Earnings Call: Q3 2018

Nov 23, 2018

Very good morning to all of you, and welcome to the quarter 3, results of Exeta. I think, welcome, not only to those who are present here, and I'll also to those who are joining us, in this call through online, access, which we provided. Usual disclaimer, so I don't go through the details on the disclaimer. Let me straight away jump on to the results, of our quarter 3. I think these, are basically the reported numbers and these have had the, significant impact coming on account of, elements like, the MFRS, Forex, an idea impact, which we saw in quarter 2, when we actually deconsolidated the idea as well. From Exjeda. I think the good news is, on a sequential basis, we've done better. We've seen a growth in revenue as well as in EBITDA. And EBITDA growth has been faster than growth in revenue. However, we continue to be impacted on the profit line because of higher depreciation and interest costs. Some of our markets have been impacted because of the increased interest rates on borrowings, during this year compared to the last year. I think this is important, which is the underlying performance of Exjeda. If you look at the underlying performance, I think, 2.5% growth in revenue, and 1.9% growth in revenue, during the quarter. This is after adjustments of, MFRS. Adjustment on account of, the idea impact and adjustments on account of Forex, implication. We've had a 9% impact on Forex during the year. Which is basically on translation from, from the operating currencies we have, versus the, versus doing it? Good news is that we've seen a positive development on the EBITDA numbers on a sequential basis. Plus 4.3% growth in, in, EBITDA. When it comes to revenue, most of the markets actually outperformed their industry. We've seen a 4.2% growth in revenue during the year. We've also seen, on a year to year date basis, growth in EBITDA, if I adjust for the elements like, the, ELP, ELP has been the pre separation scheme, which we carried out, during the quarter 3, in, Cellcom. If I adjust to that, we've seen a positive EBITDA growth compared to, the revenue growth. Cost initiatives, if you recall, last year, we did say that we would take out 5,000,000,000, ringgit over the 5 year period. I think we've been tracking pretty much in line with what we had said, and we'll go through some details later on. Patami, for us has been impacted, largely on account of increased, depreciation, the effect of some of the investments on networks, which we've made over the last couple of years. While we are seeing positive effect of those investments in the top plan, we do see an impact on our profits, coming out of a higher, deposition. And also on the interest rates, 3 of our markets did see interest rates, going up during the, year so far. We've seen the increase in interest rates in Bangladesh moving up from 6% to nearly 11% We've seen interest rates increase in Indonesia, which moved up from 8% to 10% and we saw interest rates moving up in, in Sri Lanka. So that's been the impact of, on account of interest rates and also the increased investments which did we did say earlier in the year that we would invest in 3 of our core digital businesses, which has been, increased investments. Compared to the last year. However, as I say, balance sheet given the turmoil in the market and the on account of Forex, on account of interest rates, we still maintain our balance sheet fairly strong, at gross debt to EBITDA of 2.34, and we have around half of that in U. S. Dollar and half being hedged. We've been moving slowly and steadily into fixed interest rates. 67% of our debt is now on fixed interest rates. This does have a short term impact of a non borrowing cost, but long time, we believe given the uncertainty around the interest rates environment, this is the right strategy. Let me explain the movement in profits from last year to this year as was quarter on quarter. As I said, while there's been an improvement on EBITDA, but most of it has been actually taken away by, increased depreciation. Increased investments on, new businesses and finance cost. But if you look at quarter on quarter, the one on the right hand side, you would see, that, the margin improvement, around 1.6% during the quarter, has been consequent to a, increased EBITDA margins, coming across most of your operations, for us. Let me go through each of your opcos and how they have performed. I think Cellcom has done well, when it comes to the top line growth, we've seen 2.1% growth in revenue. Coming from both prepaid as well as postpaid. In fact, last quarter was much better for both than we've seen in the earlier periods. We've also seen, our strategy of high value customer focus, bringing from increased, network, positioning, in showing improvement in ARPU both on postpaid as well as, prepaid customers. Year to date revenue, we've seen a 3% growth. EBITDA, however, has been lower, mainly coming because of the one time impact, on the VSS which we carried out and also on account of some of the, the propositions in the earlier part of the year, which we gave to drive a much higher, IDD and a migrant population on our network. Last year, we had this one off gain, which was the sale of 11th Street, but that was more internal because that was sale from cell common to the Exjeda portfolio, and also on account of higher DNI charges. I think cost has been an issue for us in Cellcom, and EBITDA margin has been, impact it because of some of the one off costs, which I explained earlier. But the management in Cellcom continues to focus on, cost optimization. In fact, that's one of the, main areas of focus for us going forward in Cellcom. We've seen some improvements happening on the subscriber acquisition cost and sales and marketing cost, but there's a long way to go. As far as the coverage is concerned, we have reached 90% LTE coverage as at theendofquarter32018. Excel. I think, this year, everyone knows, has been, a year of, lot of ups and downs in Indonesia market. And this year, happens to be after, significantly good year for us in 2017. The impact of, SIM Registration has been across the industry, but I must say XL relatively did much better than any of the other operators. In this space when it came to the process of some registration. The strategy of transformation which we had put in place around 2016 has been working well, for Excel. We've been, focusing on 3 specific areas in Excel. One is being the data leader. 