Good morning, ladies and gentlemen. My name is Clare Chin, head of investor relations at Axiata. Thank you for standing by, and welcome to Axiata Group's second quarter 2020 results briefing. Today we have with us Tan Sri Jamaludin Ibrahim, Axiata Group CEO, Dato' Izzaddin Idris, Deputy CEO, Vivek Sood, CFO, as well as representatives from our opcos. There will be a presentation followed by a Q&A session. Lastly, two housekeeping reminders. You will be on mute throughout the presentation. Also note that the call duration will go up to a max of 90 minutes. Without further ado, I would now like to hand the conference over to Tan Sri Jamal.
Good morning. Good morning to everyone. Thank you for joining us for the second quarter 2020 results. As mentioned by the moderator, I have Dato' Izzaddin, my deputy, will be also presenting, and my CFO, Vivek. Let's go to slide four in the board added packs. These are the key messages which I will go through quickly. They will be elaborated later on. Basically, as you can see from the results announced yesterday, the full impact of COVID-19 was felt last quarter, especially in April, where there was a big dive in that particular month. We did and we do see early signs of recovery by most opcos from May onwards. Frankly, if you look at May, June, even July, it's been quite convincing in terms of the recovery, especially given the fact that basically it is we are back, generally speaking, as a group, to the post-lockdown.
Well, post-lockdown here is defined loosely as January, February, as opposed to pre-COVID, which was last year. It is quite, like I said, encouraging, but I dare not say that this will be the trend, given the fact that it's still very uncertain because of the impact of COVID, directly and indirectly. We'll come back to that. What is good, however, regardless of what's happening, our cash position remains very strong and is further strengthened by the recent Sukuk EMTN issuances. That also has been reflected as a confidence from bond investors as a great validation for us. You will see later on, we'll talk about it, the investment in the digital business by Great Eastern also validated our digital business in general, but digital finance business in specific.
Given what's happened the last first half, and especially this quarter, although the trend looks pretty good, but we maintain that directionally, there will be a low single-digit decline or percentage decline in revenue and EBITDA for this year. From a cost perspective, we believe we are very much on track to achieve the MYR 5 billion, which is one year ahead. If you do recall, about three years ago, we said that we will hit a MYR 5 billion saving within five years. It seems that by end of this year, we will achieve the MYR 5 billion one year ahead of time. This is evidence from the improvement in our EBITDA year-on-year, especially year-to-date 2020. I mean, EBITDA margin. What is important is that it's kind of a preview for our upcoming Axiata Analyst & Investor Day 2020, which we'll be organizing the specific date and time shortly.
We have agreed with the board, and the board has agreed that we will position ourselves to be more dividend yield company within a three to five years' time. There are many implications by saying just that with regards to our portfolio, with regards to our investment appetite, with regards to our growth areas, and so on and so forth. That will be discussed in more detail during the Investors Day. This time around, we might not be able to share you as much detail as we would like to. Going to the next slide. These are all the headlines across the group, across all our footprint.
Not pretty good with regards to employment, jobs, GDP contraction, and so on and so forth, and also the impact of COVID to the economy in general, and especially to Nepal, whereby about 28.7% of our remittance for the country contracted, affecting us especially so. The second quarter result for Ncell is far below expectation. Going to the next slide. I want to just quickly go through the highlights and the lowlights. On the highlights, all things being said, from when we announced the result back in May for the first quarter, we were looking at even worse than what we saw, because we look at the April results, we were very worried. Net, though, we have demonstrated operational resilience in the face of the COVID-19 pressures.
What is good, like I said earlier, the cash OCF grew 17.2% to MYR 1.2 billion, resulting in a cash balance of MYR 5.9 billion, which is pretty strong and healthy. Like I said earlier also, the cost improvement has led to the improvement of EBITDA. EBITDA margin increased by 0.9 percentage points to 43%. We are very happy the results from XL, edotco, Robi, and Smart have been pretty good despite COVID-19. As I've said earlier, June results have been quite encouraging. In fact, starting from May, but June especially, is largely back to the pre-lockdown level. As I said, not pre-pandemic, but pre-lockdown, which we compared to the average of January and February. The Great Eastern validation of investment of $70 million is a big boost to ADS and definitely a big boost to our DFS strategies and plans.
We've been very cautious about dividend, as much as we have huge capacity to pay dividend because of our cash position, because of our balance sheet, and because what we see in the future. We decided to be very cautious and announce an interim dividend of MYR 0.02. That's good news. On the lowlights include the I mean, pretty obvious that PATAMI declined 62% because of the impact from Ncell, ADS, and higher D&A, especially higher D&A this quarter, and of course this year will impact PATAMI. The COVID-19 impact, we estimated across the group, an estimated forgone revenue of about MYR 400 million. Primarily in many countries, customers couldn't even top up because of the closure of the outlets. In terms of CSR, we made it very clear during the second quarter that our priorities are staff, customers, and then our own business.
This is just what we estimated to be an MYR 80 million CSR program. Frankly, a lot of work has been done, which cannot be easily quantified. The business challenges in Ncell, last quarter have been pretty high given the major reduction in the business in general, the top-up that we couldn't do, and most importantly, the impact because of the ILD. Similarly, Smart to some extent. If you look at slide seven, you could see the trend that I was alluding to. Practically all OpCos are on a uptrend from May onwards. You will see that from this slide, XL.
You see from this slide, XL has been barely affected by the COVID-19 to date, although I must say that the pandemic in Indonesia is on the rise, so that could be a question mark beyond June or July. As you can see also, the recovery of Celcom, May, June, and in fact, if you extrapolate, July has been also on the uptrend. Now, I won't go to all these details you can see from this chart, but if I can summarize, the next slide, which is the group. It's on the same slide.
