Good afternoon, ladies and gentlemen. My name is Clare Chin, Head of Investor Relations at Axiata Group. Thank you for standing by, and welcome to Axiata's second quarter results briefing call. Today, we have present with us Vivek Sood, Axiata Group's CEO; Dr. Hans Wijayasuriya, CEO of Telecom; Nik Rizal Kamil, Group CFO; as well as representatives from our operating companies. There will be a short presentation, followed by a Q&A session. So without further ado, I would like to hand the conference over to Vivek, please.
Thank you, Clare. Very good afternoon to all of you. It's a pleasure to have you online for the quarter two performance update. I'm pleased our strategy, which we discussed with the investors back in December, is falling in place, and this is resulting, which is basically focused around the five vectors of value creation and five strategic priorities, so that's something which is in the right direction. Operationally, very strong quarter. We had coming out of improvement in our ARPU across markets and effect of operational excellence translated into a very strong double-digit growth in EBITDA, as well as double-digit growth in EBIT. Balance sheet continues to strengthen for us.
If you recall, we were net debt to EBITDA is 2.34, and one of the strategic elements for us was to improve our balance sheet. While the debt levels remain steady, we have seen growth in EBITDA translating into net debt to EBITDA come down from around 2.34 end of last year to 2.88. As I said, our strategy of value creation across the five vectors is moving in the right direction. We completed the merger in Airtel, Dialog merger in Sri Lanka back in June. This might see some short-term P&L and earnings impact because of the consolidation and integration cost, but long term, with synergies coming in, it would be significantly value accretive.
I'm happy to announce a MYR 0.05 interim dividend, which is in line with the commitment which we made back in December last year, to deliver MYR 0.10 sum dividend for 2024 . So let me go briefly across some of these key highlights, and then I'll hand over to Nik to go through the details by OpCo. As I said, good growth in revenue, 7.8%, contributed by strong performance across all OpCos, except Link Net and Dialog, and I'll come to more details on why those were down. But that translating into strong double-digit growth in EBITDA and EBIT.
Most of our large OpCos, which have delivered good results for the quarter, as well as first half, and that flowing down to a strong PATAMI development, and also relatively high share of results from associates, and lower Forex losses compared to last year. Underlying PATAMI, which is on constant currency, was MYR 324 million for first half. Improvement in profit margins is the underlying revenue growth was 5.2%, and that's primarily the difference between the reported and underlying is because during that quarter, ringgit relatively had weakened, and there's a resultant translation impact. And as far as EBIT growth on underlying basis being 40%, as I said earlier, from our large OpCos.
Cash flows, which is after leases, at MYR 677 million, growth of more than 100%, and strongly coming from the EBITDA growth of 18.7%. Balance sheet improves at 2.8x, and strong cash balance available at the group of MYR 1.3 billion. Revenue growth guidance, we had, if you remember, given mid-single digit revenue growth guidance as well as teens EBIT growth for 2024. I'm happy to say that, despite of factoring in the impact of Bangladesh social unrest, as well as the political challenges, our EBIT growth, we expect to be ahead of our headline KPI, mostly coming out of the strong performance in first half of 2024.
As I said earlier, happy to declare interim dividend of MYR 0.05 for the first half. Quick summary of each of the OpCos. XL, you would have seen their results earlier when they published year-to-date growth of 8.1% coming from an ARPU improvement of 4.8% to 44,000. Quarter- on- quarter, ARPU is being stable, and this coming from data and digital services. The savings and sales and marketing, as well as the network cost, resulted in an EBITDA improvement of 33.6% and PATAMI improvement of 57.5%. Robi continues to do well with revenue growth of 4.8%, given driven from data growth, and subscriber improvement.
The cost optimization measures which they've been focusing on, resulting in double-digit growth in EBITDA and profit of MYR 2.1 billion, which is more than double of what was there last year for the same period. Dialog, I think in terms of EBITDA margin, we've seen an improvement. However, revenue growth has been down because of curtailment of hubbing revenue, which was low-margin business, as well as the Forex impact on the international termination revenue, which had a negative impact for us. And the lower EBITDA margin translated into lower PATAMI, also because of the fact last year with the improvement on the currency, we did get some one-time benefit, and this year also impacted by higher taxation.
