Hello, this is Jamal. I'm the CEO for Axiata Group. I'm going to make the announcement for the Q4 2018 and of course, 2018 as a whole. Can I proceed? All right. Of course, I'll be presenting the summary, then I'll pass to Vivek to present the financial for 2018. I'll come back to talk about 2019. The first two slides. Slide three and four, summary of the whole year. Basically, but it's pretty obvious, this is the most massive portfolio of rationalization and monetization in 2018. Of course, some spill over to early 2019, although most of the work has been done in last year. This will pave the way for 2019 and the future.
2018 headline, you will see, and we will go into more detail, is a loss of MYR 5 billion, but a normalized PATAMI of MYR 1 billion and underlying PATAMI of MYR 1.2 billion. Can be a bit confusing. Vivek will explain more. Just to give you a feel that the headline PATAMI is minus MYR 5 billion, out of which, MYR 5 billion actually pre-tax non-cash. Right? Idea related transactions amount to MYR 3.9 billion. Idea itself comprised of the dilution, the technical impairment, and the operating loss for the Q1, but in total MYR 3.9 billion. Our Forex and derivative losses, MYR 0.5 billion. Legacy asset, MYR 1.8 billion. Of course, other PPA minor, MYR 0.8 billion. We believe that underlying performance is very strong.
You'll see this around in more detail, in short, six of our opcos in six countries performed the best in the market in terms of revenue. Four of them the best in EBITDA, two the best in PATAMI. In terms of cost optimization, we delivered slightly better than our target, MYR 1.5 billion. Our balance sheet is pretty strong. Gross EBITDA as at December 31st, last year, MYR 2.29 billion, with a cash balance of MYR 5.1 billion. In terms of proposed dividend, we are happy to note that the dividend is back 85% DPR. It's modest, MYR 0.095, but actually higher than the last two years. Moving to the slide four, we're happy to note that digital businesses have progressed operationally and financially. Hopefully, in terms of the operational metrics, again, we can talk about that later on. We have divided the digital businesses just to avoid confusion into two.
In fact, even 2017, we were divided into two areas. One is the core digital business or businesses. Basically, the digital finance Boost, digital advising, ADA, and digital platform, Apigate. The rest, we have carved them out as what we call digital venture. I'm happy to note that we are announcing today at the same time that we have carved out to a management investment company, and this is transacted with a value of MYR 140 million. It will be transacted this year. We'll complete it in 2019. Those investment we have invested to the tune Just the digital venture portion of digital businesses, we have invested $90 million. The value for those has been valued by the company, by the external company at MYR 142 million. In terms of 2018 KPI, adjusting for the cancellation of the other acquisition.
As you know, we canceled the Pakistan. We factored into our headline KPI. We canceled the deal. We've adjusted, we met all the KPIs, of course, excluding the one-off transaction. Moving forward, given what we have done in cleaning up our books in terms of our rationalization, monetizing some of investment with the operational momentum, given the performance of our opcos, the new growth areas, and the shifting strategy we'll be talking about later on, which we presented to the analysts back in last year, we believe we have a promising 2019. There are, however, we have to admit there are moderate and high risks, but also opportunities. Last but not least, the 2019 headline KPIs reflect our cautious optimism, reflect our promising 2019 as we target for growth in revenue, for EBITDA to grow even faster than revenue.
With that, I'll pass to my CFO, Vivek, to give you further elaboration.
Okay. Good afternoon to all of you. Let me take through some of the few slides, initial slides, which will talk about the overall 2018, let me follow with the specifics OpCo related plans. Let me step back a little bit, take you all to 2016, 2017, where we did commit some of the operational activities or deliverables which we will deliver in the next couple of years. Let me start with the first one, which is operational performance. I think given that the focus of the company has been performance in our OpCos. Also mentioned by Tan Sri earlier, we've seen us gaining market share across all OpCos. We've seen some double-digit growth in some of the markets, specifically edotco, Digi.