Same slide.
I thought it's animated. On the same slide, you can see the pink colored-.
Thick pink.
Thick pink colored line, you could see that May, June is on the uptrend. Again, I am not even saying that it will be definitely on the uptrend all the way to end of the year, given that we are really uncertain about the pandemic and impact to the economy and therefore to us. I'll pass to Vivek, who will give you more detail on results.
Thank you, Tan Sri. Very good morning to all of you. If I can go to slide number nine, this is the reported results for quarter two on a year-to-date basis. Year-to-date, our revenue is down by 2.3%, quarter-on-quarter of 4%. The EBITDA is up compared to last quarter by 3.2% and flattish compared to last year. If I adjust for the VSS which we did in Celcom earlier this year, we would have seen a growth of EBITDA by around 1.3% compared to last year. Profit is on a reported basis, sees a dip of around 50% from last year, mainly coming out of the fact that last year we did have around MYR 511 million coming from the disposal of M1, a divestment of non-core digital businesses, and disposal of Idea rights in the first half of last year.
This year, we did get benefit of the profits coming from the sale of towers, but negatively impacted because of the employee restructuring program in Celcom, as well as Forex losses of around MYR 80 million. You would have seen that over the last six months, Ringgit has weakened against U.S. dollar, but now we see the trend turning around the other way with U.S. dollar weakening. If I can go to the next slide. This is the underlying performance, which is normalized on a constant currency basis. If you look at revenue, we are down 2.4%, so it's not a material impact on translation this year, unlike some of the earlier years we've seen.
The impact on revenue is mainly coming out of impact from Ncell, partly known because we knew ILD will come down year-on-year as a share of the contribution, but also the fact that we did get impacted in the lower data and voice revenue in Nepal. A couple of reasons. One is obviously, the impact of COVID-19. It is one country which was impacted for a much longer period of time. In fact, as I speak to you today, there is still a lockdown in Kathmandu region, whichGood news is we got it earlier in July, and it's been activated from July, so we should see the benefits of the additional spectrum coming in on the data monetization capabilities.
Celcom has been down by 9.5%, mainly coming in the prepaid section, where we did see a reduction of subscribers as well as drop in ARPU, but also the fact that the government regulated 1 GB per data. Free data was given during the lockdown period. That's the main reason. The good news is that we've seen the revenues coming back now in Celcom. I think June revenue on a run-rate basis in prepaid has been actually better than what it was in January. We've seen that trend. We've also seen a positive net adds coming in the quarter on prepaid. I think that's good news. That has been offset by continuing strong performance from Axiata, from edotco and Robi. Even despite the fact that Bangladesh was impacted by a substantial lockdown and the economic conditions, the business continues to do well and gain market share.
The good news is on EBITDA, we've been able to manage our costs well, partly because of the lower direct cost related to the activities in the market, but also continuing cost excellence program, which has yielded us getting a 1.3% growth in EBITDA year-on-year. PATAMI is being down on an underlying basis, mainly coming from underperformance of Ncell. ADS, if you recall, we also did mention last quarter the participation in the e-Tunai Rakyat program. We had an impact of around MYR 40 million. The impact of D&A. As you know, D&A is mostly fixed cost, the lower EBITDA is not getting compensated by the fixed D&A charges. If I can go to the next slide.
The slide number 11. This is basically a reconciliation between the normalized PATAMI last year versus this year. Main impact, as I said earlier, is coming from the D&A, which is basically fixed cost. We would always expect EBITDA growth to offset the impact coming from D&A. However, this quarter's been unusual with EBITDA being flattish given the market conditions. The slide at the bottom is basically showing the year-to-date impact between the reported PATAMI and the underlying PATAMI. You could see the impact on Forex, the tower gains, which we got in Indonesia, and also the Celcom restructuring cost. If I go to the next slide. I think operating free cash flow remains fairly strong for us.
Compared to last year, we've seen around close to MYR 180 million improvement, 17.2% growth in the operating free cash flow, coming out of the impact coming from CapEx, lower CapEx during the first half, as well as relatively on the taxation side. If you look at the slide at the bottom, the chart at the bottom, which shows where is the impact coming from. The large impact is actually effectively coming from the benefits in edotco, where some of the towers have been deferred, as well as Dialog, where the CapEx has been relatively lower in the first half compared to last year. Negative impact is in Robi, where if you recall, last year, we did have this NOC problem where we couldn't import equipment. This is fairly catch-up CapEx, which was underspent in 2019. If I go to the next slide.
Balance sheet remains fairly strong, stable, with strong cash flows of MYR 5.9 billion cash in different markets. Gross debt to EBITDA remains 2.64. Also the fact that with this balance sheet, we could actually do a very successful round of further issuance of debt, which is mostly for refinancing the existing debt for us. In terms of breakup, 60% still remains local currency, and fixed of 60%. This will change once we have the new debt coming in, which would move much larger to the fixed component of over 80% and also a much larger component of U.S. dollar debt for us. If I go to the next slide, this is a quick summary of all the OpCos. Celcom performance year-to-date, -9.5%, mainly coming out of the impact of lockdown and prepaid segment.
