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Axiata Sees Good Operational Improvement with Continued Traction in Data

2011-11-30

- Healthy QoQ Performance with Revenue +4%, EBITDA 3% and PATAMI 7%; subscribers at 187 million

- Celcom posts highest revenue quarter ever crossing the RM1.8 billion mark for the first time, posting strong 3.2% QoQ growth

- XL maintains strong data momentum with 50% YTD growth in data services revenue

- Dialog sees positive performance trajectory with QoQ revenue growth of +5% and EBITDA +14%

- Robi Continues growth trajectory with highest quarterly revenue; YTD growth of 18%

Kuala Lumpur, November 30, 2011 – Axiata Group Berhad, (“Axiata”), today announced its unaudited results for the third quarter of 2011. Building on its steady performance in key markets, Malaysia and Indonesia, continued recovery in Sri Lanka and good growth in Bangladesh, Axiata posted healthy year-to-date1 (“YTD”) Revenue, stable EBITDA (“Earnings Before Interest, Tax, Depreciation and Amortisation”) and PATAMI (“Profit after Taxation and Minority Interests”). On a quarter-on-quarter2 (“QoQ”) basis, strong growth was seen across all OpCos3.

YEAR-TO-DATE PERFORMANCE

Continued stable performances were seen across the Group, recording healthy revenue growth despite an uncertain global economy, forex fluctuations and softening markets. This was on the back of robust data business in Malaysia and Indonesia and higher active subscribers and usage in Sri Lanka and Bangladesh. Revenue was up 5% YTD to RM12.2 billion. At constant currency, revenue would have been up 8%. EBITDA dipped marginally by 0.2% in the same period partly due to the strengthening Ringgit against local currencies. At constant currency EBITDA would have grown 2.2%.The strengthening Ringgit and marked depreciation of the Bangladesh Taka, higher costs incurred to support network expansion for data as well as a change in revenue mix, did have an impact on margins, which dipped 2.3 percentage points to 43.6%.

Underlying PATAMI, stripping off the one-off gains from the share disposal in XL4 and gains from the Spice merger exercise, was RM2 billion, up 5% on the back of continued operational improvements across the main OpCos. Actual PATAMI, inclusive of extraordinary gains last year, decreased by 16%.

Axiata ended the quarter in a strong financial position, with balance sheet significantly strengthened. Net Debt to EBITDA ratio now at 0.56 x from 0.62 x at end 2010.

Strong growth was seen in regional mobile subscribers with a 26% increase YTD to 187 million, despite softening of key markets.

QUARTER-ON-QUARTER RESULTS

On a QoQ basis, Group performance reflected good overall improvement. Axiata saw a revenue growth of 4% QoQ, driven by sustained operational improvements by all key OpCos. EBITDA improved by 3%, in the same period, on the back of positive contributions from all key OpCos. Similarly, underlying PATAMI for the quarter was up 7%.

DATA LEADS GROWTH AT CELCOM AND XL

Malaysia

Celcom5 maintained steady growth amidst competitive market conditions with revenue up by 4% YTD, driven primarily by data. EBITDA in the period was up by 1%. Continuous improvement was seen in profitability, up a strong 10% in the period. On a QoQ basis Celcom saw strong growth, posting the highest quarterly revenue ever, crossing the RM1.8 billion mark for the first time. Core business remained stable, despite reducing global trends, on the back of Celcom's focus on voice resuscitation which saw a 3.5% increase QoQ.

Growth in non-voice services remained strong. Data now contributes 36% to revenue, a hike of 14% YTD, supported by increased usage and encouraging take up of smartphones and tablets. Mobile Broadband saw continued traction despite intense competition with a 25% YTD growth in revenue. Subscribers surpassed the 900,000 mark, a rise of 15% YTD. With focus remaining on data for future growth, Celcom will continue to prioritise this segment via innovative data offerings and services as well as internal process enhancements and IT capability geared towards the changing environment.

Indonesia

Momentum continued at XL, driven by strong growth in data. On a YTD basis, revenue grew by 8% to IDR14 trillion and EBITDA for the period increased by 3% to IDR7 trillion with margins at 50%. Similarly, PAT was up by 5% to IDR2.2 trillion.

Data represents a tremendous opportunity for XL and diligent focus on growing the business saw a 50% growth in data revenue as compared to a year ago with increased adoption and usage. Data usage has grown rapidly by 278% with users now representing more than half of subscribers with 24.1 million users. With increased traction in data, XL has accelerated their infrastructure deployment ramping up its 3G rollout with 61% increase of Node Bs YoY and more than 50% of capex is earmarked for data business.

To support the growing data business, XL is transforming the organization into a data centric organization with a strong emphasis on service management to drive greater focus and performance. A dedicated organisation has been established to focus on Mobile Data Services and new business. Alongside this, a new service management group has been

formed which aims to focus on improving end to end service experience for customers, including a reliable and good quality network and enhanced service delivery.