2nd is building on 2, brands which we have, and 3rd is expanding our footprint, outside Java into the non Java area. All this has yielded in terms of, improved performance relative to the market. However, we still need to see the impact of a post impact of some registration really falling in place. As far as the footprint is concerned, I think you've been expanding ourselves with 4 g. We've got 100 and 16,000, BTS, most of it going into the 4 g space. As far as the revenue is concerned, I think we've had a slight growth. I think the only company amongst the large operators showing a year on year growth, and marginally lower on EBITDA, on a year to date basis. However, the impact of interest rates and the depreciation coming out of the higher investments we've made on network expansion, resulting in profits being lower. Dialogue, by far, the best performing asset of us, at this point in time. Has seen a solid performance on a year to date basis, on all parameters, all lines of businesses. Revenue has grown 15.6 percent, EBITDA 18.9 percent. Profits have been marginally lower, mainly coming out of the ForEx impact, you would have seen how the Sri Lankan rupees been depreciating and also the interest cost, which I talked about earlier. But if I adjust for these, for instance, we've seen a bad improvement of 21% in Sri Lanka. As I said, I think we've been firing in all lines of businesses, in dialogue, with a mobile growing 13.7% fixed business going 33.5% and, pay TV business going at 8.4%. While the revenue, mobile revenue growth has been solid, we've been recently impacted because of the, decline in the, in the removal of the floor rates on voice. And that, I think is something which we have to watch out, going forward. Our fixed revenue, has been growing well and has been compensating very well to the loss, which we've seen on the, mobile side consequent to the, drop removal of the, floor rates. In terms of population coverage, 54% on 4 g, and 59% on fixed. So there's still a lot of scope in terms of footprint expansion. And taking a had with, Ethel in 2016. Robbie has been expanding very well, and has been doing exceptionally well in the market space. With the service revenue growth of 9.1 percent and EBITDA growth of 31%. Yes, EBITDA comes from a much lower base, but we've seen a significant improvement on the EBITDA margins. Airtel, which we acquired, is now turned positive in terms of the, EBITDA margins, for us. Pat has been impacted, mainly coming out of the, the ForEx as well as the interest cost increase Yes. Last quarter, we did see one off again from the transfer of 20% stake, from Ruby, to for the tower business. To e.com. The EBITDA margins continue to be strong because of lower devices. As well as a reduction in the connect charges. We've seen some positive effect of removal of the, the introduction of the unified floor rates in Bangladesh. But over time, that effect has been narrowed on, because of the impact of elasticity or vice usage. In the market space. But overall, Roby's performance has been in line with our expectation, in fact, better there. In sale, we have, we were aware of the ILD revenue, which will come down. But I think, good to say that, NCELL continues to hold their EBITDA margins despite a reduction of around 15.5% on ILE revenue. Which does contribute on nearly 96% of margins, 96% EBITDA margins. Despite that, they have been holding their EBITDA margin at 63%. Year to date, revenue has been, at 2.2% mainly impacted by, by the loss of, fifteen and a half percent drop in early revenue. But compensated well with core revenue, growth. EBITDA, marginally lower, again, I said, on account of ILD, which does contribute a significant EBITDA margin. And that flows down to the, profit line, for the year to date. And also last year, we had 1 off, prior period impact, of 1,300,000,000 which has been, when you compare it on a year to date basis impacted. As far as the market is concerned, we've seen some impact, which is coming out of the new charges which have been introduced in Nepal, which is a telecom charges. You may know that, the, the telecom service charges been introduced on data at 13% and on voice has been improved increased from 11% to, 13%. So that's had some impact on the quarter. With the EBITDA declining at 5.6 percent, revenue declining at 5.6% and EBITDA declining at 3.7%. Data revenue accounts for 20 3 percent of total revenue. We see a big opportunity in Nepal as we start continue rolling out over 4G across the country. Sorry? So, Mark, We've seen some easing out of the, pricing pressure, or price war, as we call, in in Cambodia. That has seen has an impact on a positive development on revenue at 3.4% and, the the data growing at 22% and 60% of our revenue now comes from data. So there's been a fair amount of, data consumption improvement in, in Cambodia. And we do see stabilization of price prices in that market. EBITDA grew at 0.7%. Part of impact has been, increased on regulatory charges. On a quarter of the revenue share, which has increased from, 2 to 4 person, to, 4 to 7 person. Quarter on quarter, revenue grew 2.6 percent, EBITDA 8% and PAD, 8.6%. So say fairly strong quarter performance coming out of, smart. In.core, it contributes nearly 8% of our revenue and EBITDA, has had a solid performance on revenue development at 13.5%. EBITDA has been impacted, on account of some of the, adjustments made on the, service agreements. As well as on account of some of the spends, which we had incurred on the M and A activities. However, Pat continues to do very well at 8.18.3%. E.co has 717,800 Towers, which is a 8.5% year on year growth, and tenancy continues to be strong. Increased from 1.5x to 1.6x in quarter 32018. Digital Businesses, we've seen some investments going into digital businesses. I think all of them have been doing well. Specifically boost in Malaysia has been doing extremely well. With, 3,280,000 users registered and more than 50,000 merchants using, Boost app. In terms of core business, the 3 verticals, we've invested to 207,000,000, pretty much in line with what we said at the beginning of the year. And we've also been looking at rationalizing our non core SF. The focus has been on these 3 verticals, which is the