Jakarta, 8 March 2023. PT XL Axiata Tbk (XL Axiata) sees a number of opportunities that can accelerate business growth in 2023. For this reason, XL Axiata will focus on three pillars of growth, namely convergence services, network expansion, and strengthening customer experience. As for targets, this year, XL Axiata will aim to achieve mid to high single digit revenue growth, EBITDA margin of around 49%, and capex of around IDR 8 trillion.
Dian Siswarini, President Director & CEO of XL Axiata said, "Building on our excellent performance in 2022, XL Axiata will continue to capitalise on a number of positive opportunities that are emerging in Indonesia, to drive and improve the company's performance this year. Firstly, the demand for fixed data services. Second, demand for digital services. Third, acceleration of convergence services. Fourth, enhancing the synergy of digital operations, by leveraging convergence and omnichannel touchpoints, unifying distribution channels, and leveraging the synergy of more than 130 thousand distribution touch points."
In convergence services, XL Axiata focuses on two segments, namely family and business. For the family segment, XL Axiata offers the best digital content, through collaboration with content provider partners. This package also makes it easy for customers to choose a package that suits their family needs. Meanwhile, for the business segment, XL Axiata develops convergence products as part of an integrated digital solution for small and medium enterprises (SMEs).
This year XL Axiata is doubling down on its convergence strategy by adding more features. In addition, XL Axiata is also enhancing its family segment proposition by providing customers with a more comprehensive and relevant ecosystem, such as smart devices, building your own XL package to better suit their needs, and the flexibility to add any XL number to their convergence package. In addition, XL Axiata is also implementing e-SIM which will be launched in the first half of 2023.
In addition, XL Axiata will also increase digital operation synergy, by utilising convergence and omnichannel touchpoints, unifying distribution channels, and utilising the synergy of more than 130 thousand distribution touch points. The strategy is expected to increase XL ONE sales to the family market. Dynamic pricing will also increase the relevance of XL SATU to each cluster in particular. XL Axiata expects to close 2023 with 450 thousand home-connects and 150 thousand customers switching to convergence services.
Regarding the expansion and strengthening of network infrastructure, XL Axiata views that a high quality network will be able to support the provision of various types of services with high quality according to customer expectations. XL Axiata continues to expand its 4G network to various regions, including outside Java, by maintaining the amount of investment. By the end of 2022, XL Axiata will have 144,768 BTS (2G & 4G), with 91,632 4G BTS. BTS fiberization level has reached 54%.
Furthermore, XL Axiata's focus on customer experience continues a programme that has been ongoing for the past two years. The company's efforts to improve the quality of customer experience have been proven to help boost sales and a positive image of a company that cares about customer needs. The steps implemented include ensuring the availability of end-to-end integrated services to customers. Furthermore, XL Axiata also ensures that all customers get a digital and personalised service experience, according to what customers’ need, such as dynamic pricing up to packages and content that match customer interests.
Business opportunities in 2023
Dian Siswarini mentioned a number of positive opportunities in the telecommunications industry in 2023, which XL Axiata can utilise to improve business performance. These opportunities include, first, the demand for fixed data services, where penetration for this service is still quite low. Therefore, there is still great potential for telecommunications operators to achieve high growth in both the consumer and corporate segments.
Second, demand for digital services will remain strong. This can happen because people feel that they have many conveniences with a hybrid lifestyle, whether for work, study, recreation or shopping. The Compounded Annual Growth Rate (CAGR) for data consumption of mobile service users is also projected to reach 16% per year until 2026. Third, customers want services that are both simple and complete. This is an opportunity for convergence products that can provide a complete experience for XL Axiata customers with higher ARPU and quality. The public is also increasingly educated about the benefits of convergence services.
In order to take advantage of these opportunities and realise business growth, operationally, XL Axiata will focus on three things, namely digitization, cost leadership, and a healthy balance sheet. Regarding digitization, XL Axiata will implement the latest technology to support business operations. Digitization and automation will be applied to a number of processes to achieve operational excellence. Furthermore, the utilisation of big data and advanced analytics is carried out in customer service so that the solutions provided can be right on target, according to what consumers need.
Furthermore, to deal with rising costs next year, XL Axiata is implementing strict and measurable cost control to reduce operational costs. In addition, the company also continues to look for areas to make cost savings, such as increasing digital adoption, and energy savings, among others. This step is in line with efforts to maintain a healthy balance sheet to maintain the company's strong financial position. This is done by improving the gearing ratio (debt/EBITDA) and having no foreign currency debt, as well as strengthening the company's free cash flow position so that cash flow remains in a positive position.
XL Axiata Achieves Growth in 2022
The year 2022 was a remarkable period for XL Axiata with consistent execution of its digital transformation strategy and converged services. In general, throughout 2022, XL Axiata managed to again record higher business growth than the industry. XL Axiata's total revenue was IDR 29.2 trillion, growing 9% higher than the same period last year (YoY), supported by continued product delivery and excellent network quality. Meanwhile, total data and digital services revenue reached IDR 26.6 trillion, or 91% of the company's total revenue.
All of this growth had a positive impact on EBITDA which grew 7% from the same period the previous year (YoY) with a margin of 49%, to IDR 14.2 trillion. In addition, XL Axiata also posted growth in normalised net profit (NPAT) which increased by 1%, to IDR 1.1 trillion.
In 2022, XL Axiata also managed to retain customers by focusing on continuing to improve better customer experience and convenience, so that in that period the company managed to increase blended ARPU (average revenue per user) to IDR 39 thousand from IDR 36 thousand in the previous year's period, with total customers reaching 57.5 million customers.
One of the keys to XL Axiata's growth is personalisation of offerings and services. As a result of the personalisation strategy, supported by digitalisation and network quality improvement, XL Axiata's NPS (Net Promoter Score) value has increased significantly to 4.5x, driving service usage and ultimately helping to increase revenue.
In terms of XL Axiata's financial statements as of the end of 2022, it shows a healthy condition, where gross debt was recorded at IDR12.1 trillion, with a gearing ratio of net debt to EBITDA of 0.49x. Net debt was recorded at IDR 6.9 trillion. In addition, XL Axiata has no USD-denominated debt. 64% of current borrowings have floating interest rates and 36% have fixed interest rates. Free Cash Flow (FCF) was at a healthy level, with an increase of 54%, to IDR 5.2 trillion.