As you know, in Dialog, the tax is on the revenue numbers. The Smart continues to outperform, where in all metrics, they've shown double-digit improvement. Revenue at 10.8%, EBITDA 34.3%, PATAMI at 35.3%, coming out of ARPU improvement, and effect of cost initiatives that they've been driving. Link Net, I think, sustained their subscribers. They were around 750,000 subscribers last year, same time on the residential. They've maintained that. I think revenue was partly impacted because of the enterprise contribution, where we did took a specific call of not pushing for one-off projects which were low margin, but carried a high risk of bad debts. So they've been lowered down.
More focus of the company has been towards recurring revenue, and also focus around the transition from being a served fiber co-- being a ServeCo to a FiberCo. And they've been started... they've been building home passes for XL to deliver, and that has had an impact on the D&A and finance costs, which is not resulting in revenue because the revenue would follow as XL starts getting their home connects in. EDOTCO, so inter-improvement in contribution in key markets. Mostly the focus markets, which is Malaysia, Bangladesh, Cambodia and Philippines, which has shown growth in coming in the EBITDA numbers and EBIT improvement of 26.8%.
Also, I think the focus of EDOTCO has been driving co-locations, which has also been the benefit in the overall performance of the EDOTCO group. The PATAMI is higher, supported by lower Forex losses compared to last year. I think Boost, we launched the bank, as you know, on the 6th of June, which positions Boost as a really strong fintech player in Malaysia, having both the wallet as well as the banking capabilities, which serves around 11.2 million customers on the wallet and around 656,000 Malaysian merchants. Bank at early stage, I think we still are building and delivering on the new products to be launched on the bank.
However, despite the early start-up losses on the bank, overall improvement on the cash burn in the business coming out of being focused around lower marketing and staff costs in the wallet business. ADA has been quite a turnaround story compared to where we were last year. We've seen growth of 34.7% in revenue coming out of all segments, predominantly customer engagement, which is the messaging business of theirs, as well as building the data and AI segment, which is a new growth engine for ADA post the acquisition made in 2023. That's resulting in the EBIT growth improvement of more than 100%, and also flowing down on PATAMI growth of more than 100%. So I think, overall, all OpCos have done well.
I think Dialog, Link Net has some challenges, but I think the good news is from Dialog, economic front, things are stabilizing. And Link Net, I think the transition which we have planned to a FiberC o should resolve the current pressures on that company. With that, I hand over to Nik to take you through details OpCo by OpCo.
Thank you, Vivek. Selamat and good afternoon, everyone. Now, I think Vivek has gone through the OpCo by OpCo. We've got detailed slides on the OpCo by OpCo results in the appendix. What I will do now is still mainly more talk on the group reported numbers. On a reported basis, as what was alluded to, Vivek, earlier, year-to-date revenue was up 7.8%, mainly due to the strong contribution from all OpCos, with the exception of Link Net, which was impacted by lower enterprise revenue and Dialog from lower contribution from the low-margin hubbing business.
We continue to see double-digit EBITDA and EBIT growth of 18.7% and 42.9% respectively, largely contributed by strong performance from XL, Robi and Smart, which was spotted by market repair and cost optimization. And also from EDOTCO, from growth in the focus markets of Malaysia, Bangladesh, Cambodia and Philippines on the back of higher co-location and build-to-suit. Reported PATAMI also improved to MYR 238 million, largely due to the improved EBIT contribution from the OpCos, higher share of results from associates and lower Forex losses incurred in the first half of the year compared to the corresponding period last year. This was, however, moderated by higher net finance costs, mainly from XL, EDOTCO, and Robi.
