarter results presentation today. I see there's a lot of attendance today. I know there's a handful of our own colleagues, but I think, Claire, we have a set of attendance this afternoon. Again, thank you for joining us. Happy to report the Q2 results today. You would have picked up from the press release that we've issued the performance of the group for the Q2 year to date, strong performance for year to date despite the business environment caused by the pandemic. You can see the revenue excluding device at 7.2%, EBITDA 11%, The margin rising to about 44.2 percent and this number is lifted predominantly entirely by Cellcom Dialog. Of course, the narrow set of performance from Axiata Digital, specifically this time last year, we had the E tonight program that had cost a RM40 million. There's none of that nature this year. And specifically, ADA has reported a profit of DKK20 1,000,000 whereas the losses at DFS has narrowed to about DKK77 1,000,000 this year compared to DKK171 1,000,000 the year before. So as I said, underlying pipeline driven by improved EBITDA contribution as well as lower net finance costs. But the accelerated depreciation of 3 gs asset at Cellcom and Ruby continued. That's about RMB177 1,000,000. But that So we'll still carry on for a bit into the next quarter. By the Q4, that will turn around. Now at the same time, the Group recorded OpEx savings of about DKK225 1,000,000. So that's the other boost, if you like, to the EBITDA numbers. Vivek will cover that in much greater detail. As I said, a solid Q2 results compared to the Q1, as a result of higher EBITDA coupled with lower accelerated depreciation of 3 gs assets. Of course, OCF operating free cash flow rose to about DKK1.6 billion, balance sheet has improved further, strong cash position of DKK7 1,000,000,000. Our gross debt to EBITDA ratio trended down to DKK2.48. You recall last year, this time last year, it was about DKK2.64 And our threshold, if you like, is 2.5x. So that's the other good news so far as the results are concerned. Insofar as Cellcom full marks to the team, very visible results for the transformation program. And on this, I'd like to place on record My appreciation to the Cellcom team for showing good set of results. They added 1,020,000 customers. And as you can see there is the results are driven by a 12.5% growth in prepaid revenue. Now of course, the challenge is always to the Cellcom brand. Of course, MBNO also did quite well, in particular Tuned Talk. Now this time last year, we had the ERP cost of about CNY77 1,000,000 net. And of course, this year, we don't have such expense and therefore that has also boosted the numbers year on year. So far as XL is concerned, the Q1 was a bit of a challenge because of the competitive pressures, weak consumer spending, But the Lebaran or Hireo period helped the numbers as well as the easing of the price competition. So you see That revenue excluding device is up by 7.7% quarter on quarter and partner led by about 23.4%. Year to date, however, It's still flattish at negative 0.8 percent and EBITDA margin is still resilient at about 50% as a result of lower network and direct expenses. Ruby recorded strong data revenue growth. We see this as always an opportunity for us to continue to grow the business. But the challenges with the higher data consumption, even in Malaysia, for example, the data consumptions has risen to as of June of about sorry, has risen to 23.9 gig per customer per month. Now this time last year, it's about I think 15 gig. What that means is we have to continue to invest in the capacity to make sure that the quality doesn't suffer and that the network can cater for the higher traffic as a consequence of the continuing lockdown. Dialog has performed considerably well in the four segments in all segments of its business, mobile, fixed and TV in all the metrics. You can see there EBITDA, revenue part time free cash flow as well, yes. And sell is a bit the one that's the outlier if you like. It's to start with, we don't have the same coverage as our main competitor, NTC. And as a result of the continuing lockdown, Because there's 2 effects. 1st, with the population back in the rural areas because we don't have coverage, they opt to jump onto the other competitor's network. Secondly, with the lockdown, a lot of the consumers opt to switch on their ISP sort of network. Yeah. So what that means is the mobile network will be disadvantaged in that sense. And of course, the spectrum constraint, although we've been awarded the spectrum In April this year, we need to make sure that the rollout will be effective. And again, The rollout is affected by the continuing lockdown. It's not as fast as we'd like to be. And hopefully, The benefits, if you like, of the relief in the network will kick in, in the Q4 this year. Yes. Next slide, Claire. Smart, as before, recorded a very steady performance. Year to date, part time, negative 11.3%. That's due to impairment of investment in an associate company called PayPay. It's basically an e wallet business. The business model is to give out vouchers and as a result of the lockdown, there's no consumption to encash those vouchers. Now we believe that this is just a temporary setback to the business. When the economy opens up, we believe that PayPay will be able to recover and therefore, perhaps even write back our investments that we've impact. Ansiata Digital, as I've said, ADA recorded a profit of about sorry, DKK20 1,000,000 compared to DKK6 1,000,000 last year and narrowed losses because last year we had that E29 That has affected the business by SEK40 1,000,000 last year. Higher GTV, gross transaction value for the financial services, digital financial services, up by 15.4% as a result of higher online transactions. And of course, Boost, Our wallet has increased users up to 9,100,000. That's up by 1.2x, whereas merchants that Have signed up, it's about RMB 250,000. Edogko continued with a resilient performance, particularly driven by the Malaysian and Bangladeshi markets, continuing orders. EBITDA margin has gone up to about 53% sorry, margin up to 65%. It's part of me is up by 53%. And the good news is unlike you may have read the pressures some of the MNOs are facing in Myanmar, Iroquois