CONTINUED MOMENTUM IN SOUTH ASIAN OPERATIONS

Sri Lanka

The Group's Sri Lankan operations Dialog6 Group (“Dialog”) continued its positive performance trend of recent quarters, with improved margin and profitability seen in the quarter through aggressive de-scaling of operating cost structure. Revenue was up 10% on a YTD basis, mainly from improvements in the mobile business and in particular, increased consumption of voice and mobile broadband. EBITDA was up by 5%, from persistent focus on cost rescaling strategies and PAT up by 4%. Mobile subscribers also increased by 4% YTD, despite heightened price competition across the sector.

On the backdrop of robust EBITDA performance, Dialog continued to record positive Free Cash Flows (FCF) for the seventh consecutive quarter. In line with this, Dialog maintained a structurally strong balance sheet with the Group's Net Debt to EBITDA ratio improving from 1.5x to 0.99x YTD.

Bangladesh

Bangladesh, one of the Group's fastest growing markets, showed sustained growth momentum despite competitive pressures. Robi7 continued to post double digit numbers for both revenue and EBITDA, 18% and 13% respectively on a YTD basis. Healthy revenue growth was mainly on the back of aggressive subscriber growth. PAT however, was down by 4%, due to the marked depreciation of the Taka against the USD.

Amidst aggressive market competition, Robi continued to grow subscriber base with a 37% YTD increase.

REGIONAL AFFILIATES

India

Idea maintains growth despite hyper-competition and saw its subscriber base exceed 100 million up by 35% YTD. Similarly, revenue was up an impressive 25% and EBITDA by 35% in the same period. PAT however, was impacted due to increase in depreciation and interest expenses.

Revenue grew 2% QoQ, with stronger growth in “newer” circles, driven by higher realisation per minute and higher VAS revenue.

Singapore

M1 continued its steady increase in customer base, despite the highly saturated market, adding 41,000 new customers in the third quarter. In tandem, mobile broadband and smart phone customer base increased with non-voice services contributing 35.4% of revenue, up from 31.5% a year ago.

Revenue was up 4% on a YTD basis, due to higher service revenue and handset sales, and EBITDA margin held steady at 42.1%. PAT up 6% to SGD126.4 million in the same period.

COMMENTARY

Axiata Chairman, Tan Sri Dato' Azman Hj. Mokhtar said “It has been a tough year with competition intensifying amidst a difficult operating landscape. Despite this the Group is still recording healthy growth. We will continue to maintain our resilience by focusing on fundamentals and our long term objectives of ensuring strong profit and cash, whilst looking at more revenue opportunities”.

Dato' Sri Jamaludin Ibrahim, President and Group Chief Executive Officer of Axiata added “I am quite pleased to see sequential improvements across almost all OpCos in the third quarter, despite an increasingly difficult operating landscape. Particularly pleasing are the positive results seen at Celcom in voice, which saw good QoQ growth on the back of aggressive voice resuscitation campaigns. Although traditional voice revenues are slowing in our more mature markets, data growth has been extremely encouraging. Celcom and XL in particular have seen good traction in the segment. To support growth opportunities in data, we are embarking on several initiatives which include our IT transformation, across the Group, as well as investment in data network. This will have an impact on EBITDA in the short term but we are confident of success in the longer term. The Group is financially sound, with steady cash flow generation.”

MOVING FORWARD

“We retain our ROIC target for 2011 whilst moderating our revenue and EBITDA growth expectations, given the challenging operating landscape, including competition and revenue mix as well as the strengthening Ringgit. Alongside this, we will re-emphasise on internal efficiencies as we continue to invest in the early growth phase of our transformation into a data centric company beyond voice” concluded Dato' Sri Jamaludin Ibrahim.

ABOUT AXIATA

Axiata is one of the largest Asian telecommunication companies, focused on high growth low penetration emerging markets. Axiata has controlling interests in mobile operators in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia with significant strategic stakes in India and Singapore. India and Indonesia are amongst the fastest growing markets in the world. In addition, the Malaysian-grown holding company has stakes in non-mobile telecommunication operations in Thailand.

The Group's mobile subsidiaries and associates operate under the brand name ‘Celcom' in Malaysia, ‘XL' in Indonesia, ‘Dialog' in Sri Lanka, ‘Robi' in Bangladesh, ‘HELLO' in Cambodia, ‘Idea' in India and ‘M1' in Singapore.

The Group's, including its subsidiaries and associates, has over 187 million mobile subscribers in Asia. The Group revenue for 2010 was RM15.6 billion. The Group provides employment to over 25,000 people across Asia. Axiata's vision is to be a regional champion by 2015 by piecing together the best throughout the region in connectivity, technology and talent, uniting them towards a single goal: Advancing Asia.

Axiata was awarded the Frost & Sullivan 2009 and 2010 Asia Pacific ICT Award for Best Telecom Group and the Telecom Asia Best Regional Mobile Group 2010 and 2011 for its operations in multiple Asian markets.

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