We've also seen Celcom and Axiata, which were part of the transformation as well as the turnaround story, which we experienced in 2016, actually yielding results better than the market. We also took an initiative of expanding our 4G footprint and creating a data leadership in all the markets, which also has seen a significant growth in our revenue share coming from data from 34% in 2016 to 52%. Markets like Indonesia, actually 82% of our revenue now comes from data. Our cost, we said we will deliver MYR 200 million cost optimization over three years, which was 2017- 2019. I am happy to say we've actually delivered even more than what we had promised over the two years. I'll go into details around how does that get actually reflected into the P&L of the company.
Monetization digital investments that we validated by bringing Sumitomo in ACA with MYR 20 million, which was validated sometime in quarter four. In addition to that, we are also in the process of very advanced stage of transferring our digital investments, which would also would be effective validation of the CEO's investments. From portfolio, I think that was one of the key elements of our strategy. Given that a lot of rationalization, which has had an impact on our profit numbers for 2018, this has been a tough journey for us to take. Given all this portfolio rationalization, what's really left with us are the core businesses, which is the six OpCos, three digital businesses and the tower business, edotco. I think this puts us after our operational optimum portfolio strategy, puts us with assets, which are all part of our whole strategy.
The last one, happy to say that we've actually gone back to the 85% dividend payout 2017, early 2017. That two-year sabbatical issued to get back to the DPR of 85%. If I then go to the next slide. This one reflects the actual reported performance. The factors which impacts the reported performance are first starting on the revenue side. I think the translation from rated countries currencies into the reported currencies, we have seen a nearly MYR 2 billion impact for us. In addition to that, on the EBITDA line, just that translation has had a MYR 800 million impact. You would know that ringgit in 2018 strengthened against all our currency and the effective impact of that was around 8% for us with currencies like Indonesia, actually 12% impact. That's reflective of our reported performance of negative 2.1% for the full year.
We've seen a positive development quarter on quarter on revenue at four plus 4.4%. From an EBITDA standpoint, we have seen a similar impact, which I talked about MYR 800 million drop, because of just the currency translation and also another MYR 200 million impact because of the new accounting standard MFRS 15 and MFRS 9, which has resulted in further dilution of EBITDA compared to last year. To the underlying numbers later on, this is mainly the reported numbers. PATAMI, you can see how the has been, and I'll take you through the waterfall on the reported numbers to the actual normalized PATAMI number in subsequent slides. If I can go to the next slide. This is where we talk about underlying performance. Now what is underlying performance from our context? This thing is on constant currency.
Constant currency, it is adjusting for the MFRS impact so that you have a like-to-like comparison between previous year and current year. If you look at revenue based on that, we see a 3.7% growth in revenue with all opcos actually been better than markets. Our quarter four was partly impacted by, in Ncell, because of the new telecom tax introduced as well as the expected reduction in ILD. 3.7% growth is also after excluding the Robi device revenue, which was there in 2017. If I exclude that, Robi actually performed at a +9.5% revenue growth. The EBITDA margin of 2% growth over last year is coming out of the major cost initiatives we've taken during the year, and also partly diluted because of the continued investments which we have made in the digital businesses.
We've had an additional MYR 163 million expenditure on digital businesses compared to what we had done in previous year. Celcom, we did some VSS, which we call it Employee Lifeline Plan. If I exclude the digital investments, additional digital investments, EBITDA growth for the year has been in line with the revenue growth. PATAMI has been down, and I'll go through the details in subsequent slide, but mainly coming out of increased depreciation, coming out of our continued investments on networks and increased finance charges, mainly coming out of a couple of markets where the interest rates moved up last year, especially XL and Robi, and also on account of continued digital investments, where we have been focusing on building value on our core digital businesses. Cost initiatives are on track. Balance sheet remains healthy at 2.29x gross debt to EBITDA.
