Jakarta, August 27th, 2020. PT Axiata Tbk (XL Axiata) has managed to maintain growth amidst increasing competition between data providers and the outbreak of the Covid-19 pandemic. The company's service revenue during the first semester of 2020 was IDR 12.13 trillion, there was an increase of 10% compared to the same period in the previous year. Also, revenue from data services also continued to grow 15% from the same period the previous year (YoY), and at the same time increased its contribution to the company's total service revenue to 91%.
President Director & CEO of XL Axiata, Dian Siswarini said, "We have to admit that the need of the widespread public for internet access to support work and learning activities has helped XL Axiata during the Covid-19 pandemic. Data usage traffic has indeed increased, especially in the early months of this pandemic. However, traffic sloped due to the fact that the purchasing power of customers has weakened along with the decline in general economic conditions, due to the impact of the pandemic. We don't know how long this outbreak will last, so in the future, the challenges and pressures that will be faced by the telecommunications industry, which includes XL Axiata, will still be heavy. And of course, we must still remain optimistic and prepare all our efforts to anticipate for the future.”
In the first six months of 2020, XL Axiata also managed to achieve IDR 6.49 trillion of EBITDA, 37% higher than the acquisition in the first half of 2019. Net profit after tax for this semester was recorded at IDR 1.7 trillion. On a quarterly basis, in the 2nd quarter of 2020, EBITDA also managed to increase by 4% than the previous quarter, and net profit after tax reached IDR 224 billion.
Operating expenses in the first half of 2020 decreased 12% from the same period as the previous year (YoY). This decline could occur due to several factors, one of which is the lower infrastructure cost (-23% YoY) as a result of the IFRS 16 adoption. Another factor was the lower interconnection as the result of decreased traffic noise (-21% YoY). Also, the declining marketing cost could also be a factor (-6% YoY) due to the shift in spending to digital.
Dian added, the decreasing of spending power from the people have given impact to operators and triggered competition. Certain operators have offered cheap data package which aim to maintain and increase traffic and utilized the moment of work from home and online learning. This situation gave operators a more pressure in the current tough position.
Responding to the industry dynamics and the prevailing competition, XL Axiata is cautious and calculative. New products or data packages are presented with thorough consideration based on data analysis of service consumption patterns of valid customers. The results are quite effective and in accordance with the targeted market segments. Data traffic for the first six months of 2020 increased by 45% compared to the first semester of 2019, from 1,531 Petabytes to 2,221 Petabytes. Meanwhile, if calculated per-quarter, data traffic have also increased 22% compared to the previous quarter.
XL Axiata has also succeeded in maintaining the number of customers. As of the end of the second quarter of 2020, the number of customers slightly increased to 55.67 million from 55.49 in the previous quarter. The average income per user or ARPU for this quarter is IDR 36 thousand for prepaid and IDR 111 thousand for postpaid. Mixed ARPU of IDR 37 thousand from (previously) IDR 36 thousand. The penetration rate of smartphone users reached 87% of total customers and is relatively stable compared to the previous quarter which reached 86%.
During the first half of 2020, XL Axiata introduced several new offers, namely the XTRA UNLIMITED TURBO feature and 1 hour Unlimited for XL prepaid customers, and the Edu-Pack package for AXIS customers, as well as myPRIOHOME for Priority postpaid customers.
XL Axiata continues to use digital IT, AI and data analytics to identify the needs of each customer segment for telecommunications and data services. Thus, companies can be more precise in making new service products that are really needed by each customer segment. In addition, product offerings can also be more targeted according to the character of each customer segment.
The Covid-19 pandemic did not prevent XL Axiata from continuing the company’s network building process. Up until the end of June (2020), XL Axiata was recorded to have a total of over 139 thousand Base Transceiver Station (BTS). This number increased by about 10% from the number of BTS in the same period last year. Of that total, as many as 49,744 are 4G BTS. Meanwhile, when viewed from the wide coverage area, XL Axiata’s 4G network has served customers in 456 cities/districts in almost all provinces in the Republic of Indonesia.
In order to prepare for 5G network, XL Axiata also continues the network fiberization process. Up until this moment, the process has reached 60% of the total target in 2020. This fiberization process also supports and helps the improvement of data network quality in each area because one of the benefits of this process is that the transport network capacity becomes larger. Fiberization has proven to be able to improve network quality to support a number of data services with large capacities, such as live video streaming.
From a financial perspective, the company’s balance sheet remains healthy with a higher cash balance after receiving additional sales from towers. Free Cash Flow (FCF) is also at a healthy level, namely IDR 2.76 trillion even though there is an increase in capex to realize the commitment to network development.
Also, XL Axiata currently does not have loans denominated in US Dollar, 45% of which have floating interest with spread maturities.
Future Services
XL Axiata also has not halt in preparing innovative services that can become the foundation of future businesses. One of them being the XL Home Service, which the company continues to improve the quality of its’ services, including expanding its’ network. Broadband services for this family segment have developed new effective ways or models to increase homepass. The results have proven to be effective and have contributed to increasing the number of connections, which currently have reached 65 thousand subscribers.
Up to this moment, XL Home has served customers in numerous major cities, such as Jakarta, Bogor, Depok, Tangerang, Bekasi, Makassar, Balikpapan, Banjarmasin, Denpasar, Yogyakarta, and Bandung. XL Home has built a fiber-optic network that can reach around 350 thousand homepasses.
The next service for the near future that has been prepared is Live.on. This service allows each user to get full control over large data packages or data services with one quota to determine all required applications, network, and usage period. Users will also get maximum access speed, accumulating remaining data up to 1,000 GB. This service is completely digital. XL Axiata hopes that this service will answer customer expectations in the future which has a very dynamic character.
Ready to enter a new order
The management of XL Axiata has prepared various anticipatory steps to face the pandemic in order to ensure the continuity of telecommunication services for the community in the current emergency period. Since the work from home policy, implemented on March 17th, 2020, the company has also implemented a Business Continuity Plan to ensure that the customer service transition can be carried out smoothly. For the purposes of network development, everything is still going according to plan, with no significant delays, with the delivery of network equipment and materials delivered on time.
Since the beginning of the Covid-19 outbreak in Indonesia, XL Axiata has also implemented social programs. Among other things, in the form of launching a free 2GB/day data access program to help people more easily access applications that support work and study from home. Humanitarian donation programs, both cash and non-cash related to the need to deal with the current situation (pandemic), have also been carried out in various regions, including through related government agencies. The total value of assistance provided, both cash and non-cash, reached over (IDR) 100 billion for all Covid-19 prevention programs, including providing free data access.