Earnings Call: Q2 2020

Aug 28, 2020

Good morning, ladies and gentlemen. My name is Claire Chen, Head of Investor Relations at Aljeta. Thank you for standing by, and welcome to Aljeta Group's second quarter 2020 results briefing. Today, we have with us Sansuir Jhamaluddin Ibrahim Asiatea Group CEO. Zato Isadeen Idris, Deputy CEO Vivek Souet, CFO, as well as representatives from our opcos. There will be a presentation followed by a QA session. Lastly, 2 housekeeping reminders. You will be on mute throughout the presentation. Also note the call duration will come out of the next of 90 minutes. Without further ado, I will now like to hand the conference over to Nasir Jamal. Good morning. Good morning to everyone. Thank you for joining us for 2nd quarter. As mentioned by the moderator, I have as I said, and my deputy will be for presenting and my CFO Vivek. Let's go to slide 4 in the, I bought a little bag. These are the key messages, which I will go to quickly, that will be lee liberated later on. Basically, as you can see from the results now on yesterday, the full impact of COVID 19 was felt, this last quarter, especially in April where it was a big dive, in that particular month, we we did, and we do see early a recovery by most of course from May onwards. Frankly, if you look at, May, June, even July, has 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, you know, is defined loosely as January, February. As opposed to pre COVID, which was last year. So it is quite, like I said, encouraging but I did 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. So 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 SUKO, EMTN issuances. That also had been reflected, as a confidence from born investors as a great, validation for us. Also, you will see later on, we'll talk about it. The investment in the digital business by greatest and also validated that our digital business in general, but digital finance business in specific. Now given this, what's happened in 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 new and EBITDA for this year. From a cost perspective, we believe we have we are very much on track to achieve the 5,000,000,000, which is 1 year ahead. If you do recall, about 4 years ago, we said that 3 years ago, we said that we will hit a 5,000,000,000 saving within 5 years. It seems that by end of this year, we will achieve the 5,000,000,000 1 year ahead of time. This is evidenced from the improvement in our EBITDA, year on year, especially year to date, 2020. I mean, EBITDA margin. Now what is important is that, it's kind of a preview for our upcoming Aljeta Analyst And Investors Day 2020, which will be, will be organizing the specific date and time shortly. We we have agreed with the bot and the bot have agreed that we will position ourselves to be more divided your company within a 3 to 5 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. In this time around, we may not be able to share you, as much as details we 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, traction, 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 percent of our remitters are contracted to the port of the country, contracted affecting us, especially so. And then the 2nd quarter results for NCELL It is far beyond far below expectations. Going to the next slide, I want to just quickly go through those highlights and the low lights. On the highlights, you know, just, all things being said, from our when we announce the result packet, in, May for the first quarter, we were looking at even worse than what we saw because we look at it, April results. We were very worry worried. Net net though, we have demonstrated operational resilience in the face of the COVID 19 pressures. What is good, like I said earlier, the, cash, OFCF grew 17.2 percent to 1,200,000,000 resulting in a cash balance of 5,900,000,000, which is pretty strong and healthy. Like I said earlier also, the cost improvement have led to the improvement of EBITDA. So EBITDA margin increased by 0.9 percentage points to 46%. We are going to repeat the results from xle.coRobiasmart and then pretty good despite COVID nineteen. As I've said earlier, June results have been quite encouraging, in fact, slightly from Maine, but June, especially, is largely back to the pre lockdown level, as I say, not pre pandemic, but pre lockdown, which we compared to, the average of January February. The great Eastern Validation of the investment of $70,000,000 US dollar is a big post to ADS and definitely a big boost to our DFS, strategies and plans. We've been very cautious about dividend, as much as we will 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, but we decided to be very cautious and announced an interim dividend of $0.02. That's good news. On the other, the low lights include the, I mean, predict obvious that Fatami declined 62% because of the impact from NCELL, ADS, and higher DNA, especially high DNA this quarter. And, of course, this year will impact the timing. The COVID 19 impact, we estimated across the group the an estimated foregone revenue of 400,000,000. Primarily in many countries, we couldn't, customers put an event above the closure of the outlets. In terms of CSR, we made it very clear during the second quarter that our practice, staff customers, and then our whole business, this is just what we estimated to be a 80,000,000 CSR program. But frankly, a a lot of work has been done, which cannot be easily quantified. The business challenges in Ensemble, last quarter has been, pretty, pretty high given the the the major reduction in the business in general, the top up that we couldn't do, and more, more importantly, the impact because of the ILD. Similarly to some extent. If you look at slide 7, you could see the trend that I was, kind of alluding to Practically all of course, on a uptrend from me onwards. You will see that, from this slight. Excel. Uh-huh. The engineering. Right? You see from this slide? Excel has been badly affected by the COVID nineteen to date, although I must say that the, the the the pandemic in, Indonesia is on the rise. So that, could be a question mark beyond beyond, beyond June July. The as you can see, also, the recovery of Stockholm, May, June. And in fact, we had trouble it, July has been also on the uptrend. Now I will go to all these details. You can see from this chart, but if I can summarize, the next slide, which is the group, So it's on a slide slide. So it's not the animated. On a slide