mobile financial service, the platform business and the digital marketing business. Imran, I think despite whatever is happening in that market space, MRON continues to do well, when it comes to the, top line growth, as well as, managing to hold well. On the margins and, EBITDA. And we do get a significant contribution coming from M1 for our on our results. The last, but on the least, I think, idea. We all know what's happening in that market space, but I think the good news is quarter 3 was the last year, last quarter for us, with any P and L impact because as you know, on 16th August, we did deconsolidate the idea investments and whatever was the impact on account of, 1 off, write off, or impairment was taken in the books in quarter 2. And going forward, the only impact which will come is on the fair value adjustment, we'll go through the balance sheet and not through the P and L account. Coming to capital expenditure, I think in line with what we did, we stated earlier, intensity of 24 person. Good investments going into, Salcom, improving the network position in this market space. Also going into, the, the other opcos as well as E.co, which is actually others here, and E.co investment is largely linked to the new, towers bill, which would have a significant flow of revenues and profits, going forward. As far as cash flows concerned, one of the key focus areas for us, we continue to, have a positive operating free cash flow, ensuring that, our balance sheet remains solid. As far as the financial position is concerned, as I said, gross debt to EBITDA at 3 2.34x, largely impacted because of the translation, of EBITDA from the operating currencies into ringgit. If I adjust for that, the gross debt to EBITDA is 2.11, which is pretty much, what what we would like to have, below 2.5x, the the, improvement on the, as I said earlier, I think we continue to be focused on, ensuring a good balance between hedged and unhedged portfolio. As well as focus around moving from to, fixed interest. So as far as the balance sheet is concerned, I think fairly strong and fairly stable, balance sheet. For us. And I think that's extremely important, given the current environment and macro environment, which we are working with. We last quarter adjusted our KPIs, by taking out the order, which, we know, we did not go ahead with. So if I take those adjusted KPIs, I think we are pretty much in line with the KPIs in terms of our guidance for this year. Revenues pretty much in line. EBITDA is marginally below, but that's mainly coming out of, on account of the, the ELP or the voluntary separation scheme. Which we've carried out at the sale com, and also the ROIC, pretty much in line if I had to adjust for the, the losses, from idea which we took into account. So overall, the guidance against the KPIs, we're still holding, what we said at the beginning of the, yeah. So that's it from me. So that concludes the presentation. And I think this will be followed by a Q and A session. Basically, there will be a mobile mic on the left and right hand of the floor. So feel free to raise your hand, state your name and organization before you ask the questions, please. So, can we also please invite the rest of the Axiatel group team to join, debate on stage now for Q And A? Ajata's CEO, Tansuri Jhamaluri Ibrahim. We also would like to invite Selkom CEO, Yihan Nawawi, Cellcom, CFO Jennifer Wong, XL CFO, Mohammed Adland, and XLCMO, Alan Bongke, to join, Vivek, on stage. I'm sending apologies on behalf of doctor Hans, Vijaya, as I understand that his flight from Colombo is delayed coming into KL this morning. So we do have about 10 participants on Skype. So we will take questions from the floor first. And if there's any questions coming through Skype, we will proceed for the Skype questions later. Okay? We will open the floor for Q and A event. Please put up your hands. And the mics will come. Hi, good morning. My name is Primm from Macquarie. Two questions from me. Firstly, with regards to the Malaysian mobile market, and South Home's performance, do we think that the price situation has stabilized in the market and that we at least can look forward to some form of growth in the marketplace for mobile for mobiles over the next couple of years, or is that situation still very fragile and should we be expecting further price declines and profit declines here? Secondly, also along the same tech for XL at Sierra, it appears that you seem to be doing well outside Java, and I suppose the market was very disappointed with the lack of stronger growth at Excel given that market pricing was seen to be in repair. So if you could talk about what the opportunities are and what do you think will placate the market with regards to those growth expectations? Thank you, Prem. 1st, good morning to all of you. Thank you for coming over to our investors, Analyst Day. As you can see, we have the whole line up here to answer the questions. I'm gonna pass to you how to answer your first question and, Adlana or Alan, to answer the second question. Again, let me let me proceed still with Eram, Eram. Could you answer the first question? Don't take away my mic. Good morning, everyone. It's my first question for the first appearance for the analyst, briefing. Thank you for the question. Number 1, yes, in terms of, do we see a price stabilization? I mean, to get some support from Jennifer as well. Now in the past, 18 months or 24 months, yes, you're right. We have seen the price erosion, right, in terms of the the exact the, the, the, especially on the data yield. But we also seen that same time that the volume or utilization has increased significantly so that kind of compensate, for the loss in terms of, due to the rate decline. But what we're doing in terms of strategy internally for us, what we've been focusing on the high value customers that we are targeting has gone up by about vibrating it, right? So that's something that our strategy is working. Now whether the market will see a further erosion that is something that we honestly are currently predict at this point in time. You see there's some changes in terms of the regulatory regime regulatory environment. So far, it's been very much on the fixed broadband side. But we do hope that with the things that's been happening in the market on the mobile space, where we're talking about the competition