Good morning, ladies and gentlemen. My name is Clare Chin, Head of Investor Relations at Axiata Group Berhad. Thank you for standing by, and welcome to Axiata's First Quarter 2025 Briefing. Today, we have present with us Vivek Sood, Axiata Group CEO, as well as Nick Rizal Kamil, Axiata Group CFO, as well as representatives from our operating companies and jointly controlled entities. There will be a short presentation followed by a Q&A session. Without further ado, I would like to hand over the conference to Vivek, please.
Thank you, Clare. Very good morning to all of you. First of all, apologies we could not have this call yesterday because yesterday we also had the General Meeting for the year 2024. I am happy here to give you a brief update on our quarter one performance, but also I will spend a little bit of time on emphasizing the strategy which we are unfolding and something which we had discussed with our analysts as well as investors back in January this year. Let me first start with slide number three. We have focused on our 5x5 strategy. We are going through an important transformation journey of its portfolio. I would like to reiterate that this strategy is centered on solidifying our position as a sustainable dividend company in 2026.
Therefore, there is a lot of work to be done this year, and the group has realigned its portfolio into long-term strategic holdings: digital telcos of CDB, XLSMART , Smart in Cambodia, Robi, and Dialog, which will focus on growing long-term cash flows, medium-term value elimination, and monetizable holdings, which are our infra businesses, as well as digital businesses, which will attract external capital to improve business sustainability and provide proceeds to reduce debt and fund new profitable growth opportunities. Thus, with lower finance costs as a holding company and concurrent efforts to scale down in size, this will reduce cash flow leakage of dividends upstream from opcos and jointly controlled entities to Axiata shareholders. We will continue to emphasize on how much is the dividend we are going to get from our operating companies.
This should help progressively increase our dividend per share and also improve the shareholder return, as well as we are very clearly focused on reducing our balance sheet, specifically the holding company debt significantly. What are 2025 key first quarter? What are the key elements? I think one is we're focusing on de-risking our frontier markets, where not only driving profitable growth, but also de-risking our exposure in the frontier markets. The joint control entity now, XLSMART , which is just we completed in April, the merger in April this year, and also CelcomDigi. I think the focus would be how do we get the maximum benefits of merger. Then infra businesses, which is Link Net in Indonesia, as well as our tower business, EDOTCO. We will focus on the value elimination as well as monetization strategy.
We did talk a little bit on what our plans are on that front. Digital businesses are still the way forward for us, where we are focusing on their performance at this point in time. For example, on Boost, clearly focused on them, with non-Boost Bank business being profitable by the end of this year. Boost Bank will be in an investment phase with a 3-5 years of it becoming profitable. In quarter one, we did get dividend around MYR 283 million from our companies, and we expect a much higher dividend coming in this quarter relative to quarter one. I go a little bit around the details around some of these achievements, I would say. First of all, important in frontier markets is that we've been focused on reducing our exposure in U.S. dollars, specifically because of the volatility of currencies in these markets.
I mean, if you look at even with Ringgit in first quarter, we did see a significant depreciation, and that does impact on our translation of our results. Having said that, net, if I look at these three markets, which are Bangladesh, Sri Lanka, as well as Cambodia, we are net positive on U.S. dollar now of around $100 million. So we paid down a fair amount of U.S. dollar debt over the last one, one and a half years. A little bit around three markets. Details would be covered if required by Nick in the subsequent section. Robi, I think we still see macro challenges. However, overall, in terms of the remittance, as well as the improvement in inflation and likely interest rate stabilizing, has been positive development, but we have political challenges continuing in that market. Balance sheet has become fairly resilient.
Our net debt to EBITDA is down to around 1.1 times. In quarter one, we did see quarter-on-quarter improvement in ARPU. However, year-on-year, market has seen ARPU coming down, partly because of intensity of competition, as well as to do with the political and the macro challenges each country faced after July last year. However, profitability still continues to do well, with focus remaining on capital CapEx investment in line with what the demand from the consumers is. Sri Lanka, I think we did a fairly good job on the merger which happened in June last year between Airtel and Dialog. The situation is well ahead of schedule. The market is also stabilizing, both from the overall market repair standpoint, as well as the macro challenges in Sri Lanka. Having said that, we do see some risk on prices going up later on.
Again, a lot of focus around balance sheet. I think we're down to around less than one in Sri Lanka on net debt to EBITDA. Smart continues to be our star performer. I think the ARPU has grown by nearly 8% year- on- year, and they are close to around $5 ARPU, one of the highest ARPUs in our footprint market. Smart continues to gain traction in that particular market. Profit also grew by 7%. The business actually sits with around $220 million of cash. Part of it, obviously, would be paid out as dividend to Axiata in subsequent quarters. If I go to the integration efforts on the two joint control entities we have in our portfolio, you're aware of what's being done on CelcomDigi because they did cover that as part of their analyst call. I think overall, quarter one remained resilient with profit improving.
