Over the last 10 years, we have witnessed a convergence of new digital technology and innovation which is rapidly transforming the world. The mobile device is becoming embedded in all aspects of our personal and professional lives, powerfully indicative of the digital disruption taking place across all industries, particularly in telecommunications. While this digital transformation is bound to create waves within the geopolitical and socioeconomic sphere, it also opens doors to exciting opportunities for governments and organisations to capitalize on this new digital landscape to create a more inclusive society.
Our growing presence in ASEAN and South Asia puts us in a strategic position to leverage on the digital platform to fulfil our mission of ‘Advancing Asia’ through connectivity, innovation and talent. We stand by our ambition to become a New Generation Digital Champion by 2021 and in achieving that realisation, sustainability remains a key focus area in all that we do.
Commitment Beyond Short-Term Profits
Long-Term Investor in All our Markets
Axiata continues to be a flag-bearer for Malaysia on the international front. We pride ourselves on being the leading investor of long-term growth in our markets where our investments in digital internet and technology for over two decades have helped to create access, foster inclusion and drive innovation. This is testament to our focus on not only growing our operating footprint, but being a partner that plays a fundamental role in the sustainable development of a nation’s digital ecosystem.
Across the Group, we have invested USD2.8 billion in capital expenditure in 2017, in our drive to increase connectivity, enhance reliability, and facilitate access across our network. As we expanded our network coverage and made connectivity more affordable to diverse social segments, our footprint grew in tandem, now reaching more than 1.3 billion people. We increased 4G population mobile coverage across the Group with more than 44% of our base station sites situated in rural communities, which will narrow the digital divide. We are able to digitally connect rural and urban communities and enable real and tangible impact in their daily lives for the longer term.
Driving New Digital Ecosystem
Since the launch of the Axiata Digital Innovation Fund (ADIF) in 2015, we have been actively part of the dynamic Malaysian startup scene. With a target fund size of RM100 million, ADIF is Malaysia’s largest corporate venture capital fund, with the objective of creating Malaysia’s next digital champions, especially from the Bumiputera segment. To date, ADIF has invested RM43 million into 14 Malaysian companies with 60% representing Bumiputera technopreneur startups. ADIF has also contributed to the creation of more than 4,000 jobs and generated revenue of RM67.2 million since its launch.
Beyond the Malaysian shore, we have launched similar funds in Sri Lanka through the Dialog Axiata Digital Innovation Fund (DADIF) and in Cambodia through the Smart Axiata Digital Innovation Fund (SADIF), with fund sizes of USD15 million and USD5 million respectively.
Connecting the underserved through Digital Inclusion
Our digital services portfolio has contributed significantly to enhance the creation of a digital ecosystem built around the idea of digital inclusion. Our OpCos have worked tirelessly to understand local challenges, and explore the potential that digital services can bring. The ‘Govi Mithuru’ service in Sri Lanka reaches over 400,000 farmers with digital services to improve agricultural practices. Robi’s 10 Minute School provides free online education to over 200,000 students every day in Bangladesh. Celcom’s partnership in ‘Desamall’ targets to bring 1,000 rural SMEs to the online marketplace.
One of the challenges evident was the lack of access to financial services by certain segments of society. We capitalised on the rise in mobile connectivity to provide customers with access to financial services, particularly targeting micro-enterprises that are typically excluded from traditional financial services and transact only on a cash basis.
In early 2017 we launched Boost as an e-wallet app in Malaysia which has since seen a take-up of approximately 2.2 million users and more than 11,000 payment touchpoints, 50% of which comprise of cash-only merchants. Aptly named, this is a much needed ‘boost’ for the lower income business owners who can leverage on e-wallet for business transactions. As we expand our digital financial portfolio, the micro business communities can leverage on tools to better access markets, improve efficiencies, increase income levels and contribute to building the economy.
Commitment To Nurturing People
Building Future Leaders
As digital services rapidly transforms and disrupts industries, the challenge to attract, train and retain new pools of skilled digital talent and build digital capacities and skillsets become an imperative in the modern workforce.
We believe the long-term sustainability of the Group requires investment towards developing our talent, encouraging innovation, and identifying future leaders developed and immersed in the Modern, Agile and Digital (M.A.D) ways of thinking and working. Over the next three years we will invest USD6 million to scale up employees’ digital expertise across all levels.
In 2017, we rolled out a digital transformation programme on adopting a digital first mind-set in all our efforts. At every level of the organisation, we engaged, listened and challenged our employees to adopt new ways of thinking and working.
We organised our first ‘Digital Jam’, Asia’s largest employee online activation, to demonstrate our conviction of building a M.A.D. organisation. The Jam was an online activation and engagement event with over 9,000 employees in six countries simultaneously engaged in understanding the future of digitisation, and involved in a range of exploratory activities. We invested in Lynda.com to allow our employees to have access to learning online anytime, anywhere. We launched the “Workplace” platform, enabling employees to engage each other across the Group and share best practices.
