Statement from the President & GCEO

It has been four years since we first introduced our Commitment to Development in line with our broader goal of Advancing Asia in Axiata’s Sustainability and National Contribution Report 2013. This year, we reaffirm this promise and continue delivering on our sustainability goals to bring the best in innovation, connectivity and talent to our 320 million customers across Asia. 2016 may have been a challenging year in terms of business and the operating environment, but it was also a very exciting year for us as we saw several of our longer-term sustainability initiatives begin to have greater impact.

The year marked our entry into Nepal following the completion of our acquisition of Ncell, the country’s number one mobile operator, which further strengthened our presence in Asia to ten countries. As we welcomed and integrated Ncell to the Group, we have included them for the first time this year in our Sustainability Report. In 2016, Axiata contributed RM57.2 billion (USD13.8 billion) to the collective GDPs of our operating countries, supported 1.1 million jobs and ensured connectivity for approximately 320 million subscribers with a network that covers close to two billion people across our ASEAN and South Asian footprint.


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Statement from the President & GCEO

It has been four years since we first introduced our Commitment to Development in line with our broader goal of Advancing Asia in Axiata’s Sustainability and National Contribution Report 2013. This year, we reaffirm this promise and continue delivering on our sustainability goals to bring the best in innovation, connectivity and talent to our 320 million customers across Asia. 2016 may have been a challenging year in terms of business and the operating environment, but it was also a very exciting year for us as we saw several of our longer-term sustainability initiatives begin to have greater impact.

The year marked our entry into Nepal following the completion of our acquisition of Ncell, the country’s number one mobile operator, which further strengthened our presence in Asia to ten countries. As we welcomed and integrated Ncell to the Group, we have included them for the first time this year in our Sustainability Report. In 2016, Axiata contributed RM57.2 billion (USD13.8 billion) to the collective GDPs of our operating countries, supported 1.1 million jobs and ensured connectivity for approximately 320 million subscribers with a network that covers close to two billion people across our ASEAN and South Asian footprint.


 

Commitment to Beyond Short-Term Profits

As a committed investor in ten countries across Asia, with investments extending beyond 20 years in Malaysia, Bangladesh, Cambodia and Sri Lanka, and over ten years in Indonesia, Axiata takes a strategic and long-term view of all its business decisions. Our decisions on investments, capital expenditures, products and services and building a digital ecosystem go beyond short-term profits and are based on long-term value creation for customers, communities and stakeholders we serve.

Ensuring Rural Connectivity
Our capex investments in network infrastructure for connectivity in these countries go beyond high-density areas and cities; they extend to far-reaching rural areas as well, underlining our commitment to delivering services beyond commercial motivation. As at the end of 2016, more than 30,000 or 44% of our total base transceiver stations (BTS) are located in rural regions.

Focusing on Digital Inclusivity
In addition to network coverage, we are committed to digital inclusivity through the development of relevant and accessible digital innovations such as M-Commerce, M-Money, and M-Insurance services, which have significant impact on customers’ lives. For example, we provide affordable insurance coverage for less than ten cents (USD) a day to 2.2 million M-Insurance subscribers across the Group. In Sri Lanka through Dialog, two rupees per day translates to coverage worth one million rupees for accidents and 100,000 rupees in cases of natural death. We continue to explore similar opportunities for digital inclusivity through our digital services arm, Axiata Digital.

Creating a Digital Ecosystem
Representing the largest and most active digital corporate venture capital fund in Malaysia, the Axiata Digital Innovation Fund (ADIF) has now committed RM30 million in funding across 12 digital companies. Following ADIF’s investment, the investee companies have reported an average year-on-year revenue growth of 240% and are contributing to a vibrant local digital ecosystem. In March 2017, Smart launched a similar fund in Cambodia. Next year, we aim to establish a digital fund in Sri Lanka.