itself, has taken care of the price competitiveness in the market. So we will we hope we don't see, similar intervention Jennifer? Yes. Just to reiterate, what Nederma has actually said, We are seeing that the mobile market essentially, the price, package at least for the market has not moved that much as compared to the fixed lines. So in that sense, I think the market is actually more rationalized and more sensible in the sense that we do not just price down for the sake of, pricing down. Everyone, held on to, the price point that we have Of course, there's one competitor who has actually launched, something more competitive, but I think in essence, the rest of the market has not changed. So in that sense, I think, the Malaysian market has been quite, quite sensible in that sense, at least for the postpaid market. Yes. Again, thank you and good morning and thank you for the question regarding XL and the growth, both in Java and in X Java. First of all, 2018 was a very special year. As you all know, that the introduction of SIM registration process and there was a lot of uncertainties about what's going to happen in Indonesia. And I think you're wording with the question was actually a lack of growth in Excel, we are actually very happy with the growth. It seems like that we're going to be the only company, Silicon company in Indonesia who actually have positive growth. 2018 as our competitor look in a negative way. Now ex Java, we still see that this is a single player market, almost. We see that, the incumbents getting 70% to 80% of the revenue outside Java. And we also see that, is a higher ARPU outside Java than Java. So of course, with the rollout that we have been doing in 2018 and with double digit growth, which we'll come back later on our presentation, still see potential growth outside JAVA. So our main strategy is still to roll out network outside JAVA to compete for the same time also be very aggressive to be able to attract customer outside Jabber. Thank you. I see Doctor. Hans walking into the ballroom. Could you please join us on stage for the Q And A session on the third quarter results. Does that answer your question, Fred? Is that the question here? Good morning, Fong from CMB. Thank you so much for the presentation. On the third quarter results, I have two questions mainly for Collins continues to be pretty solid, looking at ARPU trending upwards, what I want to understand here is how much do you think, in terms of room for that to continue to grow going forward given that it's already quite close to where, the market leader is And are we doing a fair bit on shared lines as well? Because we don't see any sort of, you know, any sort of dilution on ARPUs there. And on the prepaid side, could you help us understand why the prepaid, subscriber numbers were rather weak the quarter, was that due to competition or was there any due to any sort of cleanup exercise? 2nd question regarding the ELP, program, what was the one off charge in the third quarter? And, how many, employees actually later in the program or or otherwise, if you could tell us the number of staff you have after that program, that will be helpful. And going forward, where do you see your staff numbers, or where do you think an efficient staff number would be in the next few years? Those are my two questions. Thank you. In terms of the postpaid numbers, whether they are approved, we think that is gonna turn up or not. I think there's still a little bit more, to actually push because at the end of the day, if we say, you know, 1 or 2 bring it, especially in terms of subscription of, value added services, is actually not impossible. We feel that there's still room, and if we were to compare with the competition, yes, we are actually inching up, but I think there's still some gap or some room for us to actually improve in terms of the postpaid numbers. But having said that, I think the main push for us going forward it's not just in terms of pushing the ARPU. That's why when you actually see the way we have actually pushed our ARPU, we don't push for one time up, but it's actually inching. One ringgit to ringgit every quarter. So that's our game plan. We don't we don't we are not actually going out to actually increase like a 5, 6 ringgit in one go, but isn't, the way we have actually moved is actually aging up. In terms of prepaid numbers, the number of subs has actually come down in Q3, mainly because in Q2, we have quite a good, take up in terms of we have a push in terms of numbers because of the election. During the election, we had quite a number of subscribers who actually subscribed for a shop time and those numbers have actually turned up in Q3. So having said that, I think the numbers going forward should have more or less rationalized in that sense. The EOP amount, the EOP amount that we have a key charge out in Q3, it's slightly north of 50,000,000 for now. The number that we have actually put in is the number that has been offered and accepted and the exercise is still ongoing until the endoftheyear. The efficient number that we are actually looking at, it's quite close to what the competition is at the moment. We think that we're going to shed like maybe about 20% of the resources that we actually have at the moment. If I may, before you go to the next question, I wanted to answer from a broader perspective on both the, Circom postpaid and prepaid and then the ERP. On a second prepaid and prepaid, think that's the biggest strategy that we have been saying for the last 2 years that we did not execute as well, but the last 2 years, we have executed reasonably well. Is the ability to go for the higher end subscriber base, right, higher end more value, higher value customers, we have improved our network distribution, and many aspects, customer experience and many aspects of our businesses, that has resulted in our ability to gain the share of the higher value customers. If you look at the ARPU for postpaid prepaid, over the last, in 2017, and year to date, AT and A has increased consistently for both cases. Maybe, you have less customers, but certainly from an ARPU perspective and the revenue perspective has improved. So that's the broader strategy. On ERP, the sensor, a broader strategy, which I'm going to talk about it later on from a broader perspective across the group, but there's