On the next slide, on underlying performance, which is on a constant currency basis, revenue grew by 5.2%. Again, contributed by all, of course, in exception of Link Net and Dialog, similar to the reasons mentioned earlier. Similarly, EBIT reported a strong 40% growth year-on-year, coming from XL, Robi, Smart and EDOTCO. XL was supported by improved contribution from data and digital services, which grew 10% year-on-year, and lower infrastructure and sales and marketing costs. Robi supported by positive subscriber growth of 5.6% year-on-year. And also cost optimization initiatives, which was largely network related. In Smart, subscribers grew by about 2.7%, supported by also growth in ARPU of 4.9%.
In EDOTCO, as indicated earlier, higher co-location and build-to-suits in the focused markets. EBIT margin grew by more than 100%, as EBIT growth outpaced the increase in net finance costs at XL, EDOTCO and Robi. On the next slide is our adjusted AOFCF, which is basically after taking into account lease payments. Adjusted AOFCF increased by more than 100% to MYR 677 million. Largely supported by the strong EBITDA growth of 18.7% or MYR 876 million. As we have highlighted, the EBITDA growth was supported mainly by XL, Robi, Smart, and EDOTCO. There was, however, increase in net finance cost of MYR 105 million, largely contributed by XL, EDOTCO, Robi and Link Net.
On an OpCo basis, at the bottom, you can see that both Smart and EDOTCO improvement in AOFCF was spotted by the higher EBITDA and also lower CapEx. Dialog's AOFCF improvement was driven largely by CapEx phasing. On the next slide, on balance sheet, Axiata continues to report improvement in net debt to EBITDA, whereby, as at end of quarter two, 2024, we were at 2.88x , versus 3.0x in quarter one, 2024, and also further improvement from the year-end 2023 number of 3.34x . This was largely attributed to the strong EBITDA growth, whereby, group borrowings had remained relatively unchanged at MYR 25.8 billion.
Key highlight within the quarter, though, was a prepayment of $41 million of IFC loan in Robi, which actually puts us in good footing. So this was actually done, prior to the unrest in Bangladesh, where we have seen that the currency had devalued further. So as such, timing-wise, we were quite fortunate that we were able to do this prepayment before that, in the month of June. At the HoldCo level, our cash holding increased to MYR 1.3 billion quarter- on- quarter. Largely due to the proceeds, which we received from the sale of ADA stake to Mitsui, amounting to $55 million.
On the next slide, also on, still on balance sheet, as at quarter two, 2024 , 56% of Group's borrowings were on fixed rate basis, predominantly from Axiata at OpCo level, EDOTCO, Dialog and XL. 59% of foreign currency borrowing is unhedged, mainly coming from the Axiata's 30-year EMTN paper, EDOTCO term loan, and the U.S. debt in our frontier markets, i.e., in Sri Lanka and Bangladesh. In terms of maturity profile, 19% of Group's borrowings will have a maturity within the next two years, and for the holding company, HoldCo, is 13%. With that, I will pass to Vivek for the next segment.
Yeah. Thanks, Nik. So as I said earlier, we had guided revenue mid-single digit and EBIT growth of mid-teens. So we expect ourselves to be ahead of headline KPI on EBIT, and we would expect ourselves to be in line with the revenue growth of mid-single digit. So that's on the back of strong quarter, first half performance. Four corporate actions in the pipeline. I'm sure all of you would be interested in what's happening on that front. We signed the MOU back in May for the merger between XL and Smartfren. At this stage, we are in the process of due diligence. We expect all that to be completed by quarter four, and then we will wait for the necessary regulatory approvals before the transaction can be completed.
Demerging in Indonesia, Link Net, XL, basically moving the customers across to XL. We expect to be completed by the end of this end of September. Expectations for completion by quarter four, as we have the minority shareholders general meeting scheduled on 23rd September 2024. We've completed the merger between Dialog and Airtel back on 26th of June. This quarter was only reflects the debt which was consolidated, but not much of impact on the EBITDA in the quarter. The plan is to complete or neutralize the impact of the merger by within 12 months. And then, so far, the progress has been in line.