CelcomDigi did declare dividend of MYR 0.037. Home business continued to do well. It's been growing fairly fine. I think overall, markets are stabilizing in terms of number of customers. However, we still see pressures on ARPU in CelcomDigi or in the market as such. Having said that, I think the company continues to be focusing on the synergy. As you know, we did talk about around MYR 1.6 billion synergies delivered so far. XLSMART , early days, we just completed the merger in April. Plans for integration are quite in place. Rajiv is on the call, so in case you have further details required, where we are progressing, we can cover that. I think vendor negotiations are pretty much completed. The organization leadership, top talent, all those are in place. Things are moving in the right direction, but as I said, it's early days.
I think both the companies' focus would be on getting the full merger synergies by 2027. CelcomDigi, as being said, MYR 700-800 million savings coming out of the integration. We continue to maintain the NPV of synergies around MYR 8 billion. XLSMART , I think the focus on pre-tax synergies of MYR 300-400 million by 2027 still stays. I think the company is working on their business plan to deliver that kind of synergy numbers here. Infra business, Link Net, I think if you optically, the numbers look coming down on a year-on-year basis. That is because we did transfer our customers back in September from Link Net to XL. If you recall, the strategy of making Link Net as a pure fiber company, fiber wholesale company was what was put in place.
Consequently, the customers were transferred to XL so that XL could provide the converged offer to the mobile customers there. This was the first full quarter, actually, of the company being a pure fiber core. Quarter on quarter, I think we've seen, just looking at fiber core, good development happening. Obviously, year- on- year, you would not see that reflected in the numbers. Good news is that while XL SMART is looking at their own plans on building the home business, Link Net continues to get orders from third-party ISPs, which should allow it to build a bigger scale and be a fairly strong fiber wholesale company in Indonesia. The enterprise business continues to do well. I think the recurring revenue on the enterprise has been growing faster than those one-off revenues which the company was dependent on in the past.
I think we should see these new home passes lifting the value of Link Net going forward. EDOTCO, I think, continues to improve on its tenancies at 1.68. Most of the NTCs are profitable, excepting in the Philippines, which is still in the investment phase. Some impact of EDOTCO happened during the quarter because of the translation from the operating company operating numbers to the Ringgit, which EDOTCO reports quite similar to what has happened at Axiata level because of the currencies depreciating compared to the Ringgit. Having said that, I think finance costs have been lower. There have been forex gains and lower taxes, which has lifted the profits of EDOTCO for the quarter one this year. Digital businesses, quickly touching upon those, I think Boost, as I said, is being working on the path to profitability.
While optically, you would see the losses are relatively lesser compared to, I mean, they're less, but not enough compared to what was in last year, 2024, is because there's a lot of transition happening on the organization which was supporting the credit business still needs to be transferred to the bank. I think we'll see more reflective numbers coming in quarter two this year. The plan is to, on a run rate basis, Boost non-banking business should be profitable by the end of this year. I think we've been doing well on the Boost Bank deposits, around MYR 580 million. We've got close to around 250,000 customers and a loan book of around MYR 150 million at this point in time, which I think has been developing well. Loan business is the one which will give profits coming in for the Boost Bank.
Erie, I mean, it's continued to do well. Having said that, there are some markets where there are minimum commitments, which is there, which does put pressure on the margins. However, overall profitability is growing well at more than 60% at around MYR 21 million in quarter one 2025. As I said earlier, I think this is one of the focus areas for us. How do we get cash generation which of these operating company translating into dividend flow to Axiata? For quarter one, we did get around MYR 283 million dividend from all our operating companies. Around 40% of that came from CelcomDigi. We got around MYR 126 million from Dialog. We do expect dividend coming from Smart, Robi, and XL in quarter two. The numbers of dividend coming to the operating or to Axiata would be much higher in quarter two compared to last year.
We've seen a little bit of deterioration on the net debt to EBITDA from quarter-on-quarter basis. That's primarily driven by lower EBITDA because of the translation impact, which I said earlier from the operating currency into the reporting currency. So we have net debt to EBITDA from three, which is in line with what was there last year. We are, in our view, towards the target of 2.5x net debt to EBITDA by 2026. You would recall the merger in Indonesia did provide us immediate cash of MYR 400 million, which would be used for paring down the debt in June as well as July this year. I'll then hand over to Nick to take you through details of the financial numbers. This was just an overview on how we are executing our strategy. I think details on quarter one, Nick, over to you.