If I adjust for the ForEx impact at 2.9x gross debt to EBITDA, and we have a fairly even split between the dollar and local currency, and in line with our plans, around 50% of that currency is hedged. Last year, we had a very clear progression towards moving to fixed interest rates, which has actually helped us take care of some of the fluctuations in the interest rates. We generated an operating free cash flow of MYR 675 million. If I can go to the next slide. This is what reflects the reported number with what is our normalized PATAMI, as well as what we would see is the underlying PATAMI. Big impact of that is MYR 3.9 billion coming out of Idea-related losses.
The big one is the impairment which we took in August last year, which did mean we classified the investments from associate to a simple investment, resulting in a MYR 3.3 billion write-down of the investments. We did have impact of dilution, loss on dilution, which is seen as deemed sale, which was consequent to us not participating in the new issuance of Idea shares, which was around MYR 400 million, and then normal operating loss from Idea, which is around MYR 186 million. This is the big one which we took last year. The fact that this is not does allow us to classify investment into balance sheet, allows us to eventually look at the right opportunity to monetize from this investment.
We also did a significant evaluation of our investments on networks, specifically fixed assets and markets, and you would have read earlier when XL reported that they had basically 2G, where most of the customers and most of the markets actually moved out of 2G network, and now they are trying to move that spectrum over time into 4G. That's the large part of our write-off. In addition to that, the similar modernization we've done in Celcom, we've done that in some of the other operations. That's been mostly tech refreshment and modernization, which has resulted in an asset write-off of MYR 1.8 billion. We've had ForEx impact, largely coming out of revaluation of the put option in Bangladesh. Those are the three big items which actually explains why the reported number of -MYR 5 billion actually comes down to MYR 1 billion.
If I look at the adjustments on account of MFRS with the like-to-like comparison. Also on account of ForEx translation, we will have an underlying PATAMI of MYR 1.2 billion. If I go to the next slide, I think pretty much explained, but one which I would like to highlight here is while we've seen positive development in the EBITDA, it's been offset by increased depreciation. With some of these assets, technology impairments, we should see that element coming down going forward. Also we do expect that going forward, the interest rates to moderate than what has been experienced in 2018. These are the two major items which is impacting the movement on underlying PATAMI from last year to this year. Sorry.
However, Q4, in that sense, we've been impacted on account of some of the items, but we've started seeing the impact of the depreciation normalizing. If I can go to the next slide. I think this is important slide. We've been talking about cost optimization, and we said we've delivered nearly around MYR 2 billion-MYR 3 billion on cost optimization. How does Come into play in terms of impact on P&L. This slide basically demonstrates that impact. The biggest benefit on cost optimization we are seeing is on the network cost. We've actually seen costs reducing by nearly 8% year-on-year. However, as you know, we continue to invest, specifically in Indonesia, Bangladesh, and even in Celcom. While Celcom, we've reached the required coverage, we're still in the process of expanding our footprint in ex-Java and also in non-CCD markets in Bangladesh, which has an impact on costs.
There are other elements of cost, which we will see. That is in line with the expected. For example, part of the cost increase has been on content cost. Overall, fair to say that we have been keeping our cost more or less flat. If you look at 1.8% growth, despite increased investment in some cases, it has been pretty commendable on how our cost program is actually resulting in keeping cost flat. If I look at two years, the CAGR on cost has been around 1.4% year-on-year. We should expect this cost to actually start coming down absolute numbers from 2019 onwards, as we start seeing the structural results for us going forward.
If I can go to the next slide, just to explain, we continue to be at around 26% CapEx intensity, largely coming out of investment, continual investment in Indonesia, and also expanding our CapEx in edotco, where we believe investments are actually being directly linked to the future cash flows from these towers, because most of the investment is coming from build-to-suit or new towers in our existing markets. Fairly strong free cash flow and also operating free cash flow of around MYR 600 million. Marginally lower than last year, mainly coming out of the continued investments in CapEx as well as on digital businesses, which should start seeing value creation coming forward from 2019. If I can go to the next slide. Good position on balance sheet. We remain fairly strong.