As you know, EDOTCO, we did decide to exit out of Myanmar, and we had kept the asset as held for sale, back in December last year. We are still awaiting regulatory approvals on that. I mean, all the risks and opportunities, I mean, no business is without risk, and no business is without opportunities. So I think risk we do see still frontier markets. I think the recent developments in Bangladesh, it's also an opportunity. As things start stabilizing, the opportunities of revisiting the telecom license in that country, which were very restricted for the MNOs, might actually open up some opportunities in Sri Lanka. But short to medium terms, given the uncertainty on how the things are going to develop, we would put that as a risk.
We are looking forward to the elections in Sri Lanka. And post the elections, the continuity of the restructuring of the economy, will that continue or will that change direction is something which we are not aware of. It'll be dependent on the outcome of the elections and how the new party takes it forward. I think, while there is a big opportunity for us in Indonesia, we need to fund, and that funding plans, execution of that would be something which we will have to be watchful of. Opportunities, you know, with ringgit strengthening, we would see impact both on the balance sheet for us in a positive way, as well as lower interest rates is going to help across the group.
With the interest rates coming down, overall cost of financing, because that's one area which we've seen adversely impacting the profitability of the group over the last two years. The portfolio optimizations, I think that continues to be a focus area, and synergies coming out of the Dialog-Airtel merger, which, as I said, would start seeing positive effect coming out once the complete integration has been done. I think with that, I would end our presentation for quarter two, and I'll hand it over back to Clare. Clare, over to you.
Okay. Thank you, Vivek. We can now move on to the Q&A session. To all participants, to ask your questions, you may choose to do this verbally. Just raise your hand and wait till your name is called out for your turn. Otherwise, you can type your question in the chat box, too. So we can now proceed to start the Q&A session. Okay, I do see Foong has his hand up, so perhaps we can unmute the line and ask your questions, Foong.
Yeah. Hi, good afternoon, everyone. Thanks for the call. Three questions from me. Firstly, for EDOTCO, I see a fairly substantial growth in revenue in Malaysia in the second quarter, on both a QoQ and also on a year-on-year basis. The tenancies don't seem to have risen by as much. So, appreciate if you could give us some color as to what's driving the revenue growth in Malaysia in the second quarter. Second question also for EDOTCO, with the rollout of the second 5G network imminent, perhaps by the end of the year or early next year, what is the size of the opportunity for EDOTCO, over the next two years in terms of the potential new tenancies?
And then thirdly, for Robi, wanted to understand if everything has returned to normal, in terms of the operations and also in terms of the daily reload levels. Are they back to the pre-unrest period? And assuming things have stabilized from here, what would be the earnings impact from the mobile internet shutdown that we saw recently? Those are my three questions. Thank you.
Okay, Foong, thanks for your questions. I'll take the first one. On the EDOTCO Malaysia growth, you're right, the tenancies were stable. However, we did have a one-off adjustment relating to some provision that was then allowed to be recognized at the revenue line in line with MFRS 15. So it's a one-off, and it's not expected to recur.
Maybe I can take the second one,
Sure. Happy with that.
Mm-hmm. So it's very difficult for me to say, depending on what will be the outcome of the second network, who gets the second network, as well as, you know, continuity of expansion of the existing network that is DNB. I mean, I'm happy to say that nearly around 27%-28% of tenancies from DNB have been coming to EDOTCO, and EDOTCO has been the one which has been kind of or the network has been following pretty much the grid which is existing with EDOTCO in that sense. So that's an advantage. But again, it depends on the network, who gets it, which is the grid which is going to be used and how that translate into EDOTCO getting those tenancies.
If the DNB has to go ahead with the second phase, then we expect a substantial amount of tenancies based on what has been the past experience coming to EDOTCO, for that share expansion of the DNB, which they may be required to do as they go forward to expand, based on what they had committed earlier. So it's very difficult to say, Foong, at this point in time, what would be the size of opportunity. Of course, it will be larger if the network is built on EDOTCO grid, because that's becoming pretty predominantly the primary grid, for the existing network of 5G. The Robi, I would say, I think the reload, daily reload is pretty much back.