is facing no such sort of constraints as it were. So therefore, there is no significant impact from the QOO in Myanmar thus far. The Board has approved an interim dividend of $0.04 That's equivalent to about $367,000,000 payout and this is in line with us in our commitment towards becoming a high Different Company by 2024. We believe the second half will be very much in line with the headline KPIs we have indicated. So hit like KPIs of both will be low single digit percentage. Downside risk, Sir, we believe that the continuing COVID-nineteen pandemic lockdowns and so on will put further strain to the overall economies across the footprint, not just Malaysia. Of course, the vaccination rate in some of the countries is not as rapid as we all like it to be, In Asia in particular, but in Asia, my understanding in Java is a much, much higher percentage than the overall number that we've been reading. I think the overall number is about 15%, whereas in Java, it's much higher, more than 50% if I'm not mistaken, 60%, 70%, yes. So that's and of course, the continuing discussions we're going we're having with Digital National Brahad on the 5 gs rollout that's ongoing. So until and unless that's anchored down from our perspective as well as the industry, that remains An uncertainty in that sense. And of course, slower than expected recovery in NCL because of the restricted movement as I've mentioned earlier. So all in for the 1st 6 months, you would have read the announcements we've done, in particular Cellcom DG Merger. We've made submission to the MCMC. We're looking forward to the decision. Since the submission done in July, There have been various meetings already. Requests for further information have been submitted have been given to us and the team is responding quickly. My direction to the team is to try to plug all the gaps in information so that the MCMC can make a decision sooner rather than later. Barring unforeseen circumstances, we expect that to come at least the approval before year end. And we like to think that if we submitted in July, Year end will be 5 months. That should be more than ample time for MCMC to come back. Again, not wanting to put pressure on anybody, But that's the sort of timeline that we hope the MCMC will enable us to proceed with the merger either way. Yes. And of course, the formation of ADA Strategy Alliance SoftBank, we are continuing discussions with SoftBank on how to reap the synergistic benefits that has been potentially discussed across the SoftBank ecosystem and as well as for the rest of the Axiata Group to partner with SoftBank in other initiatives, particularly on the enterprise. ADA has also made this acquisition called Awake Asia to boost its digital e commerce capabilities. And of course, the joint venture between Boost Holdings and HB Banking Group to make the submission for the digital bank license in Malaysia. At the same time, Boost has made an acquisition in Indonesia. That's more platform and of course the ongoing discussions that XL and Axiata has announced for the proposed acquisition of majority stake in a company called PT Link Net, fixed broadband business in Asia. As part of our continuing commitment to support The government, in so far as pandemic response and support is concerned, the Board has approved a GBP 5,000,000 contribution in the form of medical equipment to Malaysian medical frontliners through the Greater Glen Valley Special Task Force under the Ministry of Health. So we'll continue to evaluate other avenues for us to support the government in its initiatives to cater to tackle the COVID-nineteen pandemic. One last slide from me. Next slide. Yes. This is just meant to track the monthly revenue trend pre lockdown, pre lockdown being before March 2020. And you can see that the trend, if you like, for all the companies except Ncell, which is the purple line right at the bottom, is in good shape. Hopefully, the trajectory will continue for all the other companies. And as I've said, with the continuing lockdown, This will remain to be a challenge for us in terms of their performance in the quarters to come. On that note, I'd like to hand over to Vivek Sood. It's still I mean, if you see the gentleman that will appear soon, He is Vivek Sood in case you can't recognize him. Thank you, Dato and very good afternoon to all of you and maybe good morning to some. Let me start with the first slide, which is on the reported numbers. I think what Dato We outpaced revenue by growing at 8.2% and performance has been essentially strong performance from Cellcom, Axiata Digital and also dialogue. Offset by ForEx, I think one of the challenges which we had in the first half was the reporting currency, which is ringgit strengthened against all our operating currencies. To the extent against Sri Lanka LKR, it actually strengthened by around 9% and that's had an impact around 2% to 3% on the revenue and EBITDA growth numbers. Quarter on quarter, Also revenue and EBITDA did show a strong improvement, 5.4% growth in revenue and 4.4% improvement in EBITDA margin. Batami was uplifted because of higher EBITDA and also lower finance cost. If you recall, We did do certain fundraising last year, which did bring down our finance costs quite substantially. Last year, if you recall, we had a one off gain coming from sale of towers around ringgit, which did have an impact as a positive impact in last year's profit. And also this year, We've been impacted by the accelerated depreciation in 3 gs assets across Cellcom and Ruby specifically, which is a negative impact coming in this year. So I think overall a strong performance coming from operational revenue growth and operational EBITDA performance. If I can go to the next slide. On an underlying basis, we have seen an excellent 11.2 percent EBITDA growth and 7.2% revenue growth ex devices. EBITDA margin improved by 1.2 percentage points to 44.2 percent and year to date Potami more than doubled in the first half of twenty twenty one. And also this is after inclusion of around RMB1.77 million on account of accelerated depreciation in the first half. Performance came from mostly all OpCos except EnCell. On revenue, if you look at Dialog grew by 18.6%, Axiata Digital more than 100%, ROBI