Debt levels have actually come down year-on-year for that remains at a good time, marginally impacted because of the exchange impact, because EBITDA has been lower on account of translation than would have been if the currency had remained constant. We continue to have a fairly strong cash position of MYR 5 billion cash. The drop from last quarter to this quarter is mainly on account of dividend payments, which would now be taken in next quarter. The next slide, as I said earlier. Happy to say that we are now back to 85% DPR. Does translate lower on the DPS compared to what it was earlier. We should start seeing if the profit numbers grow going forward, which is what the focus now is. We should start seeing that improvement onwards. Let me go to the next view, which is specific to each of those.
Celcom has delivered a service revenue growth of 1.1%, core revenue of prepaid and postpaid, we have seen a 4% year-on-year growth. The revenue overall gets marginally diluted for two reasons. One is our MVNO business has come down, and second is because of the interconnect base dropping year-on-year. Interconnect revenue has been coming down. The focus of the company has been in growing core revenue, which has seen a positive development, and positive development is coming out of improved ARPU, both on the prepaid and the postpaid side. We did see some subscriber reduction in the continues to be fairly strong. EBITDA margin has been partly impacted because of the revenue mix. We have had a significant device program running in the H2 of the year, and also on account of the Voluntary Separation Scheme, which we did carry out in the H2 of 2019.
PATAMI has been impacted largely on account of one of Telepen's, which does impact lower PATAMI growth. Fair to say there's still a lot work to be done in Celcom on cost optimization and margin improvement, and the management in Celcom is focused on doing that going forward. XL, quick one. Compared to while the growth numbers both in revenue and EBITDA have been lower than what our expectation would have been. It has been much stronger than the market, and we've seen the impact of the overall SIM registration has been fairly negative in the market, where revenues are expected to be down at around MYR 1,000. In that context, XL has done extremely well with a 0.4% growth in revenue and a 2.3% growth in EBITDA.
Despite expanding footprint, it's good to see the management in XL actually keeping their cost constant, which is really reflective of all the cost initiatives we Our position on data remains extremely strong, with 80% of our customers having a smartphone and 82% of revenue actually coming from data. Quarter four is actually one of the best quarters for XL, and we expect that momentum to continue. The dual-brand strategy has been yielding well with both XL and Axis doing well. Going to the next one. Dialog has been our star performer with double-digit growth in revenue and EBITDA. PAT is negative mainly because of Forex losses. If I normalize, and mostly it is unrealized, if I normalize that, the PAT growth would be 15.8%. Double-digit revenue, double-digit EBITDA, and double-digit PAT growth.
If you look at lines of businesses, all of them are done extremely well, with 44.5% growth coming from the fixed broadband business. Mobile revenue continues to grow. We still are fairly under-penetrated, so we're still expanding Robi revenue growth seems low at -0.4%, but that's because until 2017, Robi used to buy and sell devices. Now we are mostly focused on driving distribution of devices with our partners. If I take that impact out, the underlying service extremely well on EBITDA margin. Improvement. EBITDA growth is 31.6% compared to last year, which is reflective of significant focus on cost. Despite, as I said earlier, similar to XL, despite growing their footprint, investing in network, continuing to be very focused on cost, which is reflective of the EBITDA margin improvement. PATAMI PAT has been impacted mainly because of interest rates increase.
The short-term interest rates went up from around 8%-13%, but good to see that they're stabilized now at levels of 8.5%-9%, which then should start seeing lower interest rates in Bangladesh. If I go to the next one. Ncell, the quick one. Revenue has been impacted because of ILD coming down around 18.3% drop from last year, which is in line with our expectation. Core revenue continues to do well. It could have been better. A reason why we could not invest much in Nepal because of the ZTE denial order, which did stop four months of our investment rollout plans, which now is back in plan, should start seeing benefits coming out of that in 2019.