something to do with us getting more efficient as a company across the group and especially at Cellcom. So the, just to, to, qualify the the 2 programs, one has been announced and completed, right? The second program, which was announced on Friday, should be completed by endoftheyear. This is a massive program to, to, kind of improve significantly the efficiency of, Circom, from a staff population, but also from sheer, productivity. There's a big program. And I think I'll talk about it later on from a bigger perspective, but suffice it to say at this point that the financial gain with the cost will be, more than 50,000,000 this year. The 1st phase is 50,000,000, and the 2nd phase will be perhaps a portion of that. But the benefit will be the tune of 50,000,000 to 100,000,000 from now on from 2019 onwards. Yes. Hi, this is Wei Shun from BNP. Two questions. As we've seen, there are many factors impacting the, net profit for Exeta and impact. There are also many ways you can define what is normalize for Tommy. So what should we be looking at when we are thinking about the dividend payout the company, which normalized the timing should we be looking at? And is the intentions due to increase the payout, back to 2015 level in 2018. Related to that, what are the other financial measures that the company look at internally to determine the dividend payout Secondly, FX and interest rates have been, impacting the company. And I think given current circumstances will continue to be an issue. In the, years ahead. And Vivay has shared a few very briefly some of the initiatives that you're taking, Can you provide a little bit more detail as to what the, initiatives are to manage, FX and interest rates going forward? Yes. So let me start with the first one on dividend question on dividend. I think the intention is to go back to the, levels of, 2015, and which is what we did say when we moved into 2017 that, the plan is to have, in a way, a moratorium because we were investing heavily on ticket in some of the markets for 2 years, and then we will go back to 2015 levels of dividends. So I think that still holds as a plan. In fact, if you look at the payout, which we did in the interim dividend, was pretty much in line with what used to be, in 2015 level. So that's intentions still stays, so there's no change in that particular, plan. As far as the, consideration, which we have is, of course, what is the normalized, profit? When we look at normalized profit is the number which I displayed on the screen. If you look at, what what that normalized is, because there are some items which are standard items which we normalize, for example, forex or the could be a a PPA impact or, some of those elements. So one off, write offs on account of digital a divestments of investments, etcetera. So those those are the numbers which are presented are the normalized numbers, which we will look at when we actually, decide on the dividend payout ratio. However, I think the other elements we do look at is, is overall, the shareholder return. So so if dividend is an element of the shareholder return, we would look at that. As well as we will also look at, if there are opportunities of growth, and which require investments coming in, how do we balance between the 2? At every point in time. But as as I speak, I think the intention is, still to go back to the, levels of 2015, for 2018 dividend. And we would like to keep that level at least, going forward. Your last question on the ForEx. I think, couple of things we've been doing One is, we have more or less, in our operating countries moved out of, ForEx loans. So it's mostly borrowings as in local. If you look at, other than the group, we have ForEx borrowings in Indonesia. We have, some small borrowings in, Bangladesh and in Sri Lanka. Indonesia, we would be out of the audits borrowing by, the end of this year. So which means the entire borrowing in Indonesia would be, local borrowing. As far as the, Bangladesh is concerned, it is small amount. Plan is to be, as much as possible. A look at local borrowing. However, fair to say liquidity in some of these markets are not so strong that it's not always easy. To get a good, long term, local borrowing. Similar situation is in, in Sri Lanka, we would like to go more to local. However, given liquidity situation, we do balance between, between, local and for foreign borrowing. But I think, in in, Sri Lanka, we do have, some, The inflows are coming in dollar revenue through the termination rate, termination. So that does give some kind of a cushion for us. On the, dollar borrowing. The second thing which we've been doing is, moving as much as possible on fixed interest. So for his, the loans are on fixed interest. And more or less, to fix till the, majority. However, in some of the other markets, we have still, fair amount of fixed but it may not be till maturity, but we do look at, as much as possible, given the current volatility to move to the, fixed interest. 3rd element where we remain a little bit exposed, is is on the CapEx side because the mainly around half of our CapEx, for the entire country is on for it on US dollar, CapEx. So that, I think, is something which we are exposed to. We are in discussions with our vendors on moving that way for a CapEx either to local currency or to currencies which are, less volatile, given the, current environment, which is there. So I think these are the basic, methodologies we are following to ensure we are able to manage our forex. I am not that much worried on the, translation impact, which is on account of, ring. It was the operating currency because that does not have any cash impact. It's just translating, the, operating currencies into reporting currencies, but I'm not really worried about it. It could move in either direction at any point in time. I mean, you've seen how suddenly, the indonesian currency, which was at 15200 on to a dollar has actually gone back to something like 14500, which nobody had anticipated. In fact, when I look at our forecast or the even the banker's forecast in May, the versus what it is now is changing. So I'm not that much worried about translation impact. As such because that's a non cash. And it is that's why our focus is a lot more around underlying performance on on real, constant currency basis and not on the, foreign. So to just to summarize, I