As I said earlier, we do see early green shoots with improvement coming in the prepaid and a net add positive in the last quarter for us. The impact is mainly in the prepaid segment. That said, I think EBITDA has been relatively better off in terms of the percentage impact. If you exclude the restructuring, it's been down by 7.3%, mainly coming out of continuing cost initiatives as well as lower direct expenses. Free cash flow, fairly stable. PATAMI down compared to last year, but if I normalize for the restructuring in March, PATAMI would be fairly stable compared to last year. If I go to the next slide, XL. Continued strong performance from XL, with revenue growth of 7.4% on a year-to-date basis. If I look at year-on-year, around 5% growth for this quarter, despite difficult economic conditions in Indonesia.
EBITDA growth on a year-to-date basis is 36%, but if I normalize for the IFRS, if you know, Indonesia adopted IFRS in 2020. If I normalize for that, the EBITDA growth is around 15.3%, which is a strong continued focus on cost in Indonesia, despite the fact they continue to invest and drive revenue opportunities. Free cash flow. Strong free cash flow generation, mainly coming out of the fact that one is the accounting impact, which is the IFRS. If I exclude that, it's still a strong 52% growth in free cash flow this year. PATAMI looks strong, again, coming out of the fact that there is gain coming out of the tower sale. If I exclude that, it's marginally lower because of the higher D&A and also deferred tax adjustment.
Just to explain on deferred tax, the carry forward losses in Indonesia expire after a period of five years. Some of the carry forward losses from the Axis acquisition way back in 2015 are going to lapse this year. That's been adjusted as part of a deferred tax adjustment there. That's around IDR 200 billion impact. I go to the next slide. I think Ncell has been one of the challenging markets for us in this quarter specifically, and that's been essentially coming out of the COVID impact as well as the spectrum deficit where we are not able to monetize data. We've seen the impact on revenue coming from both core, which is down by 24%, and ILD.
ILD has been much larger than we had anticipated, given the conditions where a lot of migrant workers have actually moved back for the time being to Nepal. Consequently, the ILD traffic has come down relatively and continued economic and lockdown conditions in Nepal. Because of the lower revenue development impact has been on the EBITDA margin, much larger impact consequent to lower ILD because ILD does come with significantly higher margins. Free cash flow, fairly stable for Nepal and PATAMI impact coming straight because of the lower EBITDA in the first half. If I go to the next slide, Bangladesh. I think difficult situation, market conditions in Bangladesh. However, Robi continues to perform well with the revenue being stable with marginally 1.1% growth. However, strong performance on EBITDA with continuing cost initiatives driven by that business with EBITDA margins now touching 45%.
I recall, go back to the acquisition or the merger with Airtel back in 2016, we were at that point in time with EBITDA margins of around 22%, 23%. That's now more or less doubled over the last four years. Strong performance from Bangladesh in terms of improving the EBITDA margins. Free cash flow impacted because of last year, as I said earlier, we could not invest, there's been some network catch-up CapEx, which is resulting in increased CapEx spend in Bangladesh. Profits developing quite good, coming mainly from the improvement in EBITDA as well as the lower net finance cost in that market. Quickly on the Dialog performance. Stable despite the economic and COVID conditions, both revenue and EBITDA. Free cash flow, also stable. Profits coming down mainly because of the Forex impact.
If I normalize for Forex, the profit would be down by around 18%, essentially coming because of the impact on depreciation, considering the fact that there's been less growth on the EBITDA. Smart. A market which had significant resilience and luckily no major lockdown in that market, continue to do strong performance even despite the fact lot of Chinese travelers moving back as well as a dependency of this market on tourism and roaming revenue has been impacted. The revenues are fairly stable with strong EBITDA growth of 7.8%, stable free cash flow, and stable profits for the first half. Digital businesses, I think, continue to build their scale. Yes, we continue to have investment in these businesses, but they continue to build scale to meet the strategic direction which has been set for them.
With Boost continuing to build the number of customer base to 7.6 million with the merchants around 176,000 merchants and significant development growth on the GTV, and also the activity of customers, both in terms of number of transactions as well as the spending per week. Aspirasi, which is essentially the lending business, micro-financing and micro-insurance business for us, is the one which will essentially get profits going forward. It's been building their loan book fairly well and also selling micro-insurance products well, and continue to keep their credit losses or NPLs still at a much lower level based on the successful credit scoring model which they use. Adtech business, I think, continues to grow with acquiring new customers in different fields. Moving to more from a traditional agency business to a data-led, outcome-based business continues to show breakeven, despite the growth which is happening in that business.
We expect that to remain profitable or at least breakeven on profits by the end of this year. Next slide on infrastructure, edotco. Strong growth across markets, coming essentially from the new tower orders. Relatively lower than what we had expected given the market conditions. Some of the telcos have been slowing down in terms of placing orders. That, I think over time should catch up. It's more about deferment of actions than lost revenue. Strong EBITDA growth coming with 64.3% EBITDA margin. If I exclude for some of the one-offs last year, yet 17.4% EBITDA growth. Strong free cash flow coming mainly because of the delayed CapEx spend and PATAMI improvement. With that, I'll just forward it to Dato' Izzaddin on some few sections on moving forward there. Dato'.
Thanks, Vivek. Morning, everybody. With the background that Tan Sri has sketched just now, whilst revenue has seemed to have recovered to pre-COVID levels in the month of May and June, we are still concerned for the performance of the operating companies for the rest of the year for the reasons that Tan Sri has elaborated just now. From our perspective, looking ahead for 2020, the MYR 1.5 billion bond issues has helped us reduce the cost of debt by about one percentage points from 2021 onwards. The Celcom transmission restructuring of the staff, essentially the VSS program that was completed on 30th June, will reduce staff costs by about MYR 33 million per annum. Enterprise growth, we see enterprise growing from the online education space as well as the work-from-home approach that many companies have adopted. ADS, as you recall, the $70 million injection by Great Eastern has certainly validated the valuation.