slide, you can see the pink, colored, line. You can see that May, June is on the uptrend. Again, I I am not even saying that it will be, definitely on the uptrend all the way to Nordea. Given that we are really uncertain about the pandemic and impact your economy, and that's what we asked. I'll pass to Vivint. We'll give you more detail on the results. Thank you, Tanshree. Very good morning to all of you. If I can go to slide number 9, this is the reported results for quarter 2 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, Cellcom 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 50% from last year, mainly coming out of the fact that last year, we did have around 511,011,000,000 coming from the disposal of Imran 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 impact it because of the employee restructuring program in Cellcom as well as forex losses, of around 80,000,000 you would, you would have seen that, over the last 6 months, ringgit has weakened against, against dollar, but now we see the trend turning around the other way, with dollar weakening. If I can go to the next slide, this is the underlying performance which is normalized for, on a constant this is on a constant currency basis. So 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 on 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. Couple of reasons. One is obviously the impact of COVID 19. It was 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 Katmandu region, which would impact some of the revenues. That said, we also had constraints on account of spectrum in that market, which, good news is we got it in, earlier in July and has been activated from July. So we should see the benefits of additional spectrum coming in, on the data monetization capabilities. Selkom is being 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, so that's the main reason. However, the good news is that we've seen the revenues coming back now in Cellcom. I think June revenue on a run rate basis and prepaid has been actually better than what it was in January. So we're seeing that trend. We've also seen a positive net adds coming in the month or in the quarter on prepaid. So I think that's good news. That has been offset by continuing strong performance from XL from E.co and, Ruby, even despite the fact that, Bangladesh was impacted by, substantially locked on, 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 costs 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 has been 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 E29 aircraft program. We had impact of around 40,000,000 ringgit, and the impact of DNI as you know, DNA is mostly fixed costs. So the lower EBITDA, is not getting compensated by the fixed, DNA charges. If I can go to the next slide, slide number 11, this is basically a reconciliation between, the, normalized, but I mean, last year versus this year. Main impact, as I said earlier, is coming from the DMA, which is basically fixed costs. We would always expect EBITDA growth to offset the impact coming from DNA. However, this quarter has been, unusual. With EBITDA being flattish given the market condition. The slide at the bottom is basically showing the the year to date impact between the reported, Fatami and the underlying Fatami. So you could see the impact on Forex the tower gain, which we got in Indonesia and also the telecom 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 180,000,000 improvements, 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, we chart at the bottom, which shows, where is the impact coming from the large impact is actually, effectively coming from, the, the benefits in E.co where some of the towers have been, deferred as well as dialogue where the CapEx has been relatively low in the first half, compared to last year. But negative impact is in, Ruby, where if you recall last year, we did have this NOC problem where we couldn't import equipments. And so 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 inflows of 5,900,000,000 ringgit cash in different markets, gross debt to EBITDA against 2.64. I think also the fact that, with this balance sheet, we could actually do a very successful round of, for the 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, the new debt coming in which would move much larger to the fixed component of over 80% and also a much larger component of US dollar debt for us. If I go to the next slide, this is quick summary of, all the opcos, cell count performance, year to date, 9-9.5 percent, mainly coming out of the impact of locked on and prepaid segment. But as I said earlier, we do see, early green shoots with the improvement coming in the prepaid and a net add positive in the last, quarter for, for us. But the impact is mainly in the prepaid segment. That said, I think EBITDA has been relatively, better off, in terms of the percentage impact. So if you exclude the restructuring, it's been down by 7.3% mainly coming out of continuing, cost initiatives as well as load expenses in. 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, Excel, a strong performance, continued strong performance from Excel, with revenue growth of 7.4 percent on a year to date basis, if I look at, year on year, around 5% growth, for this quarter, this quite, difficult, economic conditions in Indonesia. EBITDA growth on a year to date basis is 36% but if I'm on wise for the IFRS. If you know, Indonesia adopted IFRS in 2020. So if I normalize for that, the EBITDA growth is around 15.3%. Compared, which is a strong, continued focus on, cost, in 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, which is the IFRS But if I exclude that, it's still a strong 52% growth in free cash flow this year. So Tommy looks strong, again, coming out of the fact that, there is gain coming out of the tower sale. But if I exclude that, It's marginally lower because of the higher DNA and also deferred tax adjustment. Just to explain on deferred tax, the carry forward losses in Indonesia expired after a period of 5 years. So some of the carry forward losses, from the Access acquisition way back in 2015 are going to lapse this year. And so those are the that's been adjusted as part of a deferred tax, adjustment there. That's around $200,000,000,000, idea impacted. If 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 being essentially coming out of, the, the COVID impact as well as the spectrum deficit where we are not able to monetize data. So 