think we I mean, I break forex into 3 heads once in translation, which is really not a concern for us mainly because of the translation to local currency that impacts. Second one is the, transact related, which is realized and unrealized. Unrealized on loans, again, I'm not that much worried because we have, as I said, even if we are exposed, in some of the markets. We are either covered through the on the interest side, or we are covered on the, hedging of the forex side. So I am not worried. It's really about, the realized forex impact which we, which we are worried about, which has not been very significant for us in 2018 so far. Thanks, Yedik. Just to clarify, so when we when we look at the 2018 dividend payout, we should be looking at 84% of the normalized pattern you showed on, page 3 of your presentation. That's right. That's right. Thank you. Hello. Hi, Alex from Mbank. I have two questions. My first is regarding your cost initiatives that you mentioned in your slide. You've mentioned 1,300,000,000 savings for the 1st 9 months. Was just your 1,400,000,000 target. I'm wondering, the they sent me your 4th quarter. You're only looking about 100,000,000. And where is that coming from? Is it coming from your Cellcom ERP? And, incidental to that, the 1,300,000,000 savings you've had so much. So far, how much of that actually translated into profit reduction, for that period. I'm just trying to work out the actual impact to your margins in that area. And, going into next year, how would that cost, initiate this, continue to turn up? That's the first one. Second one is regarding your fixed broadband in Saba. I'm just wondering how does your program over there, drive with what the government is doing now and now with TM's effort and also incidental to that, because of what's happening in TM and also with the management changes, is there any attempts to revisit cons reconsolidation. Let me take the first question, and then I'll ask Adam or Jennifer to take the, second one. 1.4000000000, out of which 1,300,000,000 we've achieved, is half, half split between CapEx saving and OpEx savings. So so you can say around 600, 700 is on, account of CapEx and around if 500 is on account of OpEx, all of which a 3% would have gone into the, P and L. I would not look at, VSS or, ELP as a saving at this point in time because that's impact will flow subsequently into the next year. So that's not something which is, a saving at the moment, for us. As far as the, the impact of, the next quarter, you're looking at 100,000,000 I think we look at saving, not on the basis of when is the, when is the activity being triggered. We look at savings, when does that impact flow into the P and L? So when I look at next quarter, when I say 100,000,000, we could probably be slightly higher than what are what the target for 1.4 is is based on not the new initiatives which have been triggered is based on the initiatives, which have already been done, the impact of the flowing into the P and L. So we don't look at saving the moment that initiate is trigger. The saving is only when it starts, flowing into the, P and L. So there'll always be the timing issue, which would be when the initiative is triggered and then when the impact, comes in to the, P and L. So I think, and if you're going to stay back for the, subsequent sessions we have, I have a section on cost initiatives. I will go through more details, around what we are doing during that, timeframe. On the city, Saba, yes? First is, yes, we are in compliance with what the government call for in terms of pricing. I think we have announced it earlier that we we we have reduced our pricing. We're seeing we we are seeing though it's early days, we are seeing growth coming up still in Sabah. But one thing for sure that we have the there's a lot more opportunities for us to go do better in Saba in terms of our fabarization, especially when we have, at this point in time, the most fiber in the state of Saba compared to other players as well. So this is an area that we will be looking at, quite, I will used to it the word Kinley. In the next few quarters on how we grow better, for the broadband in Saba. Then, yes, Tasu just reminded me. In terms of the broader picture, Yes. Of course, the home broadband or whatever is you ultimately want to provide the best infrastructure to provide the fixed broadband. But we are also exploring other technologies as well because other technologies has developed, not just the fiber. So we're getting into, in terms of fixed wireless access to the homes, now with the LTE and with the with the 5 gs. Also, we have alternative a technology to get, to the home. So we're looking at this, not only in Saba or Saba and Sarawa, but we're also looking at this even in Samananjo area. So we have this services ongoing today. And today is we're riding on top of our current, LTE network, LTE and the advanced network, which is today already 90% 78% in terms of population. But if the situation change, especially when in terms of what the government is going to do with the spectrums as well in the future, this is an opportunity where we can even be more aggressive in this area. Thank you. Our question on consolidation, I'm afraid to say there's no change in our position. If I can just reiterate, there are many logical financial reasons why we should consider that. But there are many qualitative, reasons why it's going to be very hard to do that. So net net I do not see a change in position at this point in time. Yes, please. This one. Yeah. Hi, it's Ranjan Sharma from JP Morgan. Thank you for having us. I have 2, broad questions. Firstly, on regulation in Malaysia, what are you hearing from MCMC in terms of pricing on the wireless side, in Malaysia. And if there is a focus for the regulator to actually decreases decreased prices further. Is there any scope of consolidation in the wireless space? Second question is on Indonesia. You're, of course, emphasizing your growth strategy outside of Java. How does AXAITA Group think about increasing ca CapEx allocation for XL as a whole. Thank you. Thank you for the question. Now straight on. So far, we have not heard specifically that the regulation regulators asking for the price reduction in terms of, wireless. So what we we have been in discussion with the the regulators, and I think we have also put out, the