We are continuously being approached by various parties to invest in edotco, given the expansion plans we've mapped out. The spectrum, one of the key reasons of the poor performance of Celcom was the capacity constraint in terms of spectrum. There were some conditions that was imposed on us, that has all been resolved. Partially resolved, we see the spectrum being activated in July, we see the capacity constraint be no longer an issue for us to monetize data. The Collective Brain initiative that we have done for IT network procurement. We should see some benefits starting to come in perhaps next year onwards. This Collective Brain initiatives will be expanded to cover other areas in time to come. So far as risk is concerned, yes, COVID-19 continue to provide uncertainties.
Further lockdowns could be imposed on the various countries, including Malaysia. The government-led initiative to provide free data will certainly impact our revenue line. Of course, intensifying competition in Malaysia will also be a big risk for us. Last but not least, is the developments around Huawei. We are in constant discussions with Huawei. At the same time, engaging other vendors to see whether we could also diversify our supplier base for our network equipment. On to the next slide. Just providing some color on Celcom customer profile between prepaid, postpaid, as well as the MVNO. We are going to focus on the prepaid segment for the second half. We started that already, the Trade Ubiquity program, to make sure that we are present in all corners of the market. Trying to implement crowdsourcing dealerships by making possibly everyone to become a dealer.
On the prepaid segment, we've launched the Truly Unlimited plan. From as low as MYR 12, you can get unlimited internet and unlimited voice calls. The one feature of that is you can even get the SIM cards delivered to your doorstep. You can see some improvement in the subscriber base, and hopefully this will gain traction in the months to come. So far as postpaid segment, the middle set of bar charts, you see some improvement as well in the month of July. So far as MVNOs, this is a strong customer base of about 4 million customers for Celcom. Next slide on Ncell. As I've mentioned, the new spectrum has been activated. We should be able to see some improvements in the subscriber base subscription. Of course, the lockdown that has been imposed has affected the ARPU on the left-hand side.
Of course, the total subscribers has come down, softened, and gross adds has slightly improved in the month of July. I think on the next slide, as Vivek has alluded to, this is part of our capital management exercise to make sure the asset liability maturity matches. What we've successfully done is to extend the average loan life to about 16 years. In our business, capital-intensive and therefore it's a long haul. The fixed rate portion of debt come after the completion of about 87% from 66% in June. That's the advantage of doing that bond issue, and expected net finance cost savings of about MYR 60 million per annum. Specifically, the 10-year Sukuk fetch a rate of 2.163% and 30-year notes fetch a rate of 3.064%, and definitely lowest ever for edotco to be able to issue in history.
Effectively, our blended borrowing rate has improved to about 3.3% from 4%. On the right-hand side, the pie charts that just show the pro forma group borrowings between fixed and floating, 71% will be fixed with this bond issue. Between local currencies, and unhedged portion remains about 38%, because the plan is for us to hedge the MYR 500 million Sukuk and leave the MYR 1 billion unhedged, in accordance with our hedging policy. The last slide that we have for today is largely to look at what we mean by looking at or reimagining our future, taking advantage of evolving norms. Can you just bring everything up? We all acknowledge that there's been a primary shift in the consumer behavior as a result of COVID-19.
What we need to do is optimize our physical assets, network equipment, and so on, as well, at the same time, accelerate the digital efforts. So far as the various functions in our business is concerned, those boxes at the bottom, six broad aspects of our business. So far as product pricing for consumer and pricing, talking about consumers, we're looking at focusing on various segments to be service-specific, time-specific, or device-specific. So far as the SMEs are concerned, we are hoping to provide them with various tools, a solution in a box, if you like, so that they can digitize their business and able to operate at minimal cost. So far as enterprise is concerned, this is quite a big opportunity for us as well, SMEs as well as micro SMEs. We have recently announced a partnership with Telefónica to provide security as a service.
The healthcare and education segments certainly will see a sectoral transformation. Of course, with the connectivity we provide, we can offer and serve remote areas at a scale. On sales and distribution, the phrase that the team has adopted is the guerrilla distribution, largely to provide retail on wheels so that anyone can sell at the same time. Retail on wheels, if you like, is making sure that we can distribute through trucks and delivery channels. For example, Grab or the various delivery services that is available in the market. So far as anybody can sell, we are thinking of activating or allowing people to also be our sellers. Of course, big issues on making sure that our brand is preserved. We're currently just experimenting how we do this.
Of course, at the same time, with the advent of technology, we're re-looking at our distribution channels in the form of digital kiosk stores in Malaysia, so that people no longer need to go to digital kiosk stores, that you will see some rationalization of the network. Insofar as the customer care is concerned, of course, we need to make sure that everyone's provided with a specific or attended to in terms of customer service, AI-based routing in terms of customer call centers, that's been adopted. For network and IT, as part of the Collective Brain, we hopefully can improve and make our systems more efficient. IT stacks will also be transformed to deliver best-in-class services across and improve the go-to market strategy.
Lastly, insofar as people are concerned, not just internally, we're also helping organizations to make sure that their work-from-home approach is done effectively by improving network services and so on. That's in a nutshell, the work internally that we're doing, trying to take advantage of the evolving norms or new norms. Hopefully, we'll be able to report a better outcome in months to come. Lastly, just to recap on the key messages. Directionally, we're looking at a low single-digit percentage decline in revenue and EBITDA for 2020. We're on track to deliver the 5 billion cost optimization a year ahead, as Tan Sri mentioned earlier just now. Once we have the Axiata Analyst & Investor Day, sometime towards the end of October, we'll confirm the date later.