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 did, we had any anticipated given the conditions, where a lot of migrant workers have actually moved back, for the time being, to, to Nepal consequently, the ILD traffic has come down, relatively and, and continued economic and lockdown, conditions in Nepal. And because of the lower revenue development impact has been on the, 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, for Nepal and Patami impact coming straight because of the lower, EBITDA margins ended up in the, first half. If I go to the next slide, Bangladesh, I think difficult, situation market conditions in Bangladesh. However, con will be continues to perform well, with the, with the revenue being stable, with marginally 1.1% growth. However, strong performance on, EBITDA with continuing costs initiatives driven by that, business, with EBITDA margins now touching 45% are made for call, go back to the acquisition or the merger with Ethel in back in 2016. We were at that point in time with EBITDA margins of around 22, 43%. So that's now kind of, more or less doubled, over the last, 4 years. So strong performance from, 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. So there's been some network catch up CapEx, which is resulting in increased, CapEx spend in Bangladesh. Profits, developing, quite better, quite good, coming mainly from the improvement in EBITDA. As well as, the lower net finance cost in the market. Quickly on, the dialogue performance, stable despite, the economic and COVID, conditions, both revenue and EBITDA. Free cash flow also stable, profit coming down mainly because of the Forex impact. If I normalize for ForEx, the profit will be down by around 18% essentially coming because of the impact on deposition, considering fact that there's been less growth on the EBITDA. Spot market, which, had significant resilience and, luckily, no major lockdown in that market continue to do, strong performance, even despite the fact that a lot of Chinese, travelers are moving back as well as the dependency of this market on tourism and enrollment revenue, has been impacted, yet the revenues are fairly stable with strong EBITDA growth of 7.8 percent, 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 7,600,000 with the merchants around 176,000 merchants and, significant development growth on the, GTV, and also the activity of the customers, both in terms of number of transaction as well as, the spending, per week. Esperassy, which is essentially the lending business, microfinancing, and microinsurance 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, their, credit losses, or NPLs still at a much lower level based on the credit scoring model, successful credit scoring model, which they, use. AgTech Business I think continues to grow with acquiring new customers, in different fields. Also, trying to move into, more from a traditional business to a data led outcome based business continues to show breakeven despite growth, which is happening in that business. And, and we expect that to remain profitable, or at least breakeven on profits by the end of this year. Next slide on infrastructure. E.com, a strong growth, across markets. Coming essentially from the new tower orders, they're literally lower than what we had expected given the market conditions. Some of the telcos have been slowing down in terms of placing orders, but that I think over time should catch up. So it's more about, deferment of, act than, than, lost revenue. Strong EBITDA growth coming with 64.3 percent EBITDA margin. If I exclude for some of the one offs last year, yet 17.4% EBITDA growth, a strong free cash flow. Payment mainly because of the delayed, CapEx spend and, put on the improvement. With that, I'll just forward it to the, on some few few sections on moving forward. Thanks. Good morning, everybody. In the background that Bancrest has touched us now, whilst revenue has, seemed to be seem to have recovered to pre lockdown levels in the month of May June. We are still, concerned and, you know, for the performance of the operating companies to SELIA for the reasons that, Transria has elaborated just now. However, from our perspective looking ahead, for 2020, the 1,500,000,000 other bond issues has, have helped us, reduce the costs of debt by about 17 percentage points from 321 onwards, the cell phone transmission, the restructuring of the staff, essentially, the VSS program that was completed, on 30th June will reduce staff costs by about $33,000,000 per annum. Enterprise growth. We see enterprise growing, from the online education space as well as we work from home. Approach that many companies have adopted areas, as you recall, the $70,000,000, injection by Great Eastern, as certainly that data evaluation. We are continuously being approached by various parties, to invest in your dotco, given the expansion plans we've mapped out. Of course, the spectrum, one of the key reasons of the performance of a sensor was the capacity constrained in terms of spectrum. There were some conditions that, was imposed on us, but that has all, been resolved. Well, partially resolved, but we see the spectrum being activated in July. So we see the capacity constraint be no longer an issue for, for us to they monetize data. And of course, 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, and and the the this, collective brand initiatives will be expanded to cover other areas in time to come. And so far as risk is concerned, yes, COVID 19 continue to provide uncertainties for the lockdowns could be imposed on, the various countries, including Malaysia, and the, government, led initiative to provide a free data, what's that impact our our revenue line. Of course, intensifying competition in New Zealand, Malaysia will also be a big risk for us. And lastly, last but not least, is the, developments from Huawei. We are in constant discussions from 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, cell phone sort of customer profile, between prepaid, postpaid, as well as the MVNO, we have we are going to focus on the prepaid segment, for the second half. We started that already, the trade BQT program to make sure that, we are present in all corners of, the market, trying to implement outsourcing dealerships by making everybody, possibly everyone, to to become a dealer. On the prepaid segment, we've launched this truly unlimited plan from as low as 12 ringgit you can get unlimited internet, unlimited voice calls. And