grew by 8.3% and Cellcom grew by 4.6 On quarter 1, but second quarter has been extremely good improvement coming in from quarter 1. Ncell, as Dato said, remains bit of a challenge. But coming out of both the core revenue growth not being sufficient enough to offset the lowering of the IND revenue and I'll cover a little bit of more details as we go along. Quarter on quarter, revenue ex devices went up by 6.4% coming across most of the Of course, accepting NCL. EBITDA 11.2%, if I normalize for the last year one off employee restructuring program in Cellcom EBITDA grew by 9%. And this has come mainly from self formed Axiata Digital where the losses have been substantially reduced and improvement coming from Dialog and e.co. We continue to focus on our excellence program on cost, which did deliver around GBP225 1,000,000. This is on the OpEx side, while on the CapEx also we had substantial savings. OpEx savings were around $225,000,000 and that's really reflective of the fact that EBITDA growth has outpaced the revenue growth. As far as quarter on quarter concern, EBITDA of 4.1% partly offset by lower end sale impact of around 9.5%. As far as profits are concerned, Patami coming from higher EBITDA, lower finance costs, lower losses coming from Exiara Digital and offset by partly by the accelerated depreciation of 3 gs assets here. Quarter on quarter, 38.2%, mainly coming from all OpCos except EnCell. Can I go to the next slide? This is just a bridge between the underlying performance of 172% first half last year versus 547% first half this year. And mainly if you see coming from the effect of EBITDA improvement and specifically Bangladesh partly because of the lower tax rates after we got listed and also the deferred tax impact in Indonesia, offset by the accelerated depreciation, which is around $177,000,000 and in addition, the additional depreciation coming from continued investments. Reported, Watami, mainly between what is reported and what is underlying is reflective of the for its impact coming in this first half. If I go to the next slide. Operating free cash flow, after we've had this whole challenge of IFRS 16, it's never reflective of accrued cash generation. So what we try to do here is to remove the effect of the depreciation on account of ROU assets to reflect what would be closer to the true cash flow generation. So that's up from €492,000,000 to €786,000,000 which is around close to 60% improvement, mostly coming from all OpCos except XL. XL has been advancing of the CapEx spend in first half of twenty twenty one. So go to the next slide. Balance sheet as Dato explained earlier remains fairly strong. We've seen our gross debt to EBITDA steadily coming down over quarters. This quarter was 42.48 and net debt to EBITDA at 1.85. We have borrowings essentially around 43% in local currency versus dollar borrowing in pretty much in line with what our target of 50% is. And lot of that borrowing is on fixed interest locked in for much longer period of time at good interest rates around 68% is on fixed and our maturity has come down substantially Over the last 1 year, we've only 21% of the maturity between 1 to 2 years, which would, as I speak, would have also further come down because some of the repayments which we've done in the month of August there. And a SEK7 billion cash, A lot of it at the group level, a 1,400,000,000, Cellcom at 2, Cellcom obviously would be partly reduced by paying down of some of their debt as well as payment of dividend and e.co around 1,200,000,000. I'll go to the next slide. Quickly, coming on each of the OpCo's performance, I think Cellcom Dato alluded to a strong prepaid performance, partly offset by the accelerated depreciation on profits profit line. If you adjust for that 12.4% growth in EBITDA and 28% growth in the Patami. Even quarter on quarter, numbers look strong for Cellcom. And free cash flow at 961,000,000, up 31%. Profits being fairly flat and the reason for that has been around close to GBP140 million or GBP160 million on account of the accelerated GBP174 1,000,000 on account of accelerated depreciation, which has been impacted this year's profit numbers. If you go to the next slide. XL, as I said, strong quarter on quarter performance with 7.7% improvement quarter on quarter, though year to date it's been flat EBITDA Group at quarter on quarter at 8%. And mainly coming out of the fact The revenues up during the debarant period as well as somewhat easing of the competition in the market. Cash flows being down mainly because of the higher CapEx and also profits being impacted Last year we had one off around ringgit 1,000,000 ringgit equivalent profits coming in the first half on sale of towers. If you go to the next slide, Rovi continues its strong performance. The revenue ex devices up by around 8.3%. EBITDA has been relatively flat because of the one time reversal of some of the provisions which we made in quarter 2 last year. If you adjust for that, the business continues to deliver strong performance on EBITDA as well as on the profit line. Next slide. Dialogue, excellent performance and all parameters. Revenue grew by 18.6 EBITDA grew by 21.9%, Patami grew by 86% and cash flow improvement by 18.1%. And that performance came from all segments, be it mobile, fixed or television. And this is in spite of difficult economic conditions in that market. I think we have had impact coming in on the reported numbers mainly on account of ForEx. As I said earlier, LKR depreciated against ringgit by around 9% during this first half. Next time? Ansell, I think we've explained on what are the reasons for the Ansell's performance being lower. One was obviously expected. ILD, we did expect to come down even more, but given pandemic and a lot of A lot of migrants are actually going back to Nepal. So the ILD is down by around 21.7%. Core revenue has gone up by 3 point But not sufficient enough to offset the drop in the ILB revenue. EBITDA is still better and also the free cash flows and profit remaining much strong. I think the challenge in this market has been on account of competition coming from the government owned NTC, a lockdown impact. This was one market which had most frequent lockdown as well as impact of the coverage, a