Okay. Thanks, Vivek.
Good morning and Assalamualaikum. I'll go through the quarter one 2025 financial performance. Overall, it was a challenging first quarter 2025 with our performance affected by the stronger Ringgit. In quarter one, the Ringgit strengthened against the Bangladeshi Taka by about 15%, 10% versus the Indonesian Rupiah, and by about 6% versus the USD. On a revenue basis, we recorded a revenue of MYR 5.1 billion for the first quarter. This was down 11.3% year- on- year and 5.1% quarter- on- quarter. However, at a constant currency basis, the decline year- on- year was only about 2.4% and quarter- on- quarter 3.8%. The main cause for the decline or the lower revenue number on a constant currency basis was mainly in Robi, which contracted by 7%.
This is due to the continued macro challenges in Bangladesh, resulting in a lower revenue generating base of 2.9% and ARPU by about 3.9% year- on- year. However, we did see some recovery on quarter on quarter basis where ARPU improved by about 1%. In Link Net, I also had an 11% contraction in revenue, mainly due to the business model shift to FibreCo , whereby, as you recall, in quarter one of last year, ServeCo was still within or the retail customers were still within Link Net, whereas from quarter four of last year onwards, pursuing the transfer of the retail customers to XL, Link Net basically transformed into a pure play or wholesale fiber model. The lower revenue was actually lifted by XL, though, which registered a 1.9% increase in revenue due to improvements in the home internet business, but also in terms of total subscribers and also data traffic.
EDOTCO, as Vivek had alluded to earlier, tendencies continue to grow to 1.68, mainly in our core NTCs in Malaysia, Bangladesh, and Philippines. Smart also continued to register strong ARPU performance in the quarter. At the EBITDA level, we recorded MYR 2.45 billion for the quarter, 12.5% down year- on- year and 10.1% down quarter on quarter. On a constant currency basis, the decline is smaller at 3.1% year- on- year. Again, mainly from the performance at Robi and Link Net, but also at the XL level due to higher costs. However, this was offset by Dialog and Smart, which in Dialog, the Airtel consolidation and cost rescaling away from the non-core areas resulted in better EBITDA performance. Also in Smart, where there was a reduction in overall direct costs. EBIT for the quarter was at MYR 796 million, 12.2% down year- on- year and 19.2% down quarter- on- quarter.
However, on a constant currency basis, it was slightly up at 0.7% year- on- year. Again, this is the flow through down from revenue and EBITDA. There was also, as I had indicated to earlier, but mainly lifted by Dialog and EDOTCO due to the cost focus. Also at the EDOTCO level, the one thing to, as a recap, EDOTCO had an adjustment or a revision of the useful economic life for their assets per accounting policy. This resulted in a benefit from lower depreciation and amortization of their towers. Bottom left, we see the joint control entity share of results. This is just at. For the quarter from Celcom at MYR 119 million, up 28% year- on- year. This is mainly due to the improvements in postpaid and home, along with strict cost discipline delivering stronger profits.
CDB continues to also deliver the cost synergies from merger integration. At the PATAMI level, the strong year-on-year PATAMI of MYR 160 million was mainly due to the lower depreciation and amortization, again driven mainly by EDOTCO, but also forex gain, lower finance costs, and higher contribution from CDB. On the UPATAMI, we recorded MYR 123 million, down 17.4% year-on-year. One of the key causes for this is quarter one was also impacted by the there was an asset revaluation in ADIF at one of our funds, whereby if we were to exclude this, the UPATAMI would have actually registered a 7.4% growth. If I go to the next page, on our balance sheet, as at the end of March 2025, on group cash, we closed the quarter at MYR 4.95 billion, which is under MYR 5 billion, up 1.3% year-on-year and 1.9% quarter-on-quarter.
This excludes, well, this includes the cash from EDOTCO Myanmar, which had to be reclassified from discontinued to continued. Even if we were to exclude it, cash balance is still strong at about MYR 4.5 billion. On group borrowing, it was at MYR 22.8 billion, down 10.5% year- on- year and 1.5% quarter- on- quarter. The 10.5% performance, approximately 50% of that was due to the stronger Ringgit. So we benefited from translation. We also reduced our forex exposure by increasing the hedge position to 47% as at quarter 125 versus 37% as at quarter 124. Quarter on quarter, the debt reduction to note is that Dialog reduced 5.3% of their Sri Lankan Rupee debt. Again, this basically translated into a 12.8% year on year decline in their debt position, bringing their net debt to EBITDA as at end of quarter 125 to below one time.