the across the the period over the past 24 months, we look at the price in the wireless market has actually been taken care of by the competition in the market. Right? So so we're seeing that. But we've also been talking to the regulator's about it's not just about the price, but it's how it's what can we do in order to reduce the cost to serve the customers so that we can actually have reduced, the the the price and give a better quality to the customers. This is in terms of the policies around spectrum, the policies in terms of, access to towers, the SBCs, etcetera. So it's not just about price that we spoke about we've been talking about with the regulator space. Also, how do we help reduce the cost to deploy, in in Malaysia? Yeah. On the consolidation, I must admit that there were lots of, movements, quote, unquote, in 2016. Kind of disappeared, a bit in 20 well, this appeared to reduce a bit in 2017 and totally disappeared in 2018. So, while there are in this case, Good. Well, there is a while back. So what I hope for 2 years ago, it is not happening at this point in time. Yeah. It's concerned. I think, we've we've taken a call as far as the, sales strategy is concerned, and we are pretty supportive of that strategy. Of the expanding, outside, Java. And so far, we're seeing the, effect of that, on overall top line and also the fact that we see positive returns from some of those places coming in. So we will continue to be, we are looking at, significant investments, going forward, on expanding, network outside Java. However, fair to say that we will closely watch the return on investments coming from those markets. And also the fact that this would not be, at compromise on investments, elsewhere. So we will continuously watch the returns from these investments. But we will, support, Excel's investments outside JAVA. All it is. Oh, sorry. Which one does? Okay. Do you mind? Yeah, please. Hi. Srini here, Deutsche. Three three questions, specifically on the third quarter. I Cellcom numbers are slightly soft, if I may, see you on a on a quarter to quarter basis. So if you can show some light on that, that'll be helpful. Similarly, Excel, we are seeing at least for the quarter, the telecom sellers are pretty aggressive, and they continue to have a fairly aggressive stance. So And in that light, you're you're mentioning about outside Java Investments. Does the balance sheet have flexibility to maintain, aggression, which telecom sales seems to be showing in in in expanding their 4 g network. Finally, on your on on Ruby, there is a fairly significant quarter on quarter increase in absolute EBITDA. So any any, you know, what has happened there would be helpful? And of the 1 port of the 700,000,000 OpEx savings, which, you know, we talked about. Broadly, which opcos have have we seen that happen? Those are my 4 questions. Thanks. So, if I'm number question number 1? The number for Q3 as compared to Q2, the numbers for Q3 as compared to Q2 in terms of revenue I'll focus, as we have said earlier, in a few last couple of quarters and even in last year's same events. We said that we have always been focusing in terms of the core brand itself. If you look at the core brand, which is the postpaid and prepaid, our revenue has actually increased. And if let's say, if I just to answer the question, why it has actually softened in a little bit is because in Q2 during the election, the number was actually a bit higher, especially in terms of prepaid. After the the election, we start to see the number actually come back a bit more softer in terms of prepaid. But in terms of postpaid numbers, we have actually grown quite happily in that sense. So in terms of revenue, for the core brand, we think that we have actually saved life and in fact, we have actually improved on the same tone, if we look at in terms of profit, if we were to normalize the number from the ERP, Yes, on the second question. If you look at Q3 numbers, yes, I think you probably have seen that the TACON cell have been pretty aggressive, especially in pushing prices up, especially for the existing customers. However, I think, from our perspective, I think we need to see whether what they are probably doing at this point in time is probably sustainable or not. The way we look at things is, I think we look at more that's probably more sustainable in the longer term. From a year to date perspective, I think we are still, outperforming the industry. I think we are the only one that's probably going to achieve, flat revenue growth in the, in the full year 2018. On expanding outside Java, I think we will continue to expand outside Java. By end of this year, I think our 4 g population coverage would probably hit around 40, 80%. I think we'll continue that investment to probably closer the gap with the market leader to expand outside Java even to next year. Think we'll probably try to achieve closer to 90% population coverage next year. Whether we have the flexibility, the internal cash to do it, I think if you look at our debt to EBITDA today, we are probably at around 1.5 times. Definitely there is ample room for us to scale up if need be, to support this investment outside Java. Yeah. I'll check the, 3rd question on Robbie. The 3rd quarter, encompassed the Hodge festival. Which is the one of the, large or the most, the largest festival in Bangladesh with where operators take the opportunity to push significant growth in RGB or revenue generating base. And this actually did worked very successfully for Robbie. And there's a 5% RGB push and therefore, revenue flow down. Of 6% Q on Q. That largely gives the EBITDA bump in the third quarter. Let me take the last one, which is the saving coming from, or the, different markets. I think, we've seen, savings coming across all of course, Excel has been doing very well when it comes to renegotiating on the tower rentals, which has been giving us a significant benefits, coming out. We've also seen a dialogue, being very focused on simplification and digitization as an activity, which is giving a substantial saving to flow in. Large part of our savings are coming out of network, elements, which we've been running as a horizontal activity across all of course. Which has been, helping us bring down costs. I I I would say that the one which has been a little bit behind on, on on what would have