We'll be able to share with you our positioning or our approach or our strategy to be a dividend income company. Thank you.
Okay, we will now proceed with the Q&A session . We can see that the first questions are going to be coming from Ranjan from JP Morgan. Ranjan, please go ahead and ask your question.
Hi. Good morning, and thank you for the call. Two questions from my side. The first one is on Huawei. You made a brief reference to it. Can you please share what is the impact that you see of the recent restrictions on Huawei, both for Axiata, the group, and for Malaysia? The second question is on the growing importance of the tower portfolio. We've had tower companies rerating, other telcos also looking at strategic options with the towers. Is this something that you would look as well, like maybe revisit the IPO of edotco? Thank you.
You want to go Huawei?
Yes, please.
Ranjan, I think Huawei has been something which is a very frequent development, right? Things keep changing very often. We know early or middle of this month, there was new guidelines coming from, or new regulation from the Department of Commerce in U.S., which basically does not allow U.S. companies to ship chips to Huawei. From our perspective, I think couple of points. One is, we've not seen any negative reaction from any of our footprint markets. It's not that politically or for other reasons, the local governments have been reacting to the U.S. action. From that extent, our footprint market, we're less worried. That brings the second question, which is on supply chain. Does this mean disruption to the supply chain from Huawei? We've been on a constant frequent dialogue with the senior management in Huawei.
We understand that they have actually stocks available for nearly a year to supply all the spares we need as well as the equipments we use from them. Third thing is that the impact of chips, we also understand from them that most of the exporters also have their licenses for the time being to be able to deliver chips to Huawei. That said, I think given that this is a very frequently developing issue, we've been in constant dialogue along with our lawyers and the lawyers of Huawei on what is the business continuity measures we need to take and what are the consequences of the legal actions taken by the U.S. In addition to that, we are also looking at some business continuity measures, going forward, specifically on the core network for us. That's where we are.
With that said, I think we are on top of it in terms of a regular dialogue with Huawei, as well as looking at the necessary measures to de-risk our exposure.
Insofar as the edotco IPO is concerned, in actual fact, Ranjan, we're in no rush to do this simply because, firstly, edotco has the capacity to gear up to expand its business portfolio. Secondly, we are looking at various other alternative invest if you like, capital-raising exercise. edotco is kind of a sweet spot. largely, yeah, at some stage we'll revisit this idea of an IPO, but the ability to raise capital is, edotco is not restricted. It's something that we will continue to evaluate. In any case, current market conditions are not really conducive for an IPO. Yes, tower companies have been rerated. To be fair, edotco is pretty resilient in this current market condition, so hence the rerating of the tower co. We hope that that trend will continue, and at some stage we'll revisit the IPO exercise.
Thank you for that. Maybe one quick follow-up on Huawei. In absence of any relief to Huawei, how easy will it be for Axiata as a group to add new vendors and maybe even swap out some of the old equipment from Huawei? Does that impact your ability to upgrade the network?
Let me answer that. Just to give you a much bigger picture. What we are doing on the network is to completely relook at the architecture of a network, what we call modernizing of the network. Before I answer your question, let me just explain a bit. What we're trying to do is to delayer or virtualization of a network
Such that we have a core and RAN. Within the core, right now we are actually quite an advanced stage of delayering the software and the hardware to the extent that the hardware we can buy and with practically most hardware vendors. Therefore, we are limited to software. I'm not saying that it will be easily replaceable, but the dependence on the vendor will be much less than with the architecture. Similarly, on the same concept, if you look at the RAN, with the Open RAN concept, similarly, it is a decoupling of hardware and software and then, of course, the cloudification of concept all into place. Net, without going to further detail, is the decoupling of the hardware and software, both for core and RAN, but also decoupling of the dependency on a specific vendor. That's the general plan.
Like I said, on the core, we are very in advanced stage. On the RAN, we are in a very early stage. We have not even implemented, but we are doing a couple of POCs. Now coming back to your question. That will help us in the long run, medium to long run. On the short run, we are looking at our vendor strategy as we speak. Having said that, Huawei has done a very good job. We are very happy what they are doing, and they have assured us the ability to supply in the short term. We will be watching the space very carefully. I don't see any issue with the ability for us to upgrade network at this point in time. You want to add anything?
No, I think, Ranjan, I think Tan Sri said everything. Just to the final closing. It's not that other vendors are new for us. We work with other vendors. We work with Ericsson, we work with ZTE, we work with Nokia in some of our footprints. We work with Cisco and some of the others on the core network. It's not that new, I think all of them are leading forward in terms of new technologies, how that need to be integrated. With the advent of open architecture, which is coming and where new vendors are emerging, I think it's not easy, there are opportunities which are there, which we are evaluating as we speak as part of our vendor strategy.
Okay. Thank you so much, and good luck.
Thank you.
Okay. Thank you, Ranjan. Our next questions coming from Arthur from Citi. Arthur, please go ahead.
Hi. Thanks for the opportunity. Two questions, please. Firstly, on spectrum, you mentioned earlier that Nepal had acquired additional spectrum in July. Does this come at added cost? Is it possible to remind us which of your markets across portfolio are actually looking at spectrum auctions in the next one, two years? Second question I had is with regard to ADS. Can we get any clarity on the ADS losses and the expectation on this for the year? Third question I had is related to Ranjan's earlier question on Huawei. You seem to have mentioned seeking to decouple hardware and software. That seems to be the opening approach for 5G. How is this applicable for the legacy networks such as 3G, 4G networks, because that's already there. Are there any cost-efficient options to delayer that?