It was at 0.9 times compared to 1.5 times at the end of quarter one of last year. edotco also reduced their overall debt by 1.5%, mainly in Bangladesh and also in Pakistan. As a result, AOFCF is also strong for the quarter, mainly due to the stringent CapEx control. This is in despite of the EBITDA decline in quarter 125, as I had alluded to earlier. The CapEx reduction across OPCOs drove AOFCF to MYR 815 million, which is 73.7% higher year- on- year and also higher on a quarter on quarter basis. The operating, well, basically OPCO Board Investment Committee reviews of quarterly CapEx release resulted in a 49% lower CapEx year- on- year to MYR 578 million, whereby this translates into a 13% of total CapEx budgeted of MYR 4.4 billion for 2025.
HoldCo cash, stable at roughly around MYR 0.5 billion, slightly lower on a year-on-year basis, but higher quarter-on-quarter. Hold Co borrowings, debt at the Hold Co level was at MYR 9.3 billion, 14% lower on a year-on-year basis and 1.5% lower quarter-on-quarter. Just to reiterate what Vivek had mentioned, our net debt to EBITDA was at three times at the end of quarter one 2025, slightly lower compared to quarter one 2024 and a bit higher compared to quarter four of 2024. This is mainly driven notwithstanding that we had improvements in our debt and cash position. This was negatively impacted by our weaker EBITDA performance on an annualized basis, whereby even if you look at the EBITDA on a quarter-on-quarter basis, we were 10% lower. This ratio also included supplier financing agreement at Smart Cambodia.
Due to accounting, we had to classify this as debt. As such, if we were to exclude this supplier financing agreement in Cambodia, the net debt to EBITDA will be below three times at 2.98 times. Before I pass on back to Vivek, a little bit on our headline KPI for 2025. As you can see, we announced as a recap in February of this year, we announced our headline KPIs for 2025. The KPIs were then at that point in time set based on the assumption that the group would operate under the prevailing business conditions at that time. As you will be aware, following on to this, on 16 April of this year, we successfully completed the XL Smartfren merger, where we now have an effective shareholding of 36.9% of this jointly controlled entity.
This transformative merger represents a significant step in strengthening our market position in Indonesia and unlocking long-term value for the group. Due to the material changes to the group portfolio, which is in line with our Axiata 5x5 strategy, we are maintaining the headline KPI on EBIT growth on high single digit, which is more reflective of the business performance. To ensure a like-for-like comparison, the 2024 baseline and 2024 KPI are both based on Proforma, where XLSMART is a jointly controlled entity. With that, the EBIT growth, just to reiterate, we are maintaining it at the high single digit, but based on a rebase position where XLSMART is a jointly controlled entity. With that, I will pass back to Vivek to take us through the key opportunities and risks.
Yeah, let me start with the first one, which is opportunities.
I think we do see market repair and improvement in the overall, the market becoming stable as a positive development going forward. That should improve EBITDA as well as cash flow. If you look at all five markets, we're pretty much a three-player market. And some of these markets have pretty very low ARPU to per capita income. So there's obviously opportunities for price hardening in these markets. We've seen some positive developments in the past happening across all markets, but we've seen some competitive intensity increasing specifically in Indonesia as well as Bangladesh. Having said that, there has been some positive signs of price increases happening specifically in Indonesia, where I understand starter packs have now been increased in terms of their pricing, which should make a better market structure there. Second is obviously the impact of the integration.
As I said earlier, I think the XLSMART as well as CDB full synergies realization by 2027 should have a positive impact on Axiata's earning. XLSMART , early days of the merger, but first step, which is providing the Smart customers' national roaming, should provide much better customer experience. That should help a quick win on the revenue side. I think negotiations on towers as well as the network vendors negotiations have been done, which has been fairly successful. The tower negotiations are currently underway, and that should also help getting some additional benefits from an overall synergy standpoint. CelcomDigi, as you know, most of the integration has been done. Around more than 75% of the network has been integrated. We expect that to be completed by 2026.
On our businesses, I think infra businesses, as I said, there is clearly an opportunity of us expanding Link Net fiber position with third-party ISP orders coming in. Good news is these all orders are at fairly attractive price or contracts, I would say, at this point in time. Similarly, I think the overall opportunity of balance sheet improvements, first step, getting this MYR 400 million off the table in Indonesia would help add on holding company debt. That would be used for the purpose of paring on some of the existing debt. Also, we are looking at what we did last year is using some of the funds to reduce our bonds, which are currently trading at much lower price than their par value, which should help in addition to the absolute amount, additional buyback of those bonds, which should also reduce the overall debt exposure for us.