The good news in Ncell is that despite ILD, which actually generates around 95% EBITDA margin coming down by 18.3%. That's, I think, great. PAT impact has been mainly coming out of increase in corporate tax rate, which has increased from 25%- 30%, and one-off asset impairment, which I talked about earlier. Smart continues to do well. Good news is we see a much lower intensity of competition. The growth in revenue has been strong. The impact on PAT has been mainly on account of some regulatory charges, including fees and revenue share. Otherwise, Smart business continues to do well. If I go to the next one. Tower. PAT and EBITDA was impacted mainly on account of one-off charges relating to M&A activities which were being in the pipeline for edotco, as well as some regulatory costs paid on acquiring the license in Bangladesh.
edotco continues to have strong momentum in terms of tower growth and tenancy is moved up from 2.16 to X. As far as the digital businesses are concerned, I think Boost has been doing well. Acquired 3.5 million users, around 61,500. This is as on December 31st, side of the business. ADA has acquired number of customers with 200 large accounts, including some of the clients like LG, DBS, et cetera. We expect 2019 should be a year when it turns around, breaks even on PAT. Apigate interconnected with a number of operators, 10 MNOs, which allows access to 3.1 billion customers across the network. Continues to remain strong, multiplying both the northern and the southern, the merchants as well, the MNOs. That continues to do well.
That brings me to the last slide of my presentation, which is on where we are versus the KPIs we laid for ourselves for 2018. 2018 headline KPIs, you can see on the left-hand side, in August, when we canceled the Deodar acquisition instead of.
Just keep going through. Go on.
It's been better on revenue, better on EBITDA. The ROIC, ROC has been pretty much in line with our guidance given earlier, and CapEx has been slightly below the guidance which we gave in August last year. That's it for me. I pass it on to Tan Sri to follow a few slides on 2019 moving forward
Thank you, Vivek. Let's move on. I'll try to do quite fast so that we can go to the Q&A. Slide 21. You can look at slide 21. Just give you a couple of highlights of what does 2018 mean to 2019, right? What does it mean? As a start, the growth momentum of 2018, bearing unforeseen circumstances or external factors, we should drive even a better 2019. In terms of operational excellence, Celcom has improved almost every aspect of its functions or the aspect of its operational drivers. We expect that to drive Celcom to an even better year next year. I think with Celcom strategy, the coverage like Java, cost optimization, and we should be in very good shape. Also, digitization. We have digitized. We were a bit behind the industry and the respective competitors in the market, but we have generally improved quite significantly.
Similarly, on the costs, which have already changed. The momentum is there. All in all, if you look at the growth momentum and the performance and operational excellence, it should help in our revenue and profit growth in 2019. Now, on top of that, the massive work we have done on the rationalization, and this is the most massive ever. Idea, for example, the MYR 3.3 billion of impairment and the sale of M1 should help out this year for sure. In the case of Idea, it's now in the balance sheet, so any losses in the future will not affect us. On the contrary, we believe maybe not in the short or even medium-term, we believe in the long run, it should be pretty good. M1 sale, of course, happened not last year, but this year, but certainly will help this year.
The MYR 1.8 billion massive write-off on certain assets, predominantly 2G across the group, primarily in Celcom and XL, should help us. In fact, to give you a bit of guidance, it should reduce or whether it should be a savings of MYR 150 million-MYR 200 million of depreciation and amortization in 2019. Now, digital business, just to be accurate, there are two components. One is the core, comprises of the three verticals that we are focusing on, and there's a non-core, the rest of the ventures. The core investment, which is one of the three, has been valued at MYR 100 million after the investment by Sumitomo. We're looking at further monetization this year, and hopefully will happen within the next few weeks rather than few months.