Having said that, I think you would have recently heard of the floods in Bangladesh over the last few days. That has had its own challenges because some of the markets which were impacted were the markets where Robi was the strongest brand. In some markets, in fact, up to 65%-70% of the market share was with Robi. So that's something which will have the impact, not because of the shutdown of internet in the past, but it's mostly because of the floods in the recent days. But if I go back to the impact of shutdown, which was around MYR 1 billion, which is around close to $10 million on revenue. So it was not a big impact.
After that, we did pick, see somewhat recovery coming in, because once the internet was open, the data consumption, specifically for social media, et cetera, did increase substantially. So I... On a run rate basis, we are back, but I think the impact which happened during the shutdown would still remain, and the impact of the floods, which has recently come in, would be there in quarter three numbers.
Okay. And, if I can just do a quick follow-up on the one-off adjustment at EDOTCO, at the revenue line, right? Can you share how much was that in the second quarter?
That was around 1 21 million.
Yeah.
Yeah.
Yes.
Okay. All right. Got it. Okay, thank you so much, everyone.
121. I think there was another 30.. 121 million.
121 .
Yeah.
120 -
Okay.
Yeah.
Yeah.
All right. Got it. Thanks. Thanks, guys.
Thanks, Foong. So we do have a question via the chat. The question is: CelcomDigi's plan 6000 decom towers impaired, or will they be impaired under EDOTCO? What is or would there, would be the impairment cost? That's the first question. The second question also relating to CelcomDigi's decom, tower effect on EDOTCO's EBITDA.
Yeah, I think Adlan-
Yes, Adlan on the line.
Yeah. Can I-
Yeah. So, so maybe, Adlan, you can take Adlan, CEO of EDOTCO.
Yeah. Can you hear me?
Yes, loud and clear.
Yes, we can, Adlan. Yeah.
Yeah. So I think quarter two, I think we've come to a settlement with Celcom Digi. So I think the whole objective of this settlement is actually to come with a win-win situation, right, for both parties. Yeah. Essentially, I think if you look at CD, they are looking for areas where they can actually realize some synergies. And essentially, that would probably involve in terms of waiver of penalties as well as probably consolidation of some of their towers, right? On the other hand, I think as far as we are concerned at EDOTCO, we are probably looking in terms of how do we get compensated with some of those penalties, right?
And that includes, probably in terms of contract extension, organic growth coming from their new build, which I think we expect in the next two to three years. Celcom would probably have around 2,000 to 2,500 new growth sites that they are probably looking at. So all in all, I think in our negotiation with CD, and as part of a settlement, we are probably looking at a cash flow neutral, right, from an EDOTCO perspective. I think we've probably achieved that from that perspective, and hence balancing the two.
I think if you look at the impact that we are getting, right, for every waiver of penalties that we give, we are probably gonna get new orders, right? And that has got to match on a one-to-one at a certain ratio basis, right? So from that perspective, if there is a loss of revenue, that will be replaced. Yeah. So, and from that perspective, I think you would see that overall, right, well, there probably would have some short-term impact, depending on the orders that's coming in. But I think overall, I think for us at EDOTCO, we see that on a bigger picture, there's a longer-term value creation, right?
Because we are also getting an extension of a contract, right, for all our retained tenancies that's remaining, right? And that's quite substantial. So I think if you ask about impact, it depends on the CD rollout plan, which we cannot quantify at this juncture, because it really depends on their rollout plan that they have within the next one, two, or three years, right? This is a three-year journey that CD are probably looking at.
Adlan, just to add on, there's no impairment, right? Because these-
You are right.
These sites would have under them.
Yeah. So the second question on impairment, I think if you look at Malaysia, our tenancy ratio is at 2.23. I think over the last 12, 18, 24 months, we have actually loaded up a lot of the sites with DNB tenancies. Right? So we don't see that with this CD termination or relocation of towers would have a impairment impact. Yeah.
Okay. Thank you, Adlan. Let's move on. Next up is Luis Hilado from Citi. He has a question.