I think on the risk side, 5G in Malaysia is still discussions on. Hopefully, we should be able to get to a positive landing, but this is still uncertain what would be the end outcome of this. As you know, Unimobile has got their license. So we need to really see how things will be developed with the first network. Risks on competitive landscape, I think continues. More we see in Bangladesh and Indonesia, but I think we're seeing in quarter two green shoots across both the markets, where specifically on the startup packs in both Bangladesh and Indonesia, prices getting hardened. That has a benefit of the high gross ad high churn getting reduced, which does provide far greater stickiness to the customers. I think that's a positive development which is happening.
I think risk on geopolitical macro with various developments happening across the global arena will always be something which we'll be watching out. Having said that, I think one of the reasons why we talked about the USD exposure as well as the balance sheet in these markets, specifically frontier market, is because that's one of the key focus for us so that these markets are remaining most stable even on the macro economic pressures coming in. I think last would obviously be the digital businesses value elimination. I think AD has been doing fairly well in terms of their development year on year. I think Boost is more to ensure there would be need for capital coming in Boost plan, which we are looking at new investors coming in. We expect hopefully that should be in place in next couple of months from a regulatory approval standpoint.
Okay, so that's I think where we will stop. We've said enough. I think we can open it for Q&A.
Apologies for that IT issues. Okay, anyway, thank you, Vivek. Moving on to the Q&A session, and I would like to highlight that we also have representatives from our operating companies as well as jointly controlled entities. XLS , we have CEO Rajeev as well as Feiruz on the line. EDOTCO, we have CEO Adlan. Robi, we have CEO Riyaaz. Dialog, CEO Supun are all on the call if any of you wish to engage with them directly. Please 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 questions in the chat box too. We will proceed with the Q&A session.
First up, I do see Phong from CIMB with his hands raised. Over to you, Phong.
Hi, good morning everyone. Thank you so much for the conference call. Three questions from me. Firstly, on EDOTCO, I just wanted to understand if we have started a process of seeking offers from interested parties, or are we evaluating offers as and when they come in? If there is a reasonable offer on the table, do we have any preference to keep a stake in EDOTCO, or are we okay to sell it entirely? That is question number one. Question number two, also related to EDOTCO, could you give us an update on where we are in getting the regulatory approvals for the EDOTCO Myanmar sale? Is the sale a prerequisite for any value elimination or asset monetization exercise for EDOTCO?
Then third question, do we expect to receive dividends from XLSMART over the next two years as it goes through the merger exercise? I'm just looking at your sources of cash inflow to support the MYR 0.10 dividend per share at the group level. Yes, those are my three questions. Thank you.
Let me take the first one, and Nick can also add on this. I think we've very clearly stated that these businesses are ones where we will look at value elimination and monetization. Also as part of that, look at the right capital infusion into these businesses because we still think EDOTCO is a strong growth business with a very strong position in various markets that it has.
Given where we are as Axiata with our focus and our priorities being on the yield side, there would be a need for us to look at EDOTCO quite differently. I think we are evaluating at this point in time the various next steps. If we make a decision, I think likely that we will run a process, but that would be a very limited process. It will not be something which will be a very open process because there are interests shown by various investors. Having said that, I think we've not concluded yet when and what are the and how that detail of that process will be carried out. As and when we are ready to talk about it, we will formally let everyone know. On Myanmar.
I need to take Myanmar.
Right, so on EDOTCO Myanmar, we had a long stop date in the first week of April, whereby we were expecting to get regulatory approval by the end of March. However, due to mainly driven by the massive earthquake that happened in Myanmar at the end of March, this was somewhat delayed. As such, between us and the buyer, we decided to extend the long stop date to 30th of June 2025. We are still working towards meeting that 30th of June 2025 timeline.
Dividend. On dividend, I think first of all, XL was never a very large contributor of dividend because this was a business which required enough capital. As you know, Phong, the profit margins were not that high as far as the business is concerned, but it was obviously seen as a very strong growth opportunity.
We also had a fair before we completed the merger, we had the XL declaring around $70 million dividend, which is much higher than what they've been giving every year. Their dividend typically is around $40-$50 million, which was high dividend which we got before we completed the merger. Obviously, another $400 million this year and a $75 million next year would be the cash which will be coming as part of the merger completion, right? I think from a cash flow standpoint, we think these are sufficient enough for us to be able to meet the dividend requirement which we've committed to our shareholders. As far as the company is concerned, I think next two years we would not see them delivering dividend because we would expect them to invest and build a good strong business for future than extracting dividend from that.
Next two years until 2026, I think when the integration is going on, we would be spending money on integration cost as well as, as you know, there are spectrum options coming up in Indonesia this year as well as next. There would be investments made to require that additional spectrum as well as going ahead with 5G in the Indonesian market. I do not expect any new dividend declaration coming from Indonesia in the next two years. Going forward by 2027, when the integration would be completed, I think we should start getting decent dividend from XLSMART .