On the non-core digital ventures, we are happy to inform that we have signed agreement yesterday whereby the investment management company will take over all the digital ventures, and they, not us, have valued our investment as MYR 140 million. The digital value of MYR 100 million, the cost of investment to date was MYR 90 million. At least on paper, there's a significant upside, a significant value derived from our investment. We believe the transaction itself will give a non-cash profit quite significantly in 2019. Of profit and ROIC improvements. Lastly, the deal with various in home broadband and all that will definitely help us to build long-term growth and potentially value increase also. Moving to the next slide. These are the slides we presented last year with a bit of modification during the analyst day. As I said last year, focus on profit.
We are not going to ignore revenue. We have done extremely well with revenue the last many years, and especially last year. We will keep the momentum, but there will be a skew towards profit growth rather than market share growth. We will focus on OpEx and CapEx especially. Three, we will reprioritize some investments that have very long payback. We are on that. Number four, unless we have partners that want to invest with us. Sometime in October, November, when we had this discussion, we were already looking at monetizing some investments. Of course, in some cases, we have already executed them. In the case of M1, in case of digital companies, and maybe a few others. Our focus also is on sweating the asset.
For example, in XL, on average, although it does vary significantly side by side, but just a simple average of capacity now at 50%, we hope to drive that to the tune of 70%-75%. What does it mean? What it means is that we hope to get revenue from the existing sites with almost zero incremental CapEx. On number six, we do accelerate strategy changes. I know I'm saying this with some embarrassment, but we thought two years ago this should happen, but it's not happened. We hope it will still happen over the next one or two years. Impairment, I said when we talked about it last year, we cannot give a lot of hint, but obviously, we have done that, in the case of Idea, in the case of the MYR 1.8 billion impairment or write-off on the 2G assets and related legacy assets.
Last but not least, all the team management of Axiata are now being measured more on profit rather than revenue, relatively speaking. The weightage has changed. Last slide is to show our guidance and our optimism for next year. We expect revenue to grow 3%-4%, EBITDA 5.8%, and ROIC between 5.2%-5.6%, and a CapEx commitment of MYR 6.8 billion. This is going to be our official FY 2019 headline that we have already submitted to Bursa. Lastly risks. There are, of course, moderate to high risks and opportunities. It's not going to be easy. As much as we are optimistic about 2019, given what we have done and the cleaning up we've done in 2018, we believe that life will be good. Obviously, there could be other challenges, especially in terms of some industry.
There are a lot of other opportunities in many other countries. With that, I will end my presentation and open to Q&A.
Thank you, Tan Sri Jamal. This is Clare Chin, Head of Investor Relations of Axiata. Just some housekeeping instructions. For those of you who are already on Skype, we will be opening up the Q&A meeting room, the virtual meeting room. If you have any questions, please do so, type it in that virtual meeting room and we will answer your questions accordingly. The first question comes from Weishi from PNB. First question is, Celcom's 2018 CapEx was lower than previously guided. What was the reason and what can we expect in 2019 onwards? Second question, some clarity on Ncell CapEx and drop in 2018 and CapEx outlook in 2019 and beyond. Last question, thoughts on Ncell tax issue and any provisions taken.
What was the first one again? Celcom?
Hi, Jennifer here. In relation to the CapEx, we have always said that the first couple of years in 2016 and 2017, we were going to spend a bit more for us to catch up in terms of network, but we will start to actually rationalize the spend. We said that we were going to spend slightly above MYR 1 billion for 2018, and we spent slightly below MYR 1.1 billion in 2018. What do we foresee in 2019? We think that we will continue to spend close to about maybe MYR 1 billion in 2019 to maintain our stance in terms of network experience.
Weishi, I will take the second question and third question that you've raised. Second question, which is on Ncell. Ncell CapEx was low last year for the unforeseen denial order against ZTE. As you know, ZTE has been our major vendor in Nepal. Because of that, we could not procure the equipment. Because it's a procure key with ZTE, the delay would have also consequences on their actual implementation of the investments. Going forward in 2018, we are looking at around MYR 500 million investments in Nepal, mostly to catch up the focus on continuing the rollout of the 4G across the countries.
