Rising Costs Hit XL Profit

By webadmin on 11:04 am Feb 02, 2013
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Francezka Nangoy

XL Axiata, the country’s third-largest telecommunications provider, reported a slight decline in 2012 profit as costs rose amid tight competition in an arena that includes Indosat and Telkomsel, the biggest mobile phone operator in Indonesia.

In a filing to the Indonesia Stock Exchange (IDX) on Friday, XL Axiata said its net income fell 3.2 percent to Rp 2.74 trillion ($281 million) last year, from Rp 2.83 trillion a year earlier. Its revenue, however, rose nearly 15 percent to Rp 20.97 trillion last year, from Rp 18.26 trillion a year earlier.

In a separate statement on Friday, XL Axiata said the revenue growth was led by an expansion of its data business, which saw a 50 percent increase from last year. Revenue from short message service users grew 16 percent, while revenue in voice services increased 6 percent.

“The strong data traction reflects the huge opportunity in data and XL is well positioned to capture future growth,” Hasnul Suhaimi, the company’s president director, said in a press statement.

He said data was the fastest growing segment, with those services accounting for 15 percent of total revenue in 2011 and growing to 20 percent in 2012. Data usage more than doubled over that period.

“We delivered what we set out to achieve through our strategic investment in data, deploying more than 11,000 BTS [base transceiver stations] to support mainly our data ambitions,” he added. The new BTS installations in 2012 were nearly twice as many as the 6,082 units added in 2011.

Hasnul, in his press statement, did not address the cause of the decline in profit. The company’s financial statement indicated that rising expenses were the main reason for the profit dip. Its total expenses increased 20 percent to Rp 16.62 trillion last year, from Rp 13.82 trillion in 2011.

Notable increases were seen in infrastructure expenses, which rose 35 percent, and a 54 percent jump in interconnection costs — the expenses involved with connecting the customers of one service provider with the customers of another.

The company statement said XL Axiata spent Rp 10.2 trillion on capital expenditures in 2012, which were mainly funded internally. Its total debt increased to Rp 13.5 trillion, from Rp 10.7 trillion a year earlier.

Shares of XL Axiata jumped 6 percent to Rp 5,300 on Friday, outpacing the Jakarta Composite Index’s 0.6 percent increase on the same day.