been, the target, is being self owned. So I think, there's been, some one costs which have come in, which has impacted the margins. And telecom has been a little bit behind, but now you're seeing the last a couple of months, an improvement on delivering savings, in that, OpCo. Hi. This is Hossein Savy from City. Just two questions from me. First is, I see that, e.co is rolling out small sterling Malaysia, which I understand comes from the fiber networks. I want to understand, it's, you don't call rolling out fiber as well. And the related question is, like, fiber and small cell towers are quite complimentary business. So is e.co looking into, you know, I will related to the down and earnings are up quite a bit as well. So what drove it, if you, help us to understand it? I just lost on the end cell, CapEx was quite low year to date. So I just want to understand what role there. Thank you. Before I pass to Suresh, on, to answer the question, Anadarko, I just answered the strategic question on what is Sidakos role in fiber? The the from our perspective, that's not what you don't want to do. There's a fiber company because we have other priorities at this point in time. So there's no plan for 5 per seat. However, there are many situations where it makes a lot of sense to when it comes to fiberizing the powers and the small cells, not because of fiber business itself, but just have them and the wiring up of the, the towers in a small cell. So Suresh, you wanna be more specific on question 1 and 2. Sure. I think, first thing on small cells, we are rolling out, some trials on small cells. We definitely It depends what you want to call a small cell, for example, in Malaysia today, nearly 50% when rolled out in the last 4 years of new towers is entirely Lambos, right? But I would argue many people call those samples, small cells. I call them small macros, but they're getting smaller and smaller. True small shareable, what we're trialing right now. So that, we've just installed in KL Central. And I think we'll have a live launch, end of this week with all four operators on it. Business, but 5 as part of your solution. So I think the focus with partners as much as possible to be a cloud solution means fiber to the tower or fiber to the macro installation equipment room, right? So I think that's how we look at the whole earth. Gives you some clarity. You also asked for a question, I think, about Can we take one question? We have one question from a guy, Darlene. Any opportunities to cut costs apart from staff costs? And when do you expect EBITDA margin to stabilize from here? This is from Gopa from Nomura. Okay. I think the further details we actually will present later during our session, just to give a quick preview, there's three areas that we will be focusing on One is, in terms of network cost for sure, because that's the biggest line item in our P and L. The second one is, of course, the soft cost has was mentioned, when we actually rationalize the headcount and also the resources, Then we should be able to see the number being rationalized as well. The third one is, in terms of sales and marketing, that that cost pillar was it will be mainly driven by the digitization of distribution and also, logistic for Telkom. So that's the 3 main pillar that we will be looking at in total for the next couple of quarters. And in the next three years, we're actually hoping to see the amount to If I may add in terms of, to improve the EBITDA performance, we're looking at 2 prongs. The more ones, of course, on the cost side, when we say we look at the cost, it's not just a pure cost cutting, but more we're looking at structure. So it's more sustainable, or in terms of, cost performance after that. But we're also looking at very specific about how do we monetize the network better So this is not the area that we will look at. We will present a little bit later to give you an idea how will we plan to do to that in each of the investment that we've made, how do we monetize it better so that overall, Do we have any more questions from the floor? We can take one last one. Agenda is a Good morning, Piyush from HSBC. Just two questions specifically on the results. In, are we are we seeing any signs of improvement posts, uniform, you know, pricing was implemented in terms of customer behavior shifting from driving phone, because on network, we've now similar across networks. And secondly, if you can tell, in Nepal, what has led to a sharp deceleration in the revenue, there is explanation on your What's the exact impact of this telecom service charges in Nepal? Okay. So the, lowering of the unified, not only lowering, but also unification of the floor led to some adjustment in tariffs where overall, the difference between on net and off net tariffs had to be eliminated. But the level of tariffs since then have begun to come down overall in the market. Incrementally. So early stage of the introduction, Robbie Gayan, was the highest Gayan, and at the same time, we had a main peak coming in Again, status, the published data shows that Sonya was reported in the press as well. That, Robbie has been the highest gain in the M and P regime as well. So there are 2 dynamics: one off net on net pricing unifying. And second, M and P coming in, soon after. In both situations, Ravi has been Uh-uh. From varieties now because market competition is driving that price level back to where it was? On an average basis. The taxation is not much. For data from 0 to 13%. Now the impact this had was TC Emerging Markets. Customers are budget limited, meaning that they have a specific budget that they would drop when part of when a larger proportion of that top up goes out as government taxes, the revenues or ARPU accruing to the, operator as net revenues, reduces. Now having said that, although potentially the effect could have been as much as around 8 to 9 per tonne weighted average basis, the impact was significantly less. So there has been an ARPU, a gross ARPU increase but not enough to compensate for the increased blowout to the, tax authorities. Does that answer your question? Thank you. And just to clarify, the taxes were only on mobile, these incremental taxes in Nepal? Yes, there has been, deferring treatment of between mobile and ILD? Yes. ILD. Yes. Okay. So that concludes the quarter results presentation. Thank you everybody.