That's on Nepal. As far as CGT is concerned, I think if I
What is the impact of CGT?
CGT, I think as we've explained that there's no written order yet received from the Supreme Court, it's not very practical for us to say exactly what is going to be the consequences of the outcome from CGT. That's where it is at this point in time, but I think once we get an order exactly then we will know where we stand, and also we will know what would be the consequences or the next steps from our side on this matter. As far as the provisions are concerned, we have no specific CGT provision on Ncell, but we do have matters in different markets. We have matters in Malaysia, in Bangladesh, even in Indonesia, Nepal. What we've done is, we do take certain provisions at the group level to take care of all these tax matters. We think that is good as well.
The next question is.
NCell?
No, done with Ncell. Done.
Okay.
There's a question on What do you proceed?
Okay. The next question comes from Prem from Macquarie. How much has the MVNO business impacted Celcom in Q4 2018? Were there any VSS charges in Celcom this quarter? His second question is, do you think the Malaysian mobile market has settled down sufficiently to provide positive service revenue growth? Where do you think the big risk is?
Jennifer?
I'll try the first question first. In terms of the MVNO business, overall, in terms of year-on-year basis, yes, there is a slight decline in terms of the MVNO business in the range of about slightly up of 1% of the total revenue. Having said that, in Q4, the MVNO business has kind of stabilized and has not actually declined significantly in Q4.
VSS.
Okay. Yes, the VSS, we have actually done the exercise over a period. There's two tranches that we have actually done in 2018. The majority of the employees take on until the end of the year, and they will actually be off the company starting from 2019. The charges of this VSS has actually been booked in towards the end of the year in 2018.
Yeah, if I can comment before I pass the question to Danny on the Malaysian market, on the VSS, that has been, as you know, it's voluntary, about around 400 people. Obviously positive profit next year. That will be because of that reduction in the labor of people costs next year, and that will be to the tune of MYR 50 million. Let me pass to Danny.
Hi. Thanks, Tan Sri. To Prem's question on the Malaysian mobile market, I don't think there's evidence to suggest that it has settled down. As we said that on the prepaid side, prices have somewhat stabilized, but the competition has actually gone down to low-end postpaid programs. Competition there below MYR 50 postpaid commitment plans have been rife. Competition is now focused on that segment. We also see competitors, even ourselves, going into other revenue streams, like home market broadband. It's a tough thing to say whether it's settled down or not because we have to look at how competition is shifting from pre to post today, and also other revenue streams.
Thank you, Danny. The next question comes from CIMB. What is the 2019 dividend policy?
No, we don't guide on the dividend, generally on what the policy is. The policy of the dividend remains what it is, which is trying to grow dividend over time. I think that remains, but we do not guide on the of the dividend.
Khairil?
Thanks, Vivek. The following question comes from Harris. His question is if you could quantify or gauge the digital ventures that is going to be engaged by investment management-
Managed.
Managed by investment management companies' loss contribution.
I'm not quite sure whether I understand the question here. Maybe if I can describe what's happening here. We're transferring a set of assets. These are five non-core digital assets from the Axiata Digital portfolio to a management company, a financial company. We will actually still retain pref shares of the fund, such that if there is an eventual exit of these assets from the fund, then we will actually get distribution of the profits. Obviously less the carry interest that will be retained by the fund. I'm not sure therefore how that will accrued into the fund's company losses contribution. That's probably something that could be asked with the fund management team.
I think that the next question is from Foong, right?
Yeah. That's right.
Which is, please break down the CapEx guidance of MYR 6.8 billion. Celcom would be around MYR 1 billion. XL would be between the range of MYR 2 billion-MYR 2.3 billion. Dialog Smart would be around MYR 300 million. Dialog would be around MYR 700 million. Robi would be around MYR 1 billion. Ncell, as I said earlier, would be around MYR half a billion. edotco would be around MYR 800 million. Other would be all relating to whether it's digital businesses, et cetera, would be around close to MYR 2 million-MYR 300 million. Thanks.
