Summary of Analyst Report: Axiata Group Bhd, target price RM 5.71, Neutral - CIMB Research

Axiata announced last Thursday it has established a multi-currency sukuk programme that enabled it to raise up to US$1.5bil or the equivalent in other currencies based on prevailing interest rates when funding needs arise.

The funds would be used for “general corporate purposes”.

It has obtained central bank and regulatory approvals.

The programme allows airtime vouchers, which represent an entitlement to a specified number of on-network calls on its subsidiaries, to be included as a trust asset.

We understand this helps to lower the financing cost.

We view Axiata's establishment of a sukuk programme positively as it allows the group to raise funds quickly when the need arises.

While there is no immediate need, the facility allows Axiata to raise up to US$1.5bil or the equivalent in other currencies.

With this programme in place, Axiata can raise funds within weeks, saving about two months of regulatory approvals and credit rating.

We also believe this is not a prelude to a special dividend payout.

Axiata remains a neutral with unchanged forecasts and sum of parts-based target price.

While there are no imminent merger and acquisition deals on the table, we believe Axiata remains interested in strengthening its position by being a consolidator in Bangladesh and India.

We also gather that Axiata is keen to take control of India's Idea Cellular in which it currently owns 19.3%, if the opportunity emerges.

However, we do not expect Axiata to make any significant moves in India until the regulatory issues clear up.

Other investment opportunities include Myanmar, in our view.

Switch from Axiata to Telekom Malaysia for growth or StarHub for dividend yields.

Axiata's share price has run up significantly in recent weeks, possibly due to a flight to quality and dividend-yielding stocks.

Source: www.thestar.com.my

Axiata's Celcom will launch Samsung Galaxy S3 (a.k.a. Samsung Galaxy S III) in Malaysia on 31 May

Celcom Axiata Bhd (Celcom) announced it will offer Samsung Galaxy S III to customers in Malaysia end of this month with a range of plans tailored for Celcom customers.

To celebrate the launch of this latest Samsung model, Celcom welcomes all customers to its launch that would be half on May 31 at South Court, Mid Valley Megamall at 10am.

The launch would also concurrently take place in the Shopping Complex at Sutera Mall, Johor Bharu and Aeon Station 18, Ipoh, Perak.

Those who dress in blue might walk away with Samsung Galaxy S III at the price of RM888.

“Backed by the widest most stable network coverage plus continuous network upgrades and armed with unbeatable competitive packages, customers will get to enjoy the best smartphone experience in Celcom Territory,” Celcom chief marketing officer Zalman Aefendy Zainal Abidin said in a press release yesterday.

The latest Samsung Galaxy S III cames with new intelligent features that were not only user friendly but also remarkably robust with maximised processing power, uninterrupted performance enriching users experience through its organic

design inspired by nature.

It is designed with 4.8 inches HD Super AMOLED display, the 8MP camera and 1.9MP front camera captures special moment instantly, 1.4GHz Quad-core application processor, 16GB internal memory and 50GB dropbox.

Source: www.theborneopost.com

Axiata valued its 19% stake Idea Cellular at 120 rupees although the shares were traded at only 80 rupees over the past four months, no impairments necessary as Axiata takes long term future prospect into consideration - President and CEO Datuk Seri Jamaludin Ibrahim

(AXIATA opening stock price today (24.5.2012) was RM 5.44)

*Idea Cellular closed at 75 rupees yesterday.

Axiata Group Bhd said there is no need for the company to make further impairment charges on Idea Cellular Ltd for now, even though its investment's market value has shrunk by about one-third.

However, it does not discount the possibility of a further impairment in the future, depending on how the India telecommunications industry progresses.

Axiata, via a merger between Idea Cellular and Spice Telecoms in 2008, acquired 19 per cent stake in Idea Cellular for about 143 rupees (RM8.03) a share in 2008.

Unfortunately, Idea's share price has been on a declining trend since the merger.

Last year, Axiata decided to book a RM1.1 billion impairment on Idea. Post impairment, Axiata's 19 per cent stake in Idea is now valued at about 120 rupees (RM6.73) a share.

For the past 12 months, Idea shares have been trading at an average of about 90 rupees a share and for the past four weeks, Idea shares were traded at about 80 rupees a share.

"For now, there's no need for further impairments, but we will continue to evaluate periodically.

"When we evaluate, it's not over a short-term basis, it's a long-term basis where we look at the whole prospect of the company and industry," said president and chief executive officer Datuk Seri Jamaludin Ibrahim after the company's annual general meeting yesterday.

Some Indian mobile operators have written off part of their investments after the country's Supreme Court order to cancel 122 mobile permits in February this year.

Among the biggest "casualties" was Uninor - a company majority controlled by Norwegian firm Telenor ASA. Uninor has lost all its telecom licences as a result of the Supreme Court's decision.

As a result, Telenor has reported a 79 per cent fall in its first quarter net profit at 583 million kroner, due to a 3.9 billion kroner (RM2.14 billion) write-off.

UAE-based Etisalat Group also announced that it will write off about US$820 million (RM2.57 billion), as part losses incurred from its India operations.

On how Axiata plan to utilise its cash pile, the company said it is expected to use part of the cash to reduce borrowings that are incurring higher interest rates, and will continue to be prudent on how it spends the money.

Source: www.btimes.com.my

Axiata Group's quarterly net profit rose 3% to RM 565.6 million despite impact on foreign currency translation

(AXIATA opening price today (23.05.2012) was RM 5.38)

Axiata Group Bhd made a net profit of RM565.6mil or 7 sen per share for the first quarter ended March 31, 3% higher than the RM548.4mil or 6 sen per share for the same period a year earlier.

Revenue was also higher at RM4.26bil against RM3.94bil last year.

In a statement, the telco which has a regional footprint noted that positive trends continued across all of its operating companies during the quarter under review.

“Moving forward, we are confident of delivering profitable growth and driving differentiation through innovative digital services and products. The results of this quarter are certainly a step in the right direction,” president and group chief executive officer of Axiata Datuk Seri Jamaludin Ibrahim said in the statement.

In a traditionally flat quarter all its operating companies performed well, especially against the industry, with most recording the highest ever first-quarter results, Axiata noted.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 4% to RM1.8bil.

At constant currency, revenue and EBITDA growth would have been higher at 10% and 6% respectively, it said.

Likewise, profit after taxation and minority interests (PATAMI), excluding foreign translation impact, was up 19% to RM652mil.

In the statement, Axiata noted that regional mobile subscribers grew 24% year-on-year to over 200 million.

Celcom, its Malaysia unit, sustained momentum into the first quarter of the year, continuing to show positive revenue growth for the 24th consecutive quarter.

Revenue was up 10%, EBITDA increased by 5% while PATAMI was up 7% in the same period.

The quarter saw Celcom retain its leadership status in mobile broadband amidst increasing competition, with a total of 947,000 broadband subscribers.

Revenue from broadband grew 15% year-on-year, now contributing 11% to total revenue. Strong growth was seen overall in non-voice services, with advanced data (excluding SMS) now contributing 22% to revenue.

In Indonesia, unit XL's revenue increased by 9% year-on-year to 4.95 trillion rupiahs driven by a strong momentum in advanced data which grew 71%, SMS at 18% and voice of 4% year-on-year.

Its Sri Lanka unit, Dialog, recorded strong growth in revenue during the first quarter to register 12.9 billion rupees, a significant increase of 18% year-on-year.

EBITDA was also up 27% in the same period