the the one feature of that is a can even get the SIM cards delivered to your doorstep. So you can see some improvement in the subscriber base, and hopefully this will become, you know, we'll we'll gain traction in the months to come. In suffice postpaid segment, the middle set of budgets, to see some improvement as well in the month of July. And surprise MVNOs, this is a strong, customer base for about of about 4,000,000 customers for cell phone. Next slide on ANSEL, as I've mentioned, the new Spectrum has been activated. We should be able to see some improvements in the, in the subscriber base subscription. And, of course, the lockdown that has been imposed has affected, the the ARPU on left hand side. And, of course, the total subscribers has come down, softening, and then gross adds slightly improve in the month of July. I think the, on the next slide, as, earlier too. This is, part of our capital management exercise to make sure our, the the liability asset longevity, maturity matches. So what we've been we've successfully done is to extend the average loan life to about 16 years. You know, in in our business kept intensive window holds, a long haul. And, and the fixed rate portion of the, come after the completion, we bought 87% from currently 6 from 66% in June. So that's the advantage of being that bond issue. And, expected net finance for savings of about 60,000,000 ringgit per annum, and specifically, the 10 year, a sequential rate of 2.163 percent and 30 year notes, that's a rate of 3.064 percent. And definitely, lowest ever for a telco to to be able to, issue, in in history So effectively, our blended borrowing rate has improved to about 3.3%, from 4% Now on the right hand side, the pie charts, let's just show the, the the proof of my group borrowings to be fixed and floating. 71% to be fixed with, this bond issue. And between local currencies, and an unhedged portion remains above 38% because the plan is for us to hedge the 500,000,000 Secoo and leave the 1,000,000,000 unhedged, in accordance with our hedging policy. Now The last slide that I have, we have for today is largely to look at, what we mean by looking at or reimagining our future taking advantage of evolving norms. Yeah, can you just bring everything up? Now we all acknowledge that there's been a partnership in the consumer behavior as a result of COVID 19. What we need to do is optimize our physical assets, network human and so on as well at the same time, accelerate the digital efforts. And so far as the various functions in our business concern was, boxes at the bottom, 6 aspects, 6 large, 6 broad aspects of our business, so far as product pricing for consumer and pricing talking about consumers, we're looking at making, focusing on various segments, you know, to be service specific time specific or device specific. And so far as the the SMEs are concerned, we are, hoping to provide them with, the tools, a solution in the box, if you like, so that they can, digitize their business and and, and able to operate at minimal cost And so far as enterprise is concerned, this is quite a big opportunity for us as well as SMEs as well as micro SMEs. We have recently announced a partnership with Telefonica to provide security as a service. The health care education segment certainly will see a sector of transformation. And, of course, with, the connectivity we provide, we can offer and serve operate, remote areas at a at a scale. On sales and distribution, the, phrase that the team as the doctor is the guerilla distribution, last year to provide retail on wheels and so that anyone can sell at the same time. Yeah. So we can always, if you like, is, making sure that we can distribute through trucks and delivery, delivery, channels, for example, Grab or, the various delivery services that that is available in the market. And so far as anybody can sell, we are thinking of, activating or allowing, people to also be our our sellers. Yeah? Of course, big issues on making sure that our brand, is preserved. So we're currently just experimenting how we do this. And of course, at the same time with, the advent of, technology, and we're relooking at our distribution channels in the form of, blue cube stores in Malaysia. So that, you know, people no longer need to go to Duke stores, and that, you will see some rationalization of the, network. And so far as the customer care is concerned, of course, we need to make sure that, everyone's provided with a a specific or attended to, in terms of customer surveys, 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 And lastly, insofar as people are concerned, not just, internally, we're also, helping organizations to, make sure that, yeah, work from home approach is done effectively by improving network services and so on. So that's, an 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. And lastly, just to recap on the key messages, directionally, we're looking at a low single digit percentage decline in revenue and a beta for 2020. We're on track to deliver the 5,000,000,000 cross optimization, a year ahead, as Tanshi mentioned earlier just now. And, and about 1 once we have the as at as yet to enlist an investor day, sometime towards, the end of October, we'll confirm the data. We'll be able to, share with you our positioning or our approach or our strategy to be a dividend income, company. Thank you. We will now proceed with the Q And A session. You will have 2 options to ask your questions. Option 1 is to ask your question verbally. So you will need to use the, toolbar at the bottom of your screen. Firstly, to raise your hand by clicking on that palm icon, wait till your name is called out. Remember to unmute yourself and ask your question and then after, remember to mute yourself again. The second option available is you can ask this via the group chat. So again, go to the show conversation at the toolbar, type in your question at the group chat, and we will answer your question accordingly. So, we can see that the first questions are gonna 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. You alluded, the first one is on Huawei. You you you made a brief reference to it, but can you please share what is the impact that you see of the recent, restrictions on Huawei, both for, Axiata, the group in Malaysia. The second question is on, like, the growing, importance of the tower portfolio. We've had, tower companies re rating Other Telk was also looking at strategic options with the