Okay, that is very clear. Thank you so much, Vivek, Nick, and Clare.
Thank you. Thank you, Phong.
Thank you. Okay, I think we do see Louis's hand is up. Over to you, Louis, please, from Citi. Good morning and thank you for hosting the call.
I had three questions for the holding company level initially. The first is regarding the EBIT growth guidance. Could you actually tell us what that base is that you're using for Proforma for 2024, which you're going to get the high single-digit growth from? Second question is just to clarify on the dividend policy, sustainable dividend policy going forward. Should we be looking at PATAMI or UPATAMI when we consider what the payout should be based on? For example, if XLSMART has any integration costs, will that affect your payout? Third question is I didn't quite catch the underlying asset valuation which impacted UPATAMI. If I work backwards, is it around MYR 32 million worth? What was it based on again? I didn't catch it very exactly.
Can you repeat the third question again, please?
Yes, the UPATAMI, there's the note that excluding underlying asset valuation, it would have been up. I worked backwards and it seems to be about MYR 32 million. Could you explain that one? That's right, that one. What's that based on?
For sure. You can explain that.
Okay, I think policy on dividend is very clearly stated. It is minimum 30% of normalized PATAMI. Normalized PATAMI is actually pretty much adjusting for forex, unrealized gain losses, any restructuring which happens, or any M&A activities which is happening, or there are large prior period tax issues and things like that, which we normalize, or there are issues relating to the purchase price adjustments, etc. Those would be normalized. That's what we pay on 30%, obviously taking into consideration the cash flows, the future investments required, etc. That policy is not changing.
Having said that, I think there is difference if you see our financials between PATAMI because there's a legacy of assets which is coming and hitting us on the DNA side. There is an issue of the reported PATAMI numbers or underlying PATAMI numbers. The cash which we generate and the reserves being sufficient enough for the group. We've been paying higher than whatever policy is. That's where the MYR 0.10 comes in because cash generation has always been fairly strong compared to the profit numbers because of the sole legacy block which the company has been paying. I think we are guiding the market more around MYR 0.10 dividend with progressively growth around that. I think we should be in a position to do that once we are able to reduce our holding company debt as well as the holding company cost.
That's true.
Right. So basically, with regards to our headline KPI, the revision to EBIT, maybe I might make it simpler for everyone. When we look at the rebasing, we are based on the Proforma that XL Smartfren is now a jointly controlled entity. So it doesn't appear in the EBIT line. For 2024, the rebase number is approximately about MYR 3.6 billion. Whereas for, yeah, for the 2024 rebase, it should be around. Yeah, this is the MYR 1.9 billion. Yeah. Sorry, just trying. It's about MYR 1.9 billion, right? 2024 rebase. Yeah. Sorry. Okay.
Thanks, Nick. And on the underlying asset valuation, what's the nature of that?
Yeah. On the underlying asset revaluation, this relates to one of the legacy Axiata funds, ADIF, where there is an investment within ADIF that had a share of loss of MYR 37 million for the first quarter of 2025.
Not that far off from your back of the envelope calculation of 32.
This share of loss is actually on asset revaluation.
Asset revaluation.
Because we carry that on our books as an investment.
Yes, that's right. This is the new valuation that was done on that underlying asset. As such, just to reiterate, if we were to exclude the share of loss, which is considered to be a one-off, basically, then the UPATAMI would actually register a 7.4% growth.
Is the revaluation undertaken on a quarterly basis or is it annual?
Annual.
Annual. Okay. Thank you. Thank you.
Just to be clear, Louis, on the EBIT guidance, just to reiterate, the revised EBIT guidance growth of high single digit, the baseline for 2024 is MYR 1.9 billion. This basically would assume exclusion of XL contribution as subsidiary in 2024 already.
The target for 2025 also already fully assumes XL is no longer a subsidiary for the full year. I hope that is clear.
Okay. Even the one quarter of consolidation is assumed to be below the
complete third quarter for anyone because it is really not a quarter. It is actually a quarter and a half.
One quarter and one.
Correct. Yes.
Okay. Right.
Okay. Thank you.
Okay. Thank you. Let's move on. Ranjan from JPM, please.
Hi. Good morning. Can you hear me?
Yes.
Yeah. Hi, Ranjan.
Hi. Good morning. Thank you for the presentation and the opportunity. Just one question from my side. On Link Net, the wholesale pricing mechanism that you have for the intra-group, is it on the other terms similar for XL versus other possible resellers of capacity?
Yes, because I think there is a contract where they cannot offer below the price which they have with XL for a period of time. There is such time there is an exclusivity. It is all pretty much in line with the XL pricing. Is Kanishka there on the call?