What's the first question?
Thank you.
Spectrum.
Yeah. I think, we got the two into nine megahertz of 1,800 spectrum, which has been activated in July. We are also in discussions for the tech neutral 900 and 2,100, which is also something in the pipeline. In Nepal, spectrum is not that expensive, and secondly, it's not that you have to pay upfront, so it's paid over a period of time. Cost of spectrum is least of our concern. I think it's more about the regulations, the ability to get the spectrum on time, which has been the concern in Nepal. As far as the markets are concerned, I think we paid what NPR 58 per megahertz for the spectrum. That's 58 is less than $1 million, right? It's half a million dollar, right? It's not that expensive, as I said.
Other markets where we are obviously looking at spectrum would be Malaysia, which is linked to the 5G process, which is currently underway. We are looking at spectrum potentially in Indonesia, where there would be some spectrum coming in, which is more regional spectrum. I think that will depend on the pricing and availability. It is still not very certain. We have to renew our spectrum in Bangladesh, which is the Airtel spectrum, which is coming up for renewal end of the year. In addition to that, there would be some spectrum, smaller spectrum required in Dialog as well as in Cambodia, mainly for 5G, as and when things start evolving.
Second question.
Second question on ADS losses. We do not expect this year we should be around anywhere between MYR 260-300 kind of MYR losses coming from, MYR 300 million coming from ADS. That said, I think we need to look at ADS from two contexts. One is the P&L context, which we do understand the impact on the overall profitability of the group, but also from a funding context. I think our outlook at more from a funding context than just pure P&L context, because I think the upside on value creation on these businesses is far greater than what we incur as losses. I think it's more about the funding context.
If you look at a lot of this is actually, in a way, taken care of by getting Great Eastern coming in to invest $70 million this year, which should cut down our funding requirements in this business going forward. In addition to that, we are looking at other opportunities of getting other investors coming into these businesses to help us grow these businesses, both from a funding standpoint, also from a strategic standpoint. A part of this loss is also coming this year because of the participation in the government-led programs, for example, e-Tunai, and as we speak, ePENJANA program, which is going on. These two programs are not just CSR. We don't look at them. These are all business opportunities where you co-partner with other participants to acquire more customers, which should give us a future upside in terms of revenue as well as customer base.
Yeah. Dato', you want to add anything?
No. The need to participate in Tunai, as Vivek highlighted, is just making sure that we place ourselves to acquire new customers, and that's the nature of the beast. We are compelled to participate in these programs run by the government. The second phase, if you like, that's being launched, ePENJANA. We're a bit more astute this time around. Instead of giving hard cash out, we link them up with our various partners, whether it's pharmaceutical companies and so on, so that the customers can encash products and therefore become our customers instead. Yeah.
On the third question, presumably you are referring to the RAN. In terms of impact with the new Open RAN, it wouldn't have much impact. Our strategy, like most others, is more of a new area, new network, rather than our existing network. In general, as far as we know today, it's not worth it to completely change all of them to open network. Rather, it's more feasible where the add-ons of network are to be more Open RAN. Of course, we will eventually evolve into all Open RAN. It will take a couple of years rather than in a single phase. I hope that that answered your question.
Yes, very clear. Thank you very much.
Thank you.
Thanks, Arthur.
Okay. Thank you. The following questions are coming from Prem from Macquarie. Go ahead, Prem.
Hi. Morning.
Morning.
Thank you for the opportunity. Hi. Can you hear me?
Yes, very clearly.
All right. Thank you. Two questions from me. Firstly, I think in Malaysia, it would be nice to get your views around this 5G Lab Series that has just ended and what that potentially means for the operators. My feel is the focus is probably going to go back towards the fiberization, getting the foundations of the network sorted out, especially in light of the revelation that only 40% of base stations were actually fiberized by the end of last year. What would happen if the regulator were to impose 100% fiberization requirement within three years? What does that mean for our network and CapEx within a Malaysian context? Right. Secondly, I appreciate that we've been through a very tough quarter with COVID at Celcom.
Could you give us some update in terms of outside of just doing food truck-kind selling of SIM cards, what else is there left to do at Celcom? Is it a question of coming up with new ideas or is this a case of execution? What are we doing to make permanent changes here? Thank you.
Yeah. We have Idham with us. Idham can address those two questions for you, Prem.
Hi. Good morning, everyone.
Hi.
Good morning, Prem.
Morning.
For the question. Now, yes, the lab, the NDIL, the National Digital Infrastructure Lab, that just concluded last week over the span of six weeks. You are right in looking at some of the basic fundamentals that we need to cover before we start embarking on the 5G, though we do speak a little bit about 5G, et cetera. It did start with looking at the covering in terms of population coverage from 4G LTE as well as fiber. Over the course of the lab, I think it came to a lot of realization within the industry as well as the regulators and the ministry that there's a lot of factors to be considered to achieve the goal.
For example, the cost to reach the last 2% of the population will be significantly higher than the cost for the first 90% of the population, both in terms of wireless as well as even more on fiber. The lab actually came out with a few recommendation, looking at multiple technologies, not just limited to fiber and also wireless, but looking at others, including the satellite and the high throughput satellite, so on and so forth, even FWA. The outcome of it has been quite, I would say, rational, taking into all accounts, and cost to deploy is one of the major items that we took into account.