lack of coverage on 4 gs as well as Spectrum deficit. Now with Spectrum being available in April, the investments are ongoing to match the coverage they've set. Next slide. Smart continues to remain steady in its performance and the business which has consistently delivered on steady growth as well as profits with 9.8% growth in revenue, partly impacted because of the accounting difference. If you adjust for that, it's around 4.3% growth in revenue and 4.8% growth in EBITDA and an improvement in cash flows, Marginally down on profits, mainly coming out of the one off impact of impairment on the wallet business, which was something we acquired 2 years back and the impact has been because of the COVID where the business has not really been able to operate in this environment. Hopefully, things once open up, you should see some recovery happening in this business here. Next guy. Exiata Digital, 2 businesses, ADA, the digital advertising business, strong performance coming in with positive EBITDA of 44,000,000 during the quarter. And improvement of GBP370 1,000,000 in terms of the revenue for the first half and reflective of the improvement in profit of around GBP 20,000,000 for the first half. And DFS Business, Digital Financial Services lowered down its losses from 171 to 77, partly on account of the e to nai effect of last year around $40,000,000 If you adjust for that, even then around $60,000,000 improvement in the losses in the BFS business. And this is coming on the back of very clear management of cost as well as looking at opportunities or revenue, which are monetizable there. Next slide. EDOTCO continues with strong performance in Malaysia and Bangladesh, However, somewhat impacted because of the lower activity in Myanmar, as well as some of the Tier 2 customers in markets like Cambodia. However, EBITDA margins remained very strong at 64.9% and profits, but I mean growing by 53% and that's on the back of some of the discounts which were given last year as well as overall improvement in performance on top line. Next slide. So Dato, I'll hand it over back to you to cover a couple of slides on moving forward. Yes. Thanks, Vivek. Very quickly, we think that for this year will be in line with the headline KPIs that we have indicated earlier on in the year, single percentage of both revenue as well as EBITDA. Next slide. And so far as risks and opportunities are concerned, of course, the COVID-nineteen pandemic will the strength of the overall economy across the footprint markets. But the good news is at the outset, when the pandemic started and everyone started to think that telco sector is resilient. I was a bit nervous at the time to lay claim to that. But as a result show, In fact, if you look at performance revenue wise, EBITDA wise, it's actually better than 2019 if you do the numbers and do the analysis later on. It's better than what we have achieved in 2019, slightly better. So the good news is we believe the business We'll be able to withstand, although we hope the vaccination program will continue to be rolled out in all the markets we operate. Regulatory developments in the various markets, in particular in Bangladesh, in Cambodia as well. And of course, as I've said, the commercial negotiations on the 5 gs rollout, there will continue to be a risk to the extent that The, if you like, commercial terms are not favorable or not favorable to the if we were to do it otherwise, If you look at that comparison, slower than expected recovery in sales because of restricted movement, notwithstanding the award of the new spectrum, Because of the lockdown, we are not able to roll out the network. So that will continue to pose this challenge. But we believe that So long as it is caused by that, we think that once the economy opens up, the team will be able to roll out the network to improve the service to the customer. So far as opportunity is concerned, we believe that the growth momentum from ADA with the synergistic benefits arising from the investment by SoftBank, We're working on that to harness the opportunities within the SoftBank ecosystem, at the same time identifying new areas in which Axiata itself can partner with SoftBank in the other segments of the business. Of course, dialogue will continue to we are confident that we will be able to sustain its growth momentum despite the economic challenges of Sri Lanka. We have read enough reports about the potential risks so far as the Sri Lankan economy is concerned. But as again proven that the telco business is something that We'll be able to withstand the challenges the other sectors of the economy might face. And of course, the growth momentum in rupee, We've always believed that with the operation base of RMB135 1,000,000, whilst the challenges are there, I believe that the group momentum will continue in the Bangladeshi market. So that in nutshell and so first risk and opportunities for the 2021 for the rest of the financial year. I would like now to pass back on to Claire for us to take the question and answers from all of you. Okay. Thank you, Dato and Vivek. So as usual, Q and A, you can ask the questions verbally. So remember to put up your hands, click on the emoji sign, raise your hands emoji, unmute your line and followed by asking your questions. And don't forget to mute your line again after your questions. The second method, of course, is just to put it into the chat box and then we will pick it up from there. As usual, just to highlight that we do have our colleagues from the OpCos joining us from Cellcom. We have CEO, Itam CFO, Jennifer and CMO, Alan from ExCel, CFO, Pak Boody and EdoCo CEO, Adnan, as well as Doctor. Hans, our Group EVP. So feel free to engage with them too, if you wish. All right. So let's move on quickly to Q and A. I see Phuong has his hands raised. So please unmute your line and go ahead please Phuong. Yeah. Hi. Good afternoon, Bato and CECA, senior management team. Hope everyone is well. Thank you so much for the call. A couple of questions from me. Firstly for Telkom, you've had a couple of good quarters on subscriber growth, right, since The Q2 of last year and since continued to improve, could you share with us a bit more color on drivers specifically relating to the Q2 