Okay. The next question still comes from Fong of CIMB. What is the earnings outlook for Robi in 2019? Can it turn profitable? Appreciate some color on the drivers here.
Okay. On earnings outlook for Robi, I think we are looking at, the CEO of Robi has also mentioned that the intention is to break even on profits in 2019. However, that said, it's not going to be a task given that it is a significant coming from being a leader in the 4G market. While we would intend breaking even on profits, but we will also continue to be ahead on the data position in that market. If Dr. Hans can also add, give some flavor on if he's okay.
Okay. Somehow maybe it's not connected.
Let me check.
Bryce. Doctor?
Yes. Could you repeat the question, please?
Okay. The question which Vivek has answered but perhaps additional color from your side is more color on the drivers for Robi turning into profitability in 2019 or 2020 onwards.
Yes. I think on one hand, it is driven by increasing 4G penetration, both from the driver of smartphone penetration as well as Robi's coverage. As we know, Robi has the widest 4G coverage. With consumers converting to 4G at a rapid pace and 4G smartphone penetration increasing, the headwind is for Robi in terms of data revenue growth. Combined with that, the company has embarked on a very aggressive cost optimization or rescaling exercise. The results we have seen is margin expansion at a very rapid rate ever since the merger was completed. These would be the two drivers: 4G revenues on one hand, driven by coverage and 4G penetration, and cost on the other.
Some optimization below EBITDA level with looking out for cheaper as well as fixed rate funding because Robi did suffer from a spike in the interest rate regime in the country last year. We would see this settling down and being optimized in the coming year.
Thank you, Doctor. The next question also comes from Foong of CIMB. The question is on Sri Lanka. Heightened competition in Sri Lanka was mentioned as a risk in the presentation. Is that what we are already seeing or just a risk for the moment? First, Dr. Hans.
Yes. I think there are two drivers potentially for heightened competition. One is the elimination of the floor rate regime
Within the latter part of Q4. The second is the new merged entity of Hutch and ET relaunching at some point in the coming year. From Dialog's perspective, I feel the company has established itself as a clear leader both on the data front as well as on voice. It's also rescaling its cost structure and digitization initiatives are underway. I would say that there could be some pressure on the tariff front, on the revenue front due to these two competitive dynamics. Both these dynamics seem muted at this point in time. I guess we need to update this forum in coming quarters whether this apprehension is actually being realized or not.
Thank you, Dr. Vivek. We now have a question coming from Alex from Maybank. The question is, "Is 85% dividend policy sustainable in 2020 with CapEx and spectrum layout?" Over to you.
Yeah, Alex, the way we look at anything, that's what is the focus has been on the shifting gears. I think there's a very clear agenda to drive profitability in EBITDA improvement. We expect EBITDA improvement should help generate a decent free cash flow for us to be able to pay for the CapEx as well as take care of the future dividend requirement. Also, we expect the receipts from M1 also to be able to improve the balance sheet, which should then allow us to have a much lower interest cost leading to operating free cash flow, which should then support the dividend payout.
Thank you, Vivek.
Just to add that, our intention would be to sustain dividend. As I said, depending on how things develop going forward, we will declare the dividend.
Thank you, Vivek. At this point, we have no further questions, perhaps, if any of you all have any more questions, you can type it in. We can give you another maybe couple of seconds. Otherwise, we will end the conference call soon. Okay, there doesn't seem to be any more questions coming through. Thank you very much for joining us. Perhaps some final words.
Thank you, Clare. Thank you everyone for joining for the Q4 2018 and full year 2018 results announcement. I guess since there are no question, we will stop here as usual, any other questions, we would be very glad to answer them. Thank you.
Thank you.
Thank you.