Of course, the lab also looked into Well, I'm trying not to dive out too much before the ministers make the announcement what the outcome of the lab, the little bit that I can share, besides looking at from the economic perspective, we're also looking at in terms of maximizing all kind of national assets that we have in order to minimize the cost to deploy. For example, how to utilize the spectrum and the various different layers of network that currently the country is operating. How do we optimize those so that we can use the spectrum with the latest technology? Maybe I will stop there for now because I think the big announcement will come from the government and also from the ministry later.
I guess to the concern that you brought up, whether it will have a significant impact to our CapEx and OpEx moving forward, I think that's one of the biggest criteria and concern that we have also going into the lab. By looking at various technologies, and utilizing all the assets that the country has, as well as phasing out in the right timing, then I think that part has been managed together with the regulator. On the second question, on the post-
What can be done at Celcom? Yeah? What needs to be done.
What can be done on the post-COVID, on what can be done with Celcom. Yes. Besides the thing what Dato' has mentioned earlier about new models of going to the market, about having our own direct distribution. For example, our Celcom BlueCube on wheels. We also have our beBOSS, which is a crowdsourcing of dealerships. Anybody and anyone can be a dealer and sell for Celcom. There are a few other things that we're looking. Of course, we're looking at in terms of our product and services. If you take, for example, what we have launched recently, our Truly Unlimited, as well as the Xpax XP Lite, is making traction in the market. We're seeing a lot more active dealers participating. We're seeing some trends in terms of some of the new composition of the product that they buy is actually quite encouraging.
Without me going into comparative detail, those are some of the things that we do. We're also revamping a lot more on the ground itself, in terms of our presence, our market presence, our street presence of our dealers, et cetera. There has been a few other alignments that we're doing in terms of aligning our trade better and our trade presence better. This is something that a few initiatives that we are undertaking now. Besides that, another big chunk of the drive that we do, that we learn through the MCO and the COVID period, is through our MVNOs. Our MVNOs have been quite resilient in terms of their business going through this period and predominantly through their business model that they take. For example, their MLM business model that a couple of our MVNOs adopted is actually quite resilient through this period.
We're seeing some of them growing even in the high double-digit numbers during this period. It is something that we look at, something that we can expand even further.
On the first question, maybe I can add, I did not attend the National Digital Infrastructure Lab, I don't have to worry about disclosing anything because I don't know what's going on in the National Digital Infrastructure Lab. I think we have to come back from a different perspective. Obviously, 4G and especially 5G require high bandwidth backhaul. Fiberization is the main answer, but not the only answer. In many of the single hops, you can have microwave, and microwave technology is also improving as we speak, on a rise, and has been improving quite significantly. We don't need to be 100%. However, from 30%-40%, obviously, we have to increase quite significantly, but it doesn't have to be 100% in the first place. Hopefully, during the National Digital Infrastructure Lab, that has been discussed. We are too technology-centric without looking at what's really required.
Assuming that we have to spend on CapEx, as you know, Idham and his team are looking at, as we have been in the past and will be even more, looking at co-densification rollout, joint CapEx development, and also to work with TM to build on TM fiber. There are many combination of things that we could do to significantly minimize our CapEx requirement.
Thank you very much. Tan Sri, maybe I could just throw in one more. Consolidation in Malaysia and Indonesia in particular. Any updates to your view on these two markets and the potential for consolidations?
My views has always been consistent. We believe that those two markets have to be consolidated for a reason which is pretty obvious. In Indonesia, it's pretty obvious. Again, I'm kind of repetitive. Everybody's talking everything. I believe there's perhaps more development lately, given the fact that the spectrum renewal will be quite significant that we have seen. I think everybody's a little bit more nervous than before, and therefore, the need for consolidation has already been established, but even more than ever. From that perspective, we believe there will be an increased activity or discussion among the members, among the players.
In Malaysia, quite similar in the sense that the consolidation is expected. We believe that that also will happen maybe in a slightly slower pace compared to Indonesia, given the fact that most companies, of course, we have a problem this year, but most companies are still very healthy and the need will be relatively less. Having said that, going forward to future-proof ourselves, to future-proof the industry, to me, it is quite inevitable. Maybe not necessarily immediately, but in a more medium term, whereas Indonesia, it should happen earlier. Idham?
Prem, just to add, maybe besides consolidation, I think one other big thing that we're looking at in Malaysia is collaboration. I think that that's something that we can do quite immediately, and I think a few initiatives that we kind of announced it even earlier. Number one, of course, in the more rural areas, how the mobile companies are coming together on sharing and not just sharing but also coordinating the rollout in these rural areas as well as, for example, for 5G, we also have the initial MOUs with Maxis on how we embark on the 5G rollout on the collaborative basis. Yeah, besides consolidation, I think the collaboration and active collaboration on the active component of the network also will play a bigger role.
Perfect. Thank you very much.
Thank you.
Okay. Moving on. Our next questions are coming from Alex from [AmInvestment]. Go ahead, Alex, please.
Okay. Thank you very much. I've got three questions. The first is regarding the effective tax-.
Can't hear.
Hello? Can you hear me?
Alex, we can't hear you.
Okay. Can you hear me now?
Yeah. Much better.
Okay. For the effective tax rate for Axiata, for the first half of the year is 45%. I think there were some abnormal items within it. For the full year, what sort of effective tax rate should we be looking at and maybe for this year as well, right? I also noticed your minority charge has actually jumped quite a lot. Could you give us a bit of guidance there? My third question is regarding the restatement of your EBITDA guidance for this year. When can we expect some guidance, or should we be waiting until the investor conference?
Sorry, we missed your second question.
The minority charge.
Sorry, which charge?
MI.
Minority charge. Yeah, MI.