that has seen Cellcom continue to proof in terms of the operational numbers here. And in particular, which products are you seeing still pretty good traction? And was there also any boost from the bi3 hunting program? So that's the first question. And While staying in Malaysia itself, looking at the market as well, I mean, we do see A couple of the MVNOs coming out recently with new offers that are quite aggressive. It looks like the price points are coming down The RM1 per GB level. And of course, most of these MDNUs are hosted by Cellcom. So can you share your thoughts a bit on Cellcom's MDN strategy? That would be the second question. And then my third question, I guess a question for Bernardo. With regards to Indonesia, Beyond this potential acquisition of LinkNet, do you foresee further in market consolidation in the mobile sector that may involve Excel. And in particular, I just want to get your thoughts as well with regards to Axiata's philosophy on such potential deals going forward. Whether we will be willing to do deals that where it depresses our profits in the near term, but Potentially put us in a better position, Namrata? Or are you still more keen to focus on profitability here and now with investments that have shorter payback periods. Yes, those are my questions. Thank you. Okay. What I'll do is I will touch a bit on the second quarter And what's driving it and then talk a bit about the MVNO strategy. But perhaps then after that, I'll get Idaham to elaborate on the details on what's really driving. I mean, essentially your question is, is this sustainable? Yes. So if we compare the first half last year where we lost a lot of You remember that AirFoam. So if you compare that compared to now, we've actually recovered our position in terms of the number of subscribers lost. The big change is the way we work, I like to think. The go to market strategy is much more efficient and faster, if you like. Response to customer, the quality of service and also the engagement with the dealers notwithstanding the pandemic. So all hands on deck and the team has really rose to the occasion to really make sure that it's not just about increasing subscribers, also making sure we have the right subscribers, making sure that the revenue is much more sustainable. And so far as MVNOs are concerned, yes, I saw that announcement by TUENTAL the other day yesterday, yes, niamang, I think it's called. So I guess at the end of the day, it's a question of sustainability. We have commercial arrangements with the MVNO. At the same We are reviewing our strategy insofar as MVNO is concerned, especially in light of the pending merger, Yes. Because like it or not, the MVNO, there's about 5,000,000 of the customers under MVNO that we have We can count towards our customer base. Now whether that is going to continue or not, I think we need to sort of review that in light the merger discussion or merger submission. We don't know what the regulator stands on that. Perhaps it's even premature to discuss the question that was. Perhaps I'll get Yiran to provide more details, and then I'll come back to the Indonesia strategy for you, Fong. Yes. Thank you very much, Fong. Good afternoon. Yes. We've been having quite a good quarter in terms of subscriber growth. We see some our products, we are able to be a bit more competitive in the market across the board. We're quite happy with of course, we participated in the Jallitan prehar t test, one of the growth area for the Q2. The postpaid is also has Stabilize. We're starting to see some growth coming in back into the postpaid area as well. But the real driver behind the growth in Q2 and the past few quarters came from our prepaid. I guess we have find a sweet spot in terms of our product, the product structure, the pricing that speaks well to the Malaysian consumers. We have also, as what David Zadine has mentioned, we also done quite a lot of work in terms of transforming our retail and also our trade practice, which is something that one of the major drivers to the more efficient of getting The customers from the market in the prepaid segment. At the same time, During this pandemic, we were able to adjust as well our trade as well as how we go to market to reach our customers. And whatever investment that we have made on the digital platforms, our apps, which is doing very well today actually in terms of our apps From app ratings, it's one of the highest ratings on the App Store as well as the Google Play Store, which has increased quite a fair bit And to support our business during this pandemic. On the MVNO, yes, overall, We are working with most of the MVNOs in the market. The MVNOs in a way goals are targeted in different segments than what's our comp is targeting. The MVNOs also use different go to market strategy, which in a way to help us to reach some of the segments that the SouthCom brand could not reach on its own. Of course, some of these segments has a different pricing strategy and so on and so forth. But together, Cellcom and MVNO continue to capture the growth in the market, both in the prepaid as well as I mean the postpaid as well. I hope that answers your question, Paul. And so far as the initial is concerned, I mean, if we go back 2, 3 years, if you look back, We've always talked about industry consolidation. And truth be told, at one stage, all 3 MNOs were talking to each other. Just so happened that they've decided to Indoside and Hachimin have decided to partner. Excuse me. And I guess the challenge that they're facing now is with the 3rd extension of the deadline, perhaps is to find that common ground. So for us, what we're looking at now, just if I can sort of give you guys a sneak preview on the announcement we've made on LinkNet, Yes. That's pivoting away into providing a convergence proposition into the market. So we believe that Whilst there are there will be opportunities that's been presented even with the merger because They'll take time to do the deal. They'll take time to consolidate and streamline their integrate their businesses that we believe will provide an opportunity for us to take some market share. Now at the same time, we believe that the convergence strategy is something that we should that we are