Hi. Good afternoon, everyone, and thanks for hosting the call. Two questions from me, please. I just wanted some clarification for Dialog. What were the main factors for the quarter- on- quarter reduction of its normalized losses, 2Q versus 1Q? And second question is, with about 44% of your debt floating, do you have a rough sensitivity, like, if interest rates fell 25 basis points, what the uplift to your profitability would be?
Okay.
Okay. Yeah, in the case of Dialog, it's largely due to the lower net finance costs. Quarter- on- quarter, net finance cost was lower by approximately LKR 290 million. And, this comes from the lower cost of debt, as well as, savings realized from vendor negotiation. So that's a NFC impact and also some savings from operation.
Thanks.
So I think the second one, I would... I mean, I don't know whether we quantify the number-
Yeah.
but if you look at, you know, MYR 25.8 billion is total debt.
Mm.
And then 44% of that, 46% of that is floating in nature. So we are really talking about around 12 billion, right-
Yeah
... of debt, which is there. So 1% reduction or 25 basis point reduction, we're really talking about, close to, how much? 1, maybe around-
1% is 120.
Yeah, so around 40, 40, 35 million.
35, 35 million, yeah.
Great. Thanks a lot for that.
Okay, thank you. Moving on, next up is Lim Xian Wei. Would you like to unmute your line and from HSBC to ask your question?
Hi. Sorry, I didn't realize I was on mute. Thank you so much. I am here from your coverage team in HSBC. Thank you for taking my questions. Just a quick one. You earlier touched on you expect a few more synergies from the Bharti merger. My question is that could we have... If you have the details with you, could we have more color on what kind of effect those synergies would have? Like, specifically, I'm thinking about revenue, PATAMI, profitability, cash flow. If you could provide some color on that, really appreciate it. Thank you.
No, that's Supun.
Okay.
Yeah. Is Supun on the line?
Yes, I think Supun is on the line.
Yeah. Supun, you would like to have a go at this, and then I can add.
Yeah, sure. Yeah, so overall, the synergies come from the network integration, where there will be lower CapEx spend, going forward, because of additional frequencies, that we got from Airtel, as well as, equipment, 4G equipment that we got from, the Airtel merger. In addition, the OpEx base, we see synergies to bring down the total OpEx base, what Airtel had, from a - 15% EBITDA that they were, incurring to get into the Dialog EBITDA margins in the mid to, short to mid-term. These, synergies, apart from the network savings, network, OpEx is about 60% of their, total cost base.
And apart from that, there are distribution-related savings and manpower, people-related costs that we are expecting within the next six to nine months of the integration. So the focus is to maintain the revenue side of things, then OpEx and CapEx. Then there are synergies to Dialog. The first part is Airtel synergies. The Dialog synergies would come from price hardening. What we are looking at is lifting the Dialog price points further, and getting Airtel new customers at the current Dialog price points, which in turn would harden prices in the market, and give us, give Dialog, additional revenue opportunity, revenue synergies going forward.
In summary, those are the key synergies for both Dialog and coming from Airtel and. Dr., you can add on.
I think, you covered well. The spectrum portfolio, I think, would have the sustained delivery of synergies, because there's a strong alignment of the spectrum as well, and this would reduce future CapEx.
... and also, make room, in terms of our capacity, to be competitive across the country.
Okay, thank you so much for answering my questions. Appreciate it.
Thank you. Okay, moving on, we have next on the line is Prem from CGS. Prem, please go ahead.
Hi, thank you for the opportunity, and congratulations on good set of numbers. Two questions from me, largely on EDOTCO. Firstly, with regards to the run rate on EBIT, I appreciate there were adjustments this quarter, but, the lift in the revenue line was not fully, if it was a provision that was written back, it was not apparent in the EBIT line. So what portion of this MYR 233 million from continuing operations at EDOTCO is essentially basic run rate, and how much of it is as a result of this provision writeback?
Hm.
Maybe you'll start with that first.
Adlan, you want to answer that?
So, Prem, I think if you look at. You're talking about the quarter, right?
Yes.