towers. Is it something that you would look as well? Like, maybe revisit the IPO of e.quo. Thank you. I think, Huawei has been something which is a very frequent development, right? Things keep changing very often. And we know early, or middle of this month, there was new guidelines coming from a new regulation from the Department of Commerce in, in US, which basically does not allow, US companies to ship chips to Huawei. So from our perspective, I think couple of points. One is, we've not seen any negative react from any of our footprint markets. So it's not that the politically or for, other reasons the local governments have been reacting to the U. S. Action. So from that extent, our footprint market has got it. But that brings the second question, which is on supply chain, does the, this mean disruption to the supply chain from Huawei So we've been on a constant frequent dialogue with the, with the senior management in Huawei. And, 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, we use from them. Third thing is, that, the, the impact of chips, we also understand from them that most of the markets Most of the, exporters also have their licenses for the time being to be able to deliver, chips to Huawei. That said, I think we are given that this is a very, frequently developing issue, lean and in dialogue, along with the, the, our lawyers and the lawyers of Huawei on what is the business continuity, measures we need to take and what are 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. So that's where we are. So, well, 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 derisk our exposure. And so far as the, it'll go, IPO is concerned, the actual fact, Ranjan, we're we're no rush to do this simply because, firstly, you know, who has the capacity to, gear up, to expand, this business portfolio Secondly, we are, you know, looking at various other alternative, invest, if you like kept the raising exercise. So, you know, who is kind of a sweet spot. And, largely, yeah, at some stage, we'll re you know, revisit this of IPO, but, the ability to raise capital, it's, you know, you don't close, not restricted. So it it's it's something that we will continue to, evaluate. And in any case, current market conditions are not really conducive for, for an IPO. I mean, yes, you know, tower companies have been rerated, but, and, and, to be fair, you know, Hidoka is pretty resilient in this current market condition. So hence, rerating on the tower course. So we hope that that that trend will continue and at some stage, we'll revisit the I IPO exercise. Thank you for that. Maybe one quick follow-up on Huawei. In absence of any relief to Huawei, like, how easy will it be will it be for Axiata to as a group to add new vendors and and maybe even swap out some of the old equipment from Huawei. And does that impact your ability to upgrade the network? So just to give you a, a bit much bigger picture, what we are doing on a network is to completely relook and the architecture of a network, what we call modernizing of our work, the network. It, before I answer your question, let me just explain a bit. We're trying to you to do is to, the delay of visualization of the networks, such that the we have a call and ran within the call. Right now, we are actually quite an advanced stage of delay ring this software and hardware. To the extent that the hardware will, you know, we can buy and, with practically most hardware vendors. Now, therefore, we are limited to software. Now, I'm not saying that it will be easily replaceable, but the dependence on the vendor will be quite, will be much lessened with the architecture. Similarly on the same concept. If you look at Wren, with the open Wren concept, similarly, it is a decoupling of hardware and software and the sub and then, of course, the quantification of concept, all into place. So net net, without going to further detail, is the decoupling of the hardware and software, both for core and brand, but also decoupling of the dependency on a specific vendor So that's the general plan. Like I said on a call, we are very advanced stage on the run. We are in a very early stage. We have not even implemented. We are doing a couple of POCs. So now coming back to your question. So that will help us in the long run, medium to long run. On the, short run, we are looking at, our our vendor strategy as we speak. But having said that, you know, we have done a very good job. We are very happy what they're doing. And, you know, they they they have, assured us the digit supply in a short term. So we we will be watching space very, very carefully. I don't see any issue with ability for us to upgrade network at this point in time. You want to add anything else? So I think, Ranjan, now I mean, I think Countries said everything, but just just to the final closing, it's not that other vendors are new for us. I mean, we work with other vendors. We work with Eric We work with Zeti. We work with Nokia and some of our footprints. We work with Cisco and some of the others on the core network. So it's not that new. And I think all of them are leading forward in terms of new technologies, how that need to be, integrated. And, and, with the, admin to open architecture, which is coming in where new vendors are emerging. I think, it it's not easy, but 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. Questions, please? Firstly, on Spectro, you mentioned earlier that Nicole had a car in addition to Spectrum in July. Does this come at added cost? And is it possible to remind us which of your markets across portfolio are actually looking at spectrum options in the next 1, 2 years. Second question I have is with regard to ADS. Can you get we get any clarity on the ABS losses, and the expectations on this for the year? And third question I had is related to Ranjan's earlier question on Huawei, and you seem to have mentioned something to decouple hardware and software, but it seems to be the opening approach for part of the team. But how is this applicable for the legacy networks, such as a 2 g4 g network? Is that already there? Are there any cost efficient to be de layer that. Yeah. So I think, we got, the 2, into 9 Megahertz of 1800 spectrum. Which has been activated, in July. We are also in discussions for the tech neutral 92100, which is also something in the, pipeline. And PayPal 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. So cost of spectrum is a least of our concern. I think it's