pursuing like for the Indonesian market, yes? Okay. Maybe I can just throw in a couple of quick follow ups. Firstly for Widav, The subscriber numbers that we are getting, we sort of know where these are coming from. Are they coming from The smaller rivals or are they coming from the either big to MNOs? That's the first follow-up question. And And I guess the second follow-up question for Dato is coming back to Indonesia. If you are presented with an opportunity to acquire another mobile operator, but It's going to be diluted earnings in a big way. Would you do it? Or would you say we need the spectrum, so let's think long term. Yes. Yes. Yes. Sorry, I forgot to address that. But why don't Niwab, you go first? Okay. Where these customers are coming from? I guess we're seeing these customers coming from everywhere in the market. As you know, the market has reached over 100%. But from some of the indication, yes, they do come from our competitors. I wouldn't be able to tell you Publicly from where it comes from because it's a prepaid market. Typically, it's not where they would tell us where they were coming from. But if you look at some of the other indicators from the other operators, you'll probably see where possibly These customers are coming from which network they are coming from. So that's what I can tell you on this. So far as your question, Phung Huynh, in Niger, sorry, I meant to answer that when I We've always looked at industry consolidation. So the answer to your question is yes, but it's always a question of valuation because we believe in the need to create scale in this business in the markets that we operate. In fact, if you ask me, it's long overdue. So that's why In doing the Cellcom BG merger, I talked about the future proofing of the business 3, 4 years down the road. It's not about this year. So We're prepared to see the dilution if we know that it will certainly secure the future of the mobile business in years to come. Now When it comes to valuation, that's always the challenge like all transactions. Yes, it's a question of whether we can strike a deal. I mean, why we are able to do the Cellcom DG merger is because Axiata and Telenor have us to share the same vision, the same aspirations, the same concerns of the industry and the same belief that the industry needs to scale. So if there was a party in Indonesia, I wouldn't mention who is My preference if there was such a thing. Yes, it's about having the same strategic intent of doing the merger. Yes. If a party wants to just cash out and don't see the mobile business as a future, then the discussion will be very different. Do you know what I mean? Yes. So and probably be protracted. I'm just guessing here if I was involved in that sort of transaction. But The answer to your question, yes, we would be considered to merge with another operator if it means future proofing the business. There is such a concept called joint control like what we're doing in Malaysia between Telenor and Axiata. Yes. So Phuong, I hope that answers your question. Yes, it does. Thank you so much, Nato and Igiank Liang. Sure. Thank you very much. Claire, next. Okay. Next, we have questions coming through from Izzati from Macquarie, the new and improved version of Prem and previously from Axiata also. I know. She knows all our secrets. Hi, good afternoon guys. Can you hear me? Yes, I can hear you. Hi, Tati, Suneet, Itam, everyone. All right. Just one question from me since you've talked about the M and A just now. Maybe you can give us some color in terms of, I know you talked about Having post merger integration teams between Cellcor and also DG, having started the work already, so if you can share some of the progress, How has that been? Or if there's any potential hiccup? Or what do you worry about post merger? Because I just want to get a sense of How much like Axiata we can prepare pre implementation versus like post implementation, you know, when it comes to like network planning, CLM, IT infrastructure. Yes, that's all. Very good question. Actually, that's a challenge that's been faced By the 2 organizations, we have the BAU work and we have the integration planning that's going on. So what we've done is created 2 groups of people, the integration management office and integration functional teams. In total, there are about 70 people if you look at both organizations. Now the great news, Izzati, is that everyone is working so well together. Everyone is very driven. Everyone shares the same vision. Everyone are really, what should I call it, blending in and gelling in very well. And so that's the good news. So if you ask me how the progress is, the progress is actually very good in all the various work streams or tracks When it comes to whether it's HR fund network, finance and so on. If there are challenges, It'd probably be the regulator from the regulatory point of view. So on that You know, I've mentioned we've made submission really to MCMC. Let's give it, I don't know, 3 to 5 months maybe before year end. Hopefully, we can get the approval decision rather. But so far as the submission is concerned, they've asked for several clarification already. Ever since the submission. We've been engaging with them very, very closely. So there shouldn't be any gaps, if you like, in the information that they might need. So far as progress is concerned, the good news is the teams from both sides, those who have not been selected To be part of the merger integration process, I'm rather disappointed and constantly asking Idham and Alban whether they can be part of the integration process, which is always a good sign. I mean, I think that to be a positive sign. And the staff continue to be enthusiastic and excited with the merger. Okay. Maybe I can get some comments from vessel. Like, what do you think in terms of the post merger integration or if there's any challenges that you foresee, if there is any that keeps you up at night? What keeps me at night a lot of things what keeps me at night, up at night. The merger, I think as Dato Izzadin mentioned just Now it's going relatively well, in a way, I would say, better than expected. The team is working together quite well. We have put together the various streams to prepare for day 