Mobile for Development
On the global stage, Axiata and its Operating Companies (OpCos) are part of the global mobile development effort through our role in the GSMA Foundation, which represents the interests and governs the development of the telecommunications industry. We steer mobile development in key areas such as the Connected Women Initiative promoting the use of mobile services to open up possibilities for women in the areas of education, healthcare, enterprise and business. Our OpCos, Dialog and Robi, are among the first GSMA members to have committed to Connected Women Initiative projects in Sri Lanka and Bangladesh respectively.

 

Commitment to Nurturing People

We believe that the sustainability of our business depends on the quality of our people, the skills of our workforce and the leaders we develop, both internally and externally.

Building a Talent Factory
Internally across the Group, we spent RM26 million on our internal talent development programmes. This ensures a sustainable pipeline within the Group for talent to move into key leadership roles within the organisation. The Axiata Group Accelerated Development Programme and OpCo Accelerated Development Programme are focused on our internal talent development to provide them with the skillsets and capabilities for the Group’s long-term success, as Axiata transforms into a New Generation Digital Champion. With these programmes, we now fill the majority of key management positions in our OpCos, including the CEO’s position, with internal talent. At present, five out of eight CEOs at Axiata’s major subsidiaries are internally developed talents.

Developing Future CEOs
In terms of our external focus on talent development and nurturing future CEOs, our flagship Axiata Young Talent Programme (AYTP) grooms local students into becoming future CEOs. Axiata has committed RM100 million over ten years to fund the programme. Since AYTP’s inception in 2011, over 1,120 students have benefitted with more than 100 AYTP alumni securing job placements in top multinational companies and government-linked companies. In 2016, we graduated our first cohort of 26 students from the School Leadership Development Programme. At the same time, our OpCos are adopting and deploying their own corporate responsibility programmes focused on education, such as XL Future Leaders in Indonesia which was launched in 2015.

Inclusivity and Diversity in the Workforce
We are also driving the principles of inclusivity and diversity in all areas of talent management. Our employees are made up of over 40 different nationalities with women making up 30% of our total workforce and 16% of senior leadership positions. We have zero-tolerance policies against discrimination to ensure that our people are remunerated fairly regardless of their ethnicity, religion or gender, with no instances of discrimination accepted.

Uncompromising Integrity and Exceptional Performance Culture
In 2014, Axiata introduced the culture of Uncompromising Integrity and Exceptional Performance (UI.EP) across the Group as its guiding principles and common values. We conduct training workshops that gauge and assess behaviour standards based on judgement tests. We also incorporate a UI.EP behavioural component in our employees’ annual performance review which contributes to their overall performance evaluation.

Engaging our Employees
Across the Group, our employee engagement survey also includes questions on their level of UI.EP understanding from which a Sustainability Engagement Index (SEI) is constructed. In 2016, our SEI measured score for the Group was 86%, which is within the range of the Willis Towers Watson Global High Performance Companies Norm.

 

Commitment to Process Excellence and Governance

Axiata believes in the ethos of doing “the right thing, doing it right, and in the right way”. This includes applying global best practices to drive efficiency, upholding strong governance to ensure fair and balanced business operations and having strong processes for responsible business conduct.

Upholding Strong Governance
Our adherence to compliance and governance has seen us go beyond mere compliance to incorporate best practices in our various policies such as the Axiata Regulatory Compliance Framework and the establishment of a Cyber Security Operations Centre (CSOC) in 2016. In working with suppliers and vendors, Axiata has established a Group-wide Supplier Code of Conduct where all our business practices and policies are standardised and which we make certain all our vendors adhere to. Our overarching UI.EP culture is further applied in our business dealings.

Working and Developing Local Vendors
Operating in a diverse footprint across Asia within developing economies, we recognise the importance of sourcing from the local market. Our OpCos run their own vendor development programmes with their suppliers and business partners. In 2016, 41% of our procurement spend was on local vendors. As long-term investors, our local procurement is part of our nation-building efforts and we have seen its multiplier effect on economies. We work together with our vendors to develop process and operational excellence based on our Group Procurement Policy. Through our Group Procurement Assessment, three suppliers were recognised at the inaugural Axiata Supplier Awards 2016 for their outstanding performance.

