XL Axiata Achieves Solid Performance In The Third Quarter Of 2022, Network Quality Drives Revenue Growth

JAKARTA - PT XL Axiata Tbk (XL Axiata) achieved solid performance during the first nine months of 2022. Revenue increased 9 percent higher than the same period the previous year (YoY) to IDR 21.62 trillion.

EBITDA also increased by 5 percent YoY to IDR 10.38 trillion, with a margin of 48 percent. Meanwhile, net profit after tax and normalized profit after tax and minority interest (NPATAMI) increased 17 percent to IDR 976 billion.

This solid achievement is still supported by the continuous improvement in the quality of the XL Axiata network, which makes customers more comfortable when using various telecommunication and data services.

XL Axiata's President Director and CEO, Dian Siswarini, said that since the beginning of 2022 his party has been working hard to realize the fastest and most stable internet in all service areas in Indonesia.

"Of course, this is not an easy job, but we have to make this happen because fast and stable internet is an urgent need for customers in all regions. This is also the key that we can remain competitive in the midst of increasingly fierce industry competition. The results are quite good until the first nine months of 2022, our traffic has increased by 26 percent compared to the same period the previous year. This means that customers feel that the XL Axiata network and services we provide are getting better," said Dian in a written statement, Monday, November 7.

The more comfortable customers on the XL Axiata network are reflected in the increase in data and digital service revenues throughout the first nine months of 2022 by 9 percent YoY, and grew to reach IDR 19.71 trillion. Revenue from digital data and services accounts for more than 91 percent of the company's total revenue.

Meanwhile, the total number of XL Axiata subscribers reached 57.4 million, with the portion of prepaid service subscribers amounting to 55.9 million. Customers using 4G reached 92.2 percent.

Meanwhile, blended ARPU (average revenue per user) in the third quarter of 2022 was recorded at IDR 40 thousand, an increase from IDR 37 thousand in the same period the previous year. This shows XL Axiata's ability to maintain healthy customer development.

XL Axiata's efforts to improve quality and expand its network have continued throughout the last nine months, continuing the same program in previous years. For this reason, XL Axiata applies various appropriate supporting technologies, including Smart FDD 8T8R technology to increase throughput by up to 200 percent compared to 4T4R technology, and at the same time save energy costs by up to 26 percent.

In addition, XL Axiata also continues to reorganize technology (refarming) by turning off the 3G network, and now it has reached 95 percent, with the remaining 1,989 units of 3G BTS still operating.

XL Axiata's seriousness in strengthening its network can also be seen from the allocation of 70 percent of the total IDR 9 trillion capital expenditure (capex) funds for network expansion. By the end of September 2022, XL Axiata has a total of more than 145 thousand 2G and 4G BTS, with the number of 4G BTS increasing significantly to 90,174 units. This number increased significantly compared to the same period the previous year.

The improvement in the quality of the XL Axiata network in 2022 also received recognition from one of the most trusted survey institutions in the telecommunications industry, OpenSignal. Based on the results of an independent survey conducted by the agency in last July 2022 period, XL Axiata was ranked first in the category of downloading speed and video access experience (video streaming).

Faster internet access has a positive impact on the use of digital applications, including company-owned applications, namely “myXL” and “Axisnet”. The two applications, which offer various service packages as well as digital means of serving customers, have each experienced an increase in monthly active users since the start of the pandemic.

Thus, the increased investment that XL Axiata has implemented has proven to be very supportive of improving business performance, especially in terms of cost efficiency and opportunities to increase product sales.

In line with the company's vision to become the leading converged operator in Indonesia (#1 Converged Operator in Indonesia), XL Axiata also continues to strive to introduce converged services to the Indonesian people, while increasing its benefits.

As a result, the penetration of this converged service has reached 32 percent, which means that the demand for this product is strong. The recent acquisition of Linknet will greatly support the development of this converged product in the future. In addition, XL Axiata has also completed the acquisition of Hypernet. This step will further strengthen XL Axiata's portfolio of corporate services (B2B).

Throughout the first nine months of 2022, operating expenses increased by 14 percent YoY. The increase in operational costs was influenced by several factors, including costs for marketing and sales, regulatory costs for frequency usage and USO costs, as well as interconnection expenses and device bundling costs.

XL Axiata's healthy financial position as of 9M 2022, gross debt was recorded at IDR 16.1 trillion, with a gearing net debt to EBITDA ratio (including finance lease) of 2.78x. Net debt was recorded at IDR 10.31 trillion.

XL Axiata has no US dollar-denominated debt. As much as 70 percent of existing loans have a floating interest rate (floating) and 30 percent have a fixed interest rate. Free Cash Flow (FCF) is at a healthy level, with an increase of 15 percent, to IDR 4.1 trillion.

To finance network development and encourage revenue growth, the value of capitalized capex during the first nine months of 2022 was maintained at the same level as the previous year at IDR 6.32 trillion. In 2022, XL Axiata plans to continue to allocate capital expenditures with a value of around IDR 9 trillion.

There are a number of positive opportunities in the Indonesian Telecommunications Industry in 2022 that XL Axiata can take advantage of to improve future performance. These opportunities are first, the demand for fixed data services, where penetration for this service is still quite low, which means that there is great potential for telecommunication operators to achieve high growth in both consumer services and the corporate segment.

Second, the demand for digital services will remain strong because people feel that they get a lot of convenience with a hybrid lifestyle, whether for work, study, recreation, to shopping. CAGR for data consumption of cellular service users is projected to reach 16 percent until 2026.

Third, customers want a service that is both simple and complete. This is an opportunity for a converged product that can provide a complete experience for XL Axiata customers with a higher and higher quality ARPU.