1. We also prepare not just for day 1, day 30, Day 365 and also the various plans that we need to do. The good thing that I can say is One of the key success factor that would be very critical for us to get it right is the how the two teams work together in terms of The way they work, the culture and so on and so forth. What has apparent come out so far that We see a lot of similarities in the culture. The DG with the DG and the new way of Cellcom, which we have Worked very hard in the past couple of years also to transform and modernize the way we work. When the team comes together, we see a lot of similarities, and I think this is a good sign. And then we hope that we can get all the planning, preparation, all that in place before day 1. So far so good. I think, Zati, so far as post completion, integration exercise is concerned. The one thing that worries me is when the 2 networks are combined because invariably, you're going to have some impact on the quality of network momentarily. And so the planning is very important, how we switch off and integrate the 2 networks. Yes. So that's almost like a very positioned partner, if you like, trying to make sure that the quality of service, level of service to the customers are unaffected both customers actually, DG and Cellcor. So that's one thing that we are really focusing on to try to make sure that once we do this, you can plan, but the execution is always key. All right. Okay. That's great. That's all for me. Thanks, guys. Thank you. Okay. I don't see any more people raise hands or any questions on the group chat actually. So we do now. Too soon. Yes, so please go ahead, Raghavan. Hi, it's Agonato and team. Congrats on this strong set of results. I just want to get a bit more clarity on the thinking of the strategy in Indonesia, right? So first question is, if the I mean, in the questions on the potential acquisition on LinkNet. Can you share a bit about the structure? Is this something that will be done via Exel's balance sheet or would it be a combination of Axiata Group and Exel's balance sheet or Yes. So that's on the structure. And on the second question is how does this convergence strategy fit into Exel's idea of growing its customer base outside of Java. Thanks. Now To the first question, that's why we are exploring and we kept it flexible by announcing that it is both Axiata and XL negotiating with the 2 shareholders of LinkNet. I can't share with you the details as yet, But you are right. Perhaps, Vivek, we could invite Raman to come and help us structuring the deal. Because there are many considerations, yes, the funding side of shareholders, we have 66 percent of XL that has tax implications. And then more importantly, to your point, this convergence strategy. For convergence to be effective, the businesses need to amalgamate. So the challenge is without 100% of LinkNet, you can't do a proper amalgamation. Well, you can't. You can with all the commercial arrangements in place to integrate the back house the backhaul, yes? Now on the second question, In a way, XL is really preparing itself by offering the home product to its product called XL Satu. We're already seeing a rollout of bundling, if you like, of mobile services along with the home service. So the team at XL is in a way already psyching themselves up With the customer base and home passes of RMB2 +1000000 that LinkNet has, it will certainly be able to jump start this convergence play that XL will be pivoting itself into. So If you talk about outside Java, yes, you see the advantage of Inuisha is DKK285 DKK5 million. The challenge is DKK17 1,000,000 to your point. We've looked at the income capacity of the major cities outside Java. And the business is still viable. In fact, That is the opportunity insofar as initial is concerned. It doesn't negate the opportunity. And as you know, Yes. For mobile businesses, so for mobile service, the rates outside Java is like what, 2x, 3x more than Java itself. Well, those days are perhaps With us going to those markets now, the differential is like narrowing because the justification is the extra cost to lay out the infrastructure. But we've done the homework. We've looked at the major cities we wish to cover with the convergence strategy And it's certainly an opportunity for XL. Cool. Thanks for the answer. It's very competitive, and I wish you guys all the best in Like I said, even an idea of how we should fund this, I mean, of course, we have our own ideas. My email is izadeen. Idres@axiata.com. Thanks, Zinto. Sure. Thank you for the question. Okay. Thank you. Again, is there any other questions? We don't see any hands raised or anything in the chat box at this point in time. Perhaps one last call if there's any. Hi, Piyush. Oh yes, we have 2 actually. Juliana, Juliana, please go ahead. Hi, good afternoon team. Thanks for the presentation. Actually just a question on the Group's financials, I think specifically on the Others division. Can I just try to understand, would you be able to explain a bit like what goes into it? And what Would be sort of like a fair or stable level that we should expect maybe on an annual basis? I noticed that it fluctuates quite a bit and it moves the bottom line figure at the end of the day quite materially. So just trying to get a sense of like what's a more stable number that we could work with. Jasmine, is there Vivek? No. So I think there are 2 things which comes into others. When we report numbers, we report first is obviously the corporate center, right, which would not revenue, but mainly the cost side of it. Second thing is there are eliminations specifically between the e.co and our subsidiaries in NNOZ. So that also comes in under the others and specifically reflected more in the cash flows When we show because we try to represent the intrinsic performance of each of the OpCo and then we show as those are the adjustment item, which is there to come to the final reported number. So essentially that's what would be reflective of or if there are certain impairments or charges which are more again at the Group level would be reflected there as I just mentioned. Right, so in short, it's actually quite hard to sort of forecast on a quarter on quarter basis. Yes. I mean, I