Digitising Everything
In becoming a New Generation Digital Champion, Axiata is committed to the digitisation of its internal processes to optimise efficiencies within the Group and, on a larger scale, to implement digital tools in the management of our network infrastructure. On this journey we are also introducing digitisation in our products to improve customer experience through innovations such as Dialog’s pioneering Smart Home offering which leverages on the Internet-of-Things (IoT).

 

Commitment to Planet and Society

As a Group, we are mindful of the environmental impact of our industry. We are also cognisant of the social role we play in our operating countries and are committed to community development in our markets, especially in times of adversity.

Ambitious Emissions Targets
The Group has identified an ambitious target of reducing the carbon footprint of our passive infrastructure by 40% from 2013 levels by 2018. Our commitment to greener operations is being spearheaded by the edotco Group, our infrastructure and tower company. By the end of 2016, edotco had 480 solar sites and remote monitoring systems deployed on approximately 7,000 of the 25,000 towers managed by edotco. These initiatives, together with improved tower designs, remote surveillance technology and the use of alternative power sources - also known as our GOOD (Get Out of Diesel) programme - have reduced our carbon emissions by 29% and 25% in Malaysia and Bangladesh respectively.

Investing in Disaster Response
A major focus for the Group is investing our resources and technology in disaster response, as many of the countries we operate in are prone to natural disasters such as tsunamis, earthquakes and floods. The Group-wide Disaster Readiness Programme (DRP) identifies processes, procedures and roles of OpCos in responding to natural disasters in these countries. In 2016, Ncell signed a landmark Memorandum of Understanding (MoU) to provide SMS disaster warning alerts in Nepal.

Recognition

Axiata’s sustainability performance has been acknowledged at both local and international levels. Ncell received the Global Mobile Award for “Mobile in Emergency or Humanitarian Situations” in 2016 from the GSMA. Robi also received the “Best Mobile Innovation for Education and Learning” from the GSMA for its 10-Minute School Programme.

At Group level, we received the Procurement Leaders Award: External Collaboration in 2016 which recognises our collaboration with suppliers and vendors. Our corporate governance practice was acknowledged at the Minority Shareholder Watchdog Group’s (MSWG) Malaysia-ASEAN Corporate Governance Awards 2016 where we received the Excellence Award for ESG Practices for the fourth consecutive year. Our sustainability disclosures continued to receive recognition at ACCA’s Malaysia Sustainability Reporting Awards (MaSRA) 2016 with a Commendation Award for Innovation.

Moving Forward

Axiata is intent on making a long-term positive difference in the markets where we operate - from the macro level in terms of contributing to GDP and jobs creation to the micro level where we develop local capabilities and provide assistance to targeted communities. We leverage on our role as a tech innovator and a leading mobile innovator to empower and enrich stakeholders, and use our expertise to steer mobile development towards areas that will best enrich and empower the less fortunate in our societies. However, we also recognise that there is much more that we can do.

Sustainability is the responsibility of all. As one of the first companies in Malaysia producing a sustainability report, we welcome the new guidelines introduced by the Malaysian stock exchange regulator requiring companies to manage and disclose their sustainability impacts. As for Axiata, we remain committed to our sustainability goals and will continue to acknowledge that the way we integrate and measure our deliverables will become increasingly important as we transition to become a New Generation Digital Champion.

I would like to thank all our stakeholders - regulators, governments, investors, employees, management and the Board - for their support, guidance and contributions in helping us to this point. I look forward to another productive year in delivering on our sustainability promises and as we continue on to the next phase of our sustainability journey.

 

TAN SRI JAMALUDIN IBRAHIM
President & Group Chief Executive Officer