So the 233 versus your 185, right,
Yes
... essentially. So I think, Prem, there is two parts to that, right? Out of the 121 that was mentioned in terms of the provision, there is some that would probably be something that we'll continue to realize, right? Out of the 121, 46 is something that is recurring, right? So something that will continue to benefit, yeah. It is probably the one-off that we will actually have from previous years, right? So essentially, if you look at those, and if you apply essentially our EBIT margin, essentially, right, in terms of that upside at 32%, you probably can take out of that that amount that's probably coming from 40.
So you can see out of this increase of 233, out of the increase of 48, essentially 25 would probably come from the one-off, yeah.
All right. So essentially, we're looking at about 205-210 million-
Right. Yes
... of underlying EBIT to-
Yeah
Base up or down from here?
Yes, correct. Yeah.
Is there any reason, any, reason to expect this underlying 205 to 210 to trend downwards rather than upwards?
At this point in time, we don't see any potential risk on that, right? Because essentially, what we are looking at today, if you look at our numbers, we are driving a lot of colo. And essentially, any new revenue coming in, CapEx is pretty limited, right? So... And we don't expect that your depreciation to probably increase as well when you get your new revenue. And you look at our colo ratio, it has been increasing quarter after quarter as well, in line with our plans.
Perfect. And that then ties in very nicely with my next question, which is, your CapEx number doesn't seem to be jumping around anymore. It seems pretty subdued, and you did mention that there are no large CapEx plans ahead. Now, if I was thinking of it from the previous expectations of a recapitalization exercise at EDOTCO, if your CapEx is not as high, can we therefore push back any need for a recapitalization of EDOTCO, or what are we- what are our thoughts around, this whole process?
Yeah, I think if you look at our recap exercise, we are looking probably a lot of the funds for probably more to fund the growth market, right? And essentially that would be essentially PH, right? And if you look at PH and Indonesia, right, however, if you look at Indonesia, you don't expect much growth coming in as far as expansion is concerned, given the merger exercise that's ongoing with regards to Smartfren, and essentially for IOH as well, that merger exercise. I think a lot of the orders are going to existing tower companies where I think a lot of Indosat is, IOH is owing to those parties, right? And essentially Philippines, right, is to really fund the growth in Philippines.
So depending on that, how Philippines will actually take out, which we see that in recent quarters, we're seeing that orders have started to come in. So if there is any potential recap, it will depends on the capital needs for Philippines, right? At the same time, I think we are also looking at potentially the dividend that we could probably earn in some of our markets, like Malaysia as well as Bangladesh, to probably fund that growth in Philippines. So it's a question of the demand, the growth in Philippines, and I think probably in some markets we have probably be slowed down as well, where in Bangladesh, for example, we'll probably focus a lot more on co-location.
Whether debt is probably sufficient to fund that growth in Philippines. Yeah?
Perfect.
Maybe I'll just add to Adlan's point. Yes, Prem, you're right. We may not need that kind of requirement which was planned earlier, and essentially if required, would be for Philippines expansion, right? Because both two largest market, which is Bangladesh as well as Malaysia, are cash accretive businesses. But I think if we need to do this exercise, would be for many other reasons, right? So I think we still think it makes sense, but from a timing perspective, we may have some liberty at this point in time, yeah.
I suppose the ringgit strengthening has also helped the entire balance sheet story as well.
Yeah. Yeah. Yes, that's right. Yeah.
All right, perfect. Thank you very much.
Okay, I don't see anybody else in the queue for questions, so I guess that is no more questions coming through, and maybe I'll hand over to Vivek for his closing remarks before we close off the conference call today.
Thank you, Clare. First of all, thank you everyone to join this afternoon to hear us on our quarter two performance. I think, as I said, we continue to deliver on our strategy. Things do take time in markets, and there are headwinds which are there in some of our markets, but there are opportunities also. I think, given that, focus around strategy as well as deleveraging our balance sheet is being executed on, we expect the value for the shareholders to improve. And we remain committed to 0.10 dividend for 2024. So thank you very much for joining us today. Thank you.
Thank you.