Jakarta, February 15th, 2021. Despite intense competition and in the midst of Covid-19 pandemic situation, PT XL Axiata Tbk (XL Axiata) managed to record solid growth. XL Axiata achieved an increase in service revenue of 6% from 2019 (YoY). In addition, profitability was also well maintained, where EBITDA increased by 31% YoY, and the company again posted a normalized net profit of Rp 679 billion.
In 2020, the contribution of revenue from data reached 92%, with smartphone penetration reaching 89% which is the highest in the industry. Customer acquisition remain solid where the average revenue per subscriber or mixed ARPU increased from Rp. 35,000 to Rp. 36,000 from the previous year. Meanwhile, 4G data network development continues, and until the end of 2020 it has reached 458 cities/regencies in various regions in Indonesia with more than 54 thousand 4G Base Transceiver Station (BTS).
President Director & CEO of XL Axiata Dian Siswarini stated, "Throughout 2020, we focused on our Operational Excellence strategy to drive business digitization by implementing automation and simplicity. At the same time, we also continue to build intimacy with our subscribers, by ensuring that both brands, namely XL and AXIS, achieve a strong NPS (net promoter score) in the targeted subscriber segments through various products that suit their needs, as well as continuous improvement of network quality. Despite the pandemic, we ensured that the company's business continuity is not disrupted by adapting to new norms."
Operating expenses at the end of 2020 decreased by -15% YoY, which was driven by a reduction in infrastructure expenses of -30% YoY, which was a result of IFRS 16 adoption. Interconnection and other direct expenses also decreased -25% YoY mainly due to lower interconnection due to a decrease in legacy (Voice and SMS) traffic. Meanwhile, marketing expenses decreased -8% YoY due to the shift in spending which is now increasingly moving to digital channels.
On the network side, data traffic throughout 2020 increased 47% YoY from 3,320 Petabytes to 4,869 Petabytes. Meanwhile, if calculated per quarter, traffic at the end of the fourth quarter, data traffic increased 8% QoQ. The increase in traffic was also driven by the increase in the total number of subscribers, to 57.89 million, an increase from the previous quarter of 56.88 million.
The reallocation of 3G to 4G capacity, 2020, was also carried out by the company in line with the decrease in traffic in the use of 3G services due to a strong adoption of 4G where 3G now accounts for less than 10% of total traffic. As a result, the company took a one-off depreciation charge to reduce the life of useful 3G assets. This makes the underlying asset base more reflective of the business and will generate depreciation savings that will increase future profitability.
Throughout 2020, XL Axiata introduced a number of new offerings. Among other things, for prepaid service subscribers, XL Xtra Unlimited Turbo feature, and Unlimited 1 hour. For postpaid subscribers, there are Prio Flex and unlimited myPRIO. For AXIS subscribers, there are Edu-Pack, Owsem 48GB + 30 days Unlimited Games, and 24-hour Bronet 8GB for 7 days. In addition, XtraBelajar package also has been launched as a support for students and college students in order to support the Distance Learning (PJJ) program.
The company also continues to use digital IT, artificial intelligence and data analytics to identify the needs of each subscriber segment for telecommunications and data services. Thus, the company can be more precise in making and tailoring new service products that are needed by each subscriber segment. In addition, product offerings can also be more targeted, according to the needs of each segment.
The Covid-19 pandemic has not prevented XL Axiata from continuing its network rollout. Until the end of 2020, XL Axiata was recorded to have a total of more than 144 thousand BTS. This number has increased by approximately 11% YoY. Of that total, 54,297 are 4G BTS. When viewed from the wide coverage area, XL Axiata's 4G network has served subscribers in 458 cities/regencies in almost all provinces in Indonesia.
In order to prepare the network towards 5G, XL Axiata also continues the network fiberization process. This fiberization is to support 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 several 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 addition from sales of towers. Free Cash Flow (FCF) is also at a healthy level, which is Rp 6.46 trillion or an increase of up to 76% YoY. XL Axiata currently does not have loans denominated in US Dollar, 67% of which have floating interest and not simultaneous maturities.
Ready to Take Advantage of Opportunities in the Future
XL Axiata sees several positive opportunities in the Indonesian Telecommunications Industry. One of them is related to the possibility of operator consolidation, which will have a healthy impact on the Telecommunication Industry in general. Furthermore, through an increasingly digital lifestyle with work and school from home, this will create structural and long-term demand for data. Another opportunity is an increase in demand for fixed broadband (FTTH) services, in which XL Axiata already has XL Home services with an increasing service area, as well as increasing connections. Finally, XL Axiata sees strong momentum this year to continue expanding its network outside Java as a sustainable investment.
In carrying out digital transformation in company operations, XL Axiata has carried out several strategic initiatives. In addition to the implementation of Zero Touch Operation platform, initiatives that have been implemented include Google Cloud - Hybrid-Cloud, 5G-Ready Cloud Core, Customer Identity and Access Management (CIAM), SAP S/4 HANA Cloud, Omnichannel Customer Value Management (CVM), and Multi-Channel Campaign Management (MCCM).
To provide a better experience for subscribers, XL Axiata has also launched a simplified and easier to use myXL application which can personalize the offering to each subscriber. The next growth avenue is Live.On, which allows each user to get full control over large data package data services with one quota to determine all required applications, network, and usage period.
CEO PT. XL Axiata, Tbk