more about the regulations, the ability to get these spectrum on time, which has been, the concern in, in Nepal. As far as the markets are concerned, I think we pay npr58 per megahertz, for the spectrum. And that's that's, you know, 5 38 is less than a 1,000,000, dollars, right? It's $500,000, right? So it's, 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, 5 g process, which is currently on the way. We are looking at spectrum potentially in Indonesia where there would be, coming in, which is more regional spectrum. But I think that will depend on, the pricing and availability. It's 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, in, dialogue as well as, mainly for 5 g, as and when things, start evolving. Second question? Second question on ADS losses, we do not expect, you know, this year, We should be around anywhere between 2 160 to 300 kind of, ringgit losses coming from, 300,000,000 coming from ADS. But that said, I think we need to look at ADS from 2 contexts. One is the P and L context, which, we do understand, the, the impact on the overall profitability of the growth. But also from a funding context. I think our our outlook is more from a funding context than just pure P and L, context, because I think the upside on value creation on these businesses far greater than what we incur has lost is. I think it's more about the funding context Now if you look at, a lot of this is actually in a way taken care of by, by getting great Easter coming into invest $70,000,000 this year, which should cut down our funding requirements in this business going forward. In addition to that, we are looking 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. Part of these losses also coming this year because of the, because of the participation in the government led programs, for example, Ethonai. And as we speak, EPANJANA program, it is going on. And these two businesses, these two programs, are, not just CSR. We don't look at them. Either 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. Now do you want to add anything? No. No. No. The the, the need to participate in tonight is that David highlighted is just making sure that we, face ourselves, to acquire new customers, and that's the nature of the beast. And you know, we we'd be, compelled to participate in these programs run by the government, but the 2nd phase, if you like, that's been launched, yep, and Jenna, you know, we are a bit more, astute this time around. Instead of giving hot cash out, we, make them or we, link them up with our various partners, whether it's Thomas companies and so on so that, the customers, can encash our products and therefore, become our customers in this day. Yeah? On a third question, I'm I'm presumably referring to the RAN, in terms of impact, when did the new open RAN, it wouldn't have much impact our strategy. And like most others, it's more of a new area, new net, 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. Or rather is more more feasible, the add ons of network, to be more open red. And then, of course, we will eventually evolve into all open random, but it will take a couple of years rather than, in a single phase. I hope that that answered your question. It's very clear. Thank you very much. Thank you. Thanks, Arthur. Okay. Thank you. So the following questions are coming from Fran from Macquarie. Good morning. Thank you for the opportunity. Hi, can you hear me? Yes, very clearly. So two questions from me. Firstly, I think in Malaysia, it would be nice to get your views around this, 5 g lab series that has just ended and what that potentially means for the operators. Because 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. So, you know, what would happen if the regulator were to impose a 100% fiberization requirement within 3 years what does that mean for our network and CapEx, within a Malaysian context? Alright. And secondly, you know, I appreciate that you know, the we've been through a very tough quarter with COVID at Cellcom, but, could you give us some update in terms of outside of just selling, you know, doing food truck kind of selling of SIM cards What else is there left to do at Cellcom? And is it a question of coming up with new ideas or this a case of execution? And what what are we doing to make permanent changes here? Yeah. We have Idam with us. So, Idam, can address those two questions, sir, for your friend. Hi. Good morning, everyone. Good morning, Graeme. Thank you for the question. Now, yes, the lab, the the NDIL, the National Digital Infrastructure Lab, that just concluded last week over the span of 6 weeks you were right in looking at some of the basic fundamentals that we need to cover before we start embarking on the 5 g. Do we do we do speak a little bit about 5 g, etcetera. It's it did start with, looking at the covering in terms of population coverage from, 4g LTE as well as fiber. But over the course of the lab, I think it came to lower realization within the industry as well as to regulators and the ministry that there's there's a lot of factors to be considered to achieve, the goal. For example, the cost to, to, reach the popular the last 2% of the population will be significantly higher than the cost for the 1st 90% of the population. Both in terms of, wireless as well as even more on on fiber. So the 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 the high triple satellites on and so forth, even FWA. So the outcome of it has been quite, I would say, rationale dig into all all all accounts and and costs is cost to deploy is one of the, major accounts that, that we the major items that we look to be to account. And of course, the lab also looked into, or I'm I'm trying not to divul too much before the ministers make the the announcement was the outcome of the lab, but it's the way that that I can, share, besides looking at from the economic perspective, but we're also looking at in terms of maximizing kind of, natural assets that we have in order to minimize the costs, to deploy. For example, how do you utilize the spectrum and the various different layers of network that can't be currently the country is is operating. How do we optimize those? So that, we can use the spectrum with the latest technology. Maybe I'll I will stop there for now because I think the big announcement will come the government and also from from the ministry, later. So what, I guess, we did it concern that you brought up, what it will have a significant impact, to