Okay. Let me do the first one. Yes, you're right, effective tax rate is 45%. Will this come down for full year? Yes, marginally. Not much because in case of XL, we did take additional charge on account of reversal of deferred tax, which does impact the effective tax rate. If you see, one of the reasons, driver for higher effective tax rate is relating to the regulations in Bangladesh, where there is in addition to the corporate tax, there is also 2% tax on revenue, which does impact the effective tax rate. I think we should expect full year effective tax rate to be around between the range of 40%-45%. Minority interest charge, I think it's mostly relating to the profits generated from the OpCos, which do have minorities.
I think it's more about the portfolio mix between those businesses which have higher profit now compared to last year. For example, XL, we own 66%, so 33% or 34% does go to the minority. Similarly, in case of Robi, we own around 67%, so balance does go to the minority. As well as from the tower gains, which we got this year, because tower gains comes from XL, we do share with the minorities the effect of tower gains, whereas last year, most of the one-off gains which we got were directly attributable to Axiata. For example, sale of Digital Ventures, which is 100% owned by us. Or for example, sale of rights in Idea, which is the 100% comes to Axiata, and similarly, the sale of M1. I think it's more about the portfolio mix, which is revising the minority interest charge compared to last year.
Compounded with the losses in ADS.
Similarly, if losses in ADS is something which comes to us, which will further go down now going forward, given that we are now investors coming into it. Now, as far as the EBITDA, we did withdraw our guidance in last quarter. Our stand on the guidance remains same. We continue to withdraw our guidance for this year. However, we've directionally given, based on the trends which we see, we expect to have a lower single-digit decline in percentage decline this year in both revenue and EBITDA, and that will have an impact on the profits for this year. We do not have a view whether we will have more certainty around. If any, we would be coming out much clearer in the quarter three announcement or the Investors Day, as the case may be.
Okay. Could you also provide us with a bit of guidance on your CapEx, given that you have already gone through the first half of the year? Should we be looking at flattish for the second half?
CapEx, we look at around year-to-end at around slightly below what we did spend last year on CapEx.
Okay. Thank you very much. Perfect.
Okay, thank you. We have a question on the group chat here, basically from Wite of Manulife. The question is, in your last slide, you mentioned to be a dividend yield company. Axiata has been known as a company driven by growth in emerging markets. What caused the change of heart to want to position yourself as a dividend yield company?
Thank you for the question. It's a very good question. It's less of a change of heart to say, is the reality on the ground right. Reality on the ground on the industry that we are in, reality on the ground on the expectation of the shareholders. Let me elaborate. On the industry situation, as you know, the industry is generally not growing the way it used to be. Our emerging markets are still very healthy. We used to grow double-digit in the teens, and before that, even in the twenties, but now in the high teens for most of them. Sorry, in the high single digit for most of them. Generally, as a group, it will be tapering off to mid-single digit or so for the next few years. That's one aspect of it.
The second of it, which is very important, is that if you look at the nature of investors, generally, the nature of the expected performance from all the investors is the focus on dividend. Given what shareholders want and what the reality on the industry itself, we believe that that's the best proposition. I'm not saying it will happen tomorrow or today. We are looking at within a trail of five years. Although frankly, we are in a strong position to do it a bit earlier, but all we wanted to do is to guide towards a more medium-term direction of the company. During the Axiata Analyst & Investor Day, we will explain what are the measures, what we're going to do that can materially help us to make it happen. It involves from a cost structure perspective, therefore, we can have high dividend and free cash flow.
It involves consolidation, it involves the portfolio optimization, monetization, and many others. That will be elaborated later on. Like I said, it's not suddenly we wake up one night and we decide that is the best thing to do.
Maybe just to also clarify, we are looking at a dividend-paying company rather dividend yield, because yield is a function of the market price. Invariably, you end up chasing your tail. We got to be a bit careful when we articulate the strategy or the approach that we're taking from now here on. I think if I can add on to what Tan Sri just said, the Malaysian stock market, as you all know, the valuations are also largely driven by dividend-paying companies. In our industry where you see revenue growth tapering off, this is the reality of the business. Now, of course, we have to be mindful of the need to invest in CapEx, in network technology and so on. Again, this is something that we need to try and balance, and I will articulate the approach that we're taking at the Axiata Investor Day.
The last point I want to bring up is just to also not to give the wrong impression. The couple of markets are still growing, like I said earlier, but also the growth in edotco has always been, and will continue to be, very strong to the tune of double-digit growth. Our focus on enterprise, we have been growing double-digit. We expect to grow even double-digit in the future. Our home, which is very selected though, we hope to grow double-digit growth. Selected and careful investment in ex-Java in Indonesia, what do you call it? In the areas in Robi. What do you call that?
[CBD] [crosstalk].
[Non-CBD] areas in-.
In Dhaka.
in Bangladesh. We are still be growing, investing. However, our appetite for investment will be much more determined by the return within a shorter period of time, and also any kind of acquisition, whatever, we do expect to be earnings accretive year one, maximum year two, and so on and so forth. There's a lot of parameters with effect of investment will be determined by just saying that. Therefore, it makes us very clear on what we do, what we don't want to do, what we should monetize, where should we exit, what we should not do, and so on and so forth. Again, I would not belabor too much because this will be presented during the Analyst Day. In a way, it's the biggest change of team for us.
Make sure you attend.
Make sure you attend.
Okay, thank you. We don't seem to have any further questions coming through, so perhaps I hand over to Tan Sri for his closing remarks.
Thank you again for joining us today to all of you. We hope to be able to give you a better clarification during the Axiata Analyst & Investor Day. All the best, and take care to all of you.
Thank you all.