think if you look at Most of the if you look at the steady cost will be the corporate center, so it's not something which is difficult to forecast. Corporate center, it's more about the elimination between the intercompany, which is sometimes difficult to establish, right? Okay. But then maybe on an annual basis, I mean, it has been trending downwards from a RMB932 million to RMB8900 million. Maybe going forward, what's a fair number you think we So I think one part is obviously there is this interest which has come down substantially, which is at the group level because we do borrow at group level to kind of support the OpCos, etcetera. So that's, I think, come down. So you would see interest rates impact reducing that. And obviously, we are quite regularly looking at the corporate center cost as we go along. However, given the fact that There will be additional increases happening in terms of the towers which our MNO stake. So you might have the opposite effect coming in on the elimination. Right. Okay. So safe to say that it could be trending upwards in the coming quarters? I mean, I would say that unlikely, so there would be a downtrend in one side and there would be not material change, I would say. Okay. Thank you so much. Thank you. Thanks, Juliana. Piyush? Yes, Piyush from HSBC. Please go ahead, Piyush. Hi, good afternoon. Can you hear me? Yes. Yes. Thanks for the opportunity. Two questions, Please, firstly on Axiata Digital Services. Could you talk a little bit about the revenue drivers for ADA As revenues up like more than 100% year on year over there and move to EBITDA positive. And also about the outlook for this division and your plans for any value on locking opportunities over here. Secondly, on Rovi, can you give a little bit more color on the progress of your rollout and market share gains in the non CCD kind of areas, which you have embarked upon. Sure. Vivek, do you want to take a look? Yes. So I think the ADA essentially has some 4 or 5 streams of revenue. 1 is the traditional digital marketing part of that. And in addition to that, I think the key one which has been driving growth is really the A2P for the SMS based marketing business, which has been driving growth for us. And also we've had some strong 3 year class deals with Facebook on the digital marketing side. So that's what has been driving growth for us and it's been actually growth across all segments. And we've seen also growth coming from new customers being acquired by ADA across the 9 geographies which their presence. One of the key has been actually in Korea, which has been doing extremely well for them. In addition to that, I think Indonesia has been doing well for them. So I think the large part of the growth is coming from the A2P SMS based marketing business. 2nd one is the new business, which is on the analytics, where they are able to monetize using their data capabilities. And third is obviously the traditional digital marketing business that was they've been doing. So I think that's pretty much what and outlook From standpoint, I think given that we have now strong partnership with SoftBank, we should be able to leverage some of their customer base as well as the ability to bring in new services across Some of the markets, for example, Thailand is one which we are looking at where they have strong partnerships or investments in the OTT play. In addition to that, I think we would see the new acquisition, Awake Asia, Which is basically e commerce enablement company would be another area of focus and growth because that provides end to end servicing of the e commerce companies where you could use data analytics as well as fulfillment as a part of the activity. So I think those are areas where we would see further improvement happening there. As far as Robi is concerned, maybe I want to give Hans. Hans, you want to comment on that, NCCD? Yes. Thanks, Vivek, and thanks, Bir. So the majority of Robbie's growth, which as you can see has been impressive comes from the NCCD area. As far as rollout is concerned, pandemic effects have slowed us down a little bit. We haven't rolled out as many new sites as we would have liked to. But I think with the lockdowns relaxing now, we would be able to catch up by end of the year and we would see similar growth going Thanks, Doctor. Hans. Can you tell us what's the current coverage And what's your aspirations? I know it is dependent on COVID in terms of rollout, But some kind of medium term aspirations for NCCD area? No, I think we will pace our coverage expansions, I. E, new site expansions in line with profitability constraints as well because and of course, in cementation constraints, but even more so to go for the lucrative markets first. And I would say from a geographic coverage point of view, we have maybe 2 to 3 years to actually match market leader in Bangladesh. But we will move on the more lucrative and accretive markets to begin. Great. Thanks a lot Vivek. Thanks Doctor. Hans. Thank you. You should ask a bit about value unlocking. As is, we want to try to consolidate the business to capitalize on the SoftBank partnership. So no immediate plans and so far as value of ADA is concerned, but it is on a good trajectory in terms of The customer base is driving the profitability, revenue base and so on. So actually, it's almost A pleasant sort of surprise that they've achieved what they've achieved in the 6 months this year. Looking forward to them growing the business further, Hsin. Got it, Dato. Thanks a lot. Thank you. Thank you. Piyush, Yes, I think, let's maybe wait for a couple of seconds if there's any further questions coming through. Sure. Thanks, Glen. Again, thank you for joining us this afternoon. We're presently pleased with the results that the organization, the company, the group has Chief for the 1st 6 months. We are on track to execute, if you like, Axiata 5.0 because of the well, the various initiatives judiciously, COVID or non COVID. And of course, there will be challenges along the way, but we're in good shape and the team is in great shape to really take on and seize the opportunity to achieve our vision of Axiata 5.0. So stay tuned. All right. Thank you, Dato, and thank you all for joining us today on Friday afternoon.