Now in its seventh year, the Axiata Young Talent Programme (AYTP) continues in its momentum to nurture young leaders of the future, with 1,400 students involved in the programme since inception. With a commitment of RM100 million over 10 years in Malaysia, AYTP is anchored on a holistic framework and aimed at building socially responsible and competent young adults, instilled with values, attitudes and leadership skills of a future CEO. The XL Future Leaders continues to be one of the leading youth leadership programmes in Indonesia. In 2018, we hope to roll out the programme in one more country.
COMMITMENT TO PROCESS EXCELLENCE & GOVERNANCE
Best Practice in our Value Chain
We regard our suppliers as an integral part of all our business operations to help shape innovative products and ensure customer satisfaction. In 2017, we reviewed and revised our Supplier Code of Conduct as part of our continued efforts to improve governance and to adopt evolving best practices of responsible business. The revised Supplier Code of Conduct increases governance of data privacy, cybersecurity, digitalisation, anti-money laundering and conflict of interests.
We are committed to develop local vendors and partners as part of our nation building initiative. In Malaysia, over 50% of our procurement are sourced from local vendors. Following the success of Celcom’s Local Partner Development Programme to build capacity among Bumiputera business partners, we created the Axiata Partner Development Programme (APDP) which will further support Malaysian companies to become regional and global champions. We target to support and cultivate four National champions, two Regional Champions and one Global Champion by 2020.
Transparency and Accountability
At Axiata we continue to strongly uphold the principles of transparency and accountability in all aspects of our governance practices. We constantly strive to enhance our business processes through open and transparent internal processes, engaging with third parties to encourage them to adopt processes that are transparent, ethical, and fair. In 2017, we updated our governance structure to align with our New Generation Digital Champion ambition. We received further recognition once again at the annual Malaysia–ASEAN Corporate Governance Index 2017 Awards recognising our governance structure.
Digitisation and Modernisation
The Group continues with its comprehensive digitisation programme focused on ensuring our core processes and interaction with our customers to be fully digitised. We have developed a framework mapping eight core digitisation initiatives across our operations, and have made significant progress in the areas of analytics and IT modernisation.
COMMITMENT TO OUR PLANET & SOCIETY
Reducing our Carbon Emissions
As a regional champion with presence in 11 markets and an expanding footprint of users across global digital platforms, we are committed to reducing the environmental impact of our operations. In 2017, we utilised 27.9 million GJ of energy, and emitted 6.1 million tonnes of CO2e. We aim to cut our carbon emissions by 40% per site by 2018, from 2013 levels, and as such, will review our performance at the end of 2018 and engage with stakeholders before announcing a new reduction commitment in line with our peers.
Over the years, we have rolled out various initiatives to increase energy efficiency and reduce our carbon emissions. In 2017, edotco Group constructed four bamboo telecommunication towers in Bangladesh to demonstrate innovation in the use of natural resources, which is both cost and carbon efficient. We continue to make headway in our ‘Get Out Of Diesel’ programme which saw the installation of an additional 210 green energy sites. It is estimated to reduce our emissions by 24% per green energy site.
In 2017, many communities in countries where we operate were badly affected by floods. As founding signatory partners to the GSMA Humanitarian Connectivity Charter, we stand ever ready to support all stakeholders by harnessing the reach and resilience of our mobile network before, during, and after a disaster.
Our OpCos in Nepal and Sri Lanka provided vital support to local government agencies by broadcasting over eight million SMS alerts to warn communities of impending floods, potentially saving many lives and livestock. They also enhanced their services post disaster by providing free SMS, relaying messages to families and friends, and increasing limits on credit top-ups. As part of our three-year RM300,000 in total partnership with Mercy Malaysia, we dispatched humanitarian missions to areas that were badly affected by Cylcone Mona in Bangladesh and Sri Lanka.
Raise Living Standards
We see ourselves as integral to the fabric of the communities where we operate. We recognise our responsibilities and expectations of communities to support issues that are above and beyond our core business. In each of our operating companies, we champion sustainable development initiatives based on identified needs.
We cannot do it all alone. We need partners who share our values and determination to bring about change and impact to communities. From sharing electricity powering our base stations to funding scholarships for the brightest of the nation’s next generation, we do our part to help meet the ultimate aim of the United Nations Sustainable Development Goals, which is to leave no one behind.
Axiata is committed to enhancing its sustainability programmes to deliver long-term value to its customers and stakeholders in pursuit of our vision of Advancing Asia.
In 2018, we will focus our efforts to roll out the Axiata Sustainability Roadmap 2.0, which will guide us to enhance sustainability governance and integrate sustainability strategy within our core business. The roadmap will be linked to relevant targets and indicators of the UN Sustainable Development Goals to demonstrate our commitment in being not just a national champion, but a major contributor to the economic and social development of the region.
Last but not least, I would like to thank our partners for their spirit of collaboration. It is through our diverse partnerships where we work to understand the needs of our stakeholders and leverage on technology to bring about innovative solutions, and drive towards building a sustainable and digitally advanced Asia.
TAN SRI JAMALUDIN IBRAHIM
Managing Director/President & Group Chief Executive Officer