our CapEx and OpEx moving forward. I think that's one of the biggest criteria, the concern that we have also going into the lab. So by looking at various technologies, and and utilizing all the assets that that the country has, as well as phasing out in the in the right timing, then I think that that part has been, managed together with the the regulator. On the second question on the post, What can be done, what can be done on the post COVID on the what can be done with Cellcom? Yes. Besides the thing, what, that that, as mentioned earlier, about new models of going to the market, about, having our own direct distribution. For example, our telecom do keep on wheels. We we also have our our B boss, which is a cup sourcing of dealerships, you know, anybody who can be, anybody and anyone can be, a dealer himself or southbound. There are a few other things that that we're looking at. Of course, we're looking at in terms of, our product, and and services. If you take, for example, what we have launched, recently, are truly unlimited, as well as the XPA Xp Lite is making traction in 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, of the product that they buy is actually quite quite encouraging. So without me going to into, competitive, detail. But 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 our our 3 presence of our dealers, etcetera. There has been a few other alignment that we're doing in terms of, aligning our trip better and our trip presence better, optimizing this is this is something that few initiatives that we are undertaking now. Besides that, another big chunk of the drive that we do that we learn through the to the m c MCO and the COVID period is through our MVNOs. Our MVNOs has been quite resilient in terms of their business going through this period. Predominantly through their business model that that they they they under they they take, for example, they are the MLM business model that a couple of our MVNOs, were adopted is actually quite resilient through through through this period. We're seeing, they are growing. Some of them growing even in the high double digit numbers during this period. So it is something that that we look at, something that we we can expand, even, further. On on the first question before I can add, I did not attend a lab, so I don't have to worry about disclosing anything because I don't know what's going on and then let. So the, I I think we have to, come back from a different perspective. Obviously, 4 gs, especially 5 gs require high bandwidth, backhaul. But, 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 the, on a rise and has been improving quite significantly. So there will, you know, we don't need to be 100% and they'll be in, however, from 30 to 40%, obviously, we have to increase quite significantly, but it doesn't have to be 100% in the 1st place. Hopefully, during the, the lab, that has been discussed. So we are 2 2 technology centric without looking at what's really required. Now on the, assuming that we spend on CapEx, as you know, Adam and his team, looking at as we have been in the past and we'll be even more looking according to roll out, join CapEx development, and also to work with TM to build on TM fiber. So there are many combination of things that we could do to significantly minimize our CapEx requirement. Thank you very much. Tansui, 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 consolidation my views has always been, consistent. We believe that, those two markets have to be consolidated for recently, which is pretty obvious. In, Indonesia, as pretty obvious. Again, I I'm kind of repetitive. Everybody's talking about everything, but, I I believe there's, perhaps more development lately given the fact that the spectrum renewal will be quite, significant that we have seen. So I think everybody's a little more nervous than before. And therefore, the need for consolidation, has already been established, but even more than ever. So from that perspective, we believe there will be, an increase activity or discussion among the members, among the, of, the players in Russia are quite similar in a sense that, you know, the consolation is expected, and we believe that that also will will happen. Maybe in a slow, slightly low, slower space compared to Indonesia given the fact that, you know, 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 be is quite inevitable, inevitable. Maybe not necessarily immediately, but in a in a short, in a more immediate term, Whereas in Tunisia, it should happen, earlier. Perhaps just just to add, maybe be besides consolidation, I think one of the big thing that we're looking at in Malaysia is collaboration. I think that that's something that we can do, quite immediately. And and I think, a few initiatives that we kind of announced it even earlier. Number 1, of course, in the more rural areas, how the the 3, the the the doubt, the mobile companies are coming together on on sharing and and not just sharing, but also coordinating the rollout, in this rural areas, as well as, for example, for 5 G, we also have have, the initial MOUs with Maxis on how we embark on the 5 g rollout, on the collaborative basis. Yeah. So besides consolidation, I think the collaboration and active collaboration on the on the active component of the network also will play a bigger role. Perfect. Thank you very much. Thank you. Okay. Moving on, our net questions are coming from Alex, from Ed. Toreen, Alex, please. Okay. Thank you very much. I've got three questions. The first is regarding the effectiveness. Hello? Alex, we can't hear you. Okay. Can you hear me now? Can you hear me now? Yeah. Yeah. Much better. Okay. About the effective tax rate for a debt, for the first half of the year is 45 to 10. I think there was some, a number of items within it. For the full year, what What kind of effective tax rate should we be looking at and maybe for a year as well? Right? And I also noticed your minority charge has actually jumped by a lot could you give us, you know, guidance there? And, my third question is regarding the reinstatement of your EBITDA guidance for this year. When can we expect the some, the guidance, or or should we be repeating until the investor conference? Sorry. We missed your second question. Okay. Okay. So let me do the first one. Yes, you're right. Effective, tax rate is 45%. Would this come down for full year? Yes. Marginally, not much because In case of, we did take additional charge on