Yeah.
Okay.
Is it possible for another reseller to resell to the same customers that XL has?
Same customer as
XL.
Sorry. XL has same customer. Sorry, I did not get it.
Let's say there is another operator A. He goes to a customer who is an XL customer and acquires that customer from using the same network that XL is using off Link Net.
There is an exclusivity for a cluster with XL for a period of time. I think it is 12 months or 18 months.
Twelve months.
Twelve months.
Depending on clusters, some clusters 12 months, some 18 months, but there is an exclusivity period.
They cannot sell in that specific cluster. They can sell in clusters where XL has not provided their own passive.
Got it. Thank you.
Okay. Thank you, Ranjan. Moving on, let's move on to Prem from CGIS.
Hi. Thank you for the opportunity. Just an accounting question. Given the huge changes that we are probably going to see in your balance sheet structure, P&L structures into the second quarter, are we expecting any large goodwill impairments as a result of the XLSMART transaction?
If I may, I think we should not. If any, we should see a gain coming as one-off gain on XLSMART transaction.
Okay. Perfect. Yeah. And could you give us some color on the current discount on those bonds that you're looking at redeeming?
Because this seems to be a perfect way to get balance sheets restructuring sorted out.
Okay. If we talk about the EMPN, the EMPN paper that is due in 2050, the same bonds that we did the liability management exercise last year, as of middle of May, I haven't got the latest number, as of middle of May, the price was trading at $64.50.
All right. Thank you. That's lower than what we did the last time. I believe it was about $0.68 the last time.
When we did the liability management exercise last year, the bond was trading at $70.
But just a caution, volatility is so high. I mean, we've got 30-year bond, now it's less than the yields are less than 5%. Just two weeks back, they were at 5.15% or 5.2%, right?
Correct.
But it'll hover around that kind of a price level.
I think so, yes. It has been. Perfect. Perfect.
Thank you. Thank you very much.
Okay. Thank you, Prem. I think next up is Piyush from HSBC. Piyush, please.
Yeah. Hi. Good morning. Can you hear me?
Yeah. Yeah. Hi, Piyush.
Hi, Piyush.
Hi. Morning, Vivek. Morning, team. Thanks for the opportunity. A couple of questions. Firstly, I know it's difficult, but any kind of timeline on various assets which have been identified for value elimination, if you can share any color on the progress for any of the assets. With more assets getting monetized, is there a plan to pay special dividend or even conduct share buyback, or initially you will use the capital to pare down leverage? What's that leverage level, comfort level, after which you can consider special dividend or buybacks? That's the first question.
Secondly, at the Axiata corporate level, can you talk about any cost efficiency programs and how much cost savings which we can expect in 2025 and 2026? Thank you.
I think we did, if I recall, correct me, we did say priority would be the infra businesses, which is Link Net and EDOTCO from a timing perspective. Those would probably come into play this year itself. One where we still have time because we still think these businesses can be more value accretive and we really do not require more capital other than external capital. Digital businesses, I think that probably would be a couple of years down the line. I think on a leverage, I think we have given a target of 2.5x net debt to EBITDA. I do not think it is just about the percentage.
I think it's about the holding company debt, which is what has been intended to reduce. Any realization, monetization would be first earmarked towards paring down debt and looking at investments into profitable growth opportunities, right? That's going to be the priority for us. If there's anything surplus left after that, then we will look at buyback as well as possibility. Because Piyush, our belief is that once we are able to reduce the holding company cost, which is the next question of yours, we should be also the debt. We should be able to basically pay whatever dividend we can get from our operating companies back to the shareholders. That should give better earnings on a sustainable basis than one-off special dividend debt. That's, I think, the intent. Now, cost efficiency, you're looking at the corporate center, right? Corporate center.
Yeah.
I was asking about the corporate center.
We do not, I mean, just to give you a brief, we do not provide the exact cost of the corporate center. I think that's pretty much. We've been making effort of realigning with the portfolio structure we have, the role of corporate center. As consequently, we've seen overall headcount in the corporate center coming down from something like 300 to around 160. I think to me, that's a fairly decent headcount to maintain based on the portfolio which we have, including things which require all these exercises on the corporate development which we are doing. We've come down to pretty much half the headcount at corporate center than what used to be a year and a half back.
If I can also add, in addition to the running of the corporate center, I think the corporate center cost can be seen to be a little bit volatile because we also carry all the M&A transaction costs as and when we do it, right? Building on what we have discussed earlier with regards around value elimination, monetization, these will incur costs as and when we undertake those exercises.
Yeah. I mean, that's an important point. I think Piyush, once we've done these on a run rate basis, you would see much lower costs for the corporate center.
