Rising Costs Hurt Indonesian Mobile Operator XL Axiata’s Profit
Muhamad Al Azhari
Net income at XL Axiata, the country’s third-largest mobile phone operator, fell 12 percent in the first quarter due to rising operational costs, a financial statement released on Monday shows.
Net income fell to Rp 667 billion ($72.7 million) in the first three months of this year, from Rp 756 billion in the same period in 2011.
Its financial statement shows that company expenses soared more than revenue growth, jumping 17 percent to Rp 3.84 trillion. Revenue increased 9 percent, to Rp 4.95 trillion.
The biggest contributor for the rise in expenses was listed as “other operating expenses” — expenses that include the costs of renting telecommunication infrastructure, utilities, advertising and promotions, and sales commissions. Other operating expenses rose from Rp 1.3 trillion to Rp 1.7 trillion.
Analysts said stiff competition in the market for voice calls and text messages eroded the earnings of the telecommunications company, driving up operating costs.
XL Axiata said the contribution of data service revenue to total revenue was 18 percent during the quarter, in increase of 12 percent on a year ago.
“We are encouraged by our efforts on mitigating the substitution from voice to data with a positive year on year growth in voice for the first time in the last four quarters,” XL Axiata president director Hasnul Suhaimi said.
The company’s data users now number 27.9 million, an increase of 50 percent year-on-year, and account for 60 percent of the company’s subscribers.
XL Axiata’s BlackBerry subscribers have grown 185 percent year-on-year through a variety of service packages and accompanying discount prices.
XL Axiata’s realized capital expenditure in the third quarter was Rp 1.76 trillion.
In March, the company struck a new loan agreement, accessing a Rp 1 trillion facility from Bank Central Asia, contributing to an increase in the company’s total outstanding debt to Rp 11.5 trillion from Rp 9 trillion.
XL Axiata is 66.6 percent owned by Malaysia’s Axiata Group.
Shares in Axiata fell 1.8 percent to Rp 5,400 in Monday trading in Jakarta.