account of, reversal of deferred tax, which does impact the effective tax rate. But if you see, I mean, one of the reasons driver for higher effective tax rate is relating to the regulations in, in Bangladesh, there is, in addition to the corporate tax, there is also 2 person tax on revenue. Which does impact the effective tax rate. So I think we should expect full year effective tax rate to be around between the range of 40 to 45%. Minority interest charge, I think it's mostly relating to the profits generated from the which do have minorities. So I think it's more about the portfolio, mix, between those businesses which have, which have, higher profit now compared to last year. For example, XL, we own 66 person. So 33 person, the 34 person does go to the minority. Similarly, in case of Rovi, we own around 67 persons of balance just go to the minority as well as, from the tower game, which we got this year, because travel game comes from, Excel. We do share with the minorities the effect of travel game players. Last year, most of the one off games, which we got, were directly attributable to, EXEIata. For example, sale of digital ventures, which is 100% owned by us, or, for example, sale of rights and idea, which the hundred person comes to the, to the, to Exxiate and similarly the sale of M1. So I think it's more about the portfolio mix. Which is, revising the minority interest charge compared, last year. Compounded with the losses and the ADS. Similarly, I mean, if we lower losses and ADS is something which comes to us, which will for the road on now going forward given that we are now investors coming to it. Now as far as the EBITDA, I mean, We did withdraw our guidance, in last quarter. So it was down on the guidance remain the same. We continue to withdraw our guidance for this year. However, we've directionally given, based on the trends which we see, we will 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 3. Announcement or the Investors Day as the case may be. Could you, okay, could you also provide us a little bit of guidance on your CapEx given that you already gone through the first half of the year, should we be looking at flattish for the second half? So CapEx, we 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 check here basically from a Vite of Manu Life. The question is in your last slide, you mentioned to be a dividend new company, Aviata 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 me. Thank you for the question. That's a very good question. The, is less of a change I want to say. Is the reality on the ground, right, give, reality on the ground on the industry that we are in, relative on the ground on the expectation of the shareholders. Let me answer, let me elaborate. On the industry situation, as you know, the industry is, you know, generally not growing the way it used to be. Our imaging markets are still very healthy. We used to grow, double digit in a teens and before that even in the 20s, but now in the high teens for most of them, sorry, in the high single digit for most of them. So but generally as a group, it will be kind of, tapering off to a mid single digit or so for the next few years. So that's one aspect of it. The second of it, which is very important, is that if you look at, the, the, the nature investors generally the nature of the, affected, performance from all the investors is the focus on dividend So given the, what shareholders want and what the relative on the industry itself, we believe that is the best proposition I'm not saying it will happen tomorrow or today. We are looking at within a 3 to 5 years. And 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, the the direction of the company we will be during the agenda, Analyst 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, the, portfolio optimization, monetization and many others. So that will be, elaborated, later on. So It's not, like I say, it's not suddenly, we wake up 1 night and we decide that, it's the best thing to do. Maybe just to also clarify, we are looking at the dividend paying company rather dividend yield because yield is a function of the market price. And, you know, invariably, you end up chasing your tails. So you gotta be a big careful, once we when when we articulate, the strategy or the approach that we're taking from now here on. I think, in, if I can add on to what countries just said, the mission is to market, as you all know, The valuations are also largely driven by, dividend paying companies. So you know, fall in in our industry where you see revenue growth, tipping off, you know, this is the reality of the business. Now, of course, we have to be mindful of the need to invest in, CapEx and and and network technology and so on. But, again, there's something that we need to try and balance and, periodically, the approach that we're taking, at the ASEATTA Investor Day. The last point I want to bring up is just to also not to give the, wrong impression. The, couple of our markets are still growing. Like I said earlier, but also, we are on the growth in a.co has always been, and will continue to be very strong to the tune of WGG 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. So and investment in, but selected and careful investment in ex Java in Indonesia, non, what do you call it, in the areas, in, in, in Bangladesh, So we are still be doing investing. However, the, our appetite for investment will be much more determined by the return within a short short period of time and also any kind of, acquisition, whatever, we do as back to be, the, to be earnings dilute earnings accretive year 1, maximum year 2, and so on and so forth. So there's a lot of parameters, the fact or investment will be determined by just saying that. So therefore, it makes us very clear on what we do, what we don't wanna do, what we should monetize, where should we, exit, what we should not do and so on so forth. So again, I would not belabor too much because this will be presented during the Analyst Day. So it's a it's a, in a, in a way, it's a biggest change of theme for us. So make sure you attend. Make sure you have time. Okay. Thank you. We don't seem to have, any further questions coming through. So perhaps I, hand over to Tanjuri for his closing remarks. Thank you again for joining us today to all of you. I hope to, we hope to be able to give you, a better clarification during the Aljeta investment day. And all the best, and take care to all of you. Thank you.