Exactly.
These are inflated because of some of these transactions that we've been redoing.
Got it. Got it. Okay. Thank you. Thank you.
Okay. Thank you for the question.
Louis has got another question, right?
Louis, is that a follow-up question or you are back with your hand raised again?
Maybe he forgot to put down. Let's move to the questions that are posted on the chat box.
Sure.
I'm sure you have a set of questions, but I can wait till after the queue question box too.
Okay. Let's go to the chat questions. So Azbi from BIMB, given your degearing exercise, can you guide what is your gearing target and what is the timeline to achieve that?
I think we just are similar to the previous question. Again, our target that we've gone out externally is to achieve a net debt to EBITDA of 2.5 times by 2026.
Yeah. There is also a question from Chen. Given company target to pare down HoldCo debt, will you continue to buy back or tender Axiata long-end US dollar bond in 2025?
Yeah. I think we've answered that question as well, right?
We are looking at doing another version of the liability management exercise that we did last year, and that will probably happen sometime in quarter three.
It is not that we will continue doing that. I think we still think our bondholders like holding our long-end bonds. I think that will be. This is more given the price at which these bonds are trading. We think there is an opportunity to do that exercise at this point.
Yeah. Also a commitment to utilize the proceeds from the Indonesia transaction for the purpose of paring down.
Okay. I think that is clear. Let us move back to Louis from Citi. Over to you again, Louis, please.
Hi. Yeah. Thanks. I had three questions. This time on the Oppo side.
On Robi, we noticed that Q on Q, even the margins have dropped due to increased staff costs and network costs. Are these the run rates going forward, or is there room for cost reduction going into the full year? Second question is on Dialog. Have assets already achieved the ideal EBITDA margins at these levels? It is already quite healthy, or is there room for further improvement? Last question is on EDOTCO tenancies in Malaysia, Cambodia, and Indonesia. We are down slightly Q on Q. What is driving that, and is it an aberration and we go back to growth? In general, is the first quarter a slower period for EDOTCO tenancies? Thanks.
Do we have Riyaaz? I mean, do we have? I think it is better the CEOs answer these questions.
Yeah. Exactly.
So we do have.
We can also hear what they have to say.
Exactly.
We do have Riyaaz on the line. Perhaps we can ask him to answer the Robi question, please.
Yes. Yeah, good morning. When you look at quarter on quarter, probably you saw deterioration in the margins, but that is because we had some one-offs in Q4 last year. Going back to our run rate, we should be very close to a good 49% EBITDA on a running basis. That is our guideline going forward.
Great. For the Dialog question, I believe we do have Supun online. Supun, please.
Yeah. Hi. Good morning. I think we had fairly good traction post the merger, and market is also stabilizing. That is reflected in the EBITDA as well as PATAMI improvements. We are confident of maintaining and even further improving provided the macro fundamentals remain strong.
Having said that, I think overall the Sri Lankan economy has improved post-crisis and in a steady state. Inflation as well as interest rates are fairly stable. We see continued stability and potentially further upside in the EBITDA going forward.
Thank you.
Thanks, Supun. Lastly, is EDOTCO, is Adlan able to take the question on Cambodia?
Yeah. I think, Louis, if you look at our colo ratio, it has been going up over the years. I mean, in total, as a group, you can see that it has improved from 1.66 to 1.68. I think if you look at generally, we do at the group level, colo is about two times of our build to suit, right? That is the ratio that typically we are aiming because our focus on yield, and hence we drive colocation, right? In the case of Cambodia, hello?
In the case of Cambodia, I think last quarter, you actually see that we terminated one of the ISPs in terms of this thing due to non-payment. I think this is with regards to CTEL, right? I think they were probably not going to be able to continue their operation in the market, right? That is probably a one-off coming from Cambodia. Yeah. Essentially, if you look at tenancy ratio, in countries, it is also quarter-by-quarter movement. It is also a ratio between your build-to-suits and colo as well, right? Sometimes if you do more build-to-suits than colo, your tenancy ratio will dip slightly for that particular quarter, right? In total, we typically deliver colo two times more than build-to-suit, yeah, at the group level in total.
Thanks, Adlan.
Okay. Thank you, Riyaaz, Supun, and Adlan. Are there any further questions?
If there is not, then perhaps I will hand to Vivek for his closing remarks.
Thank you, Clare. First of all, thank you everyone for joining this call. I know it is early, quite early for some of you, but thank you for that. I think, as I said, it is just not about quarter one. I think we also want to keep emphasizing on our strategy going forward and how do we create value for our shareholders. I think we will continue to update on our implementation of strategy as we go along in different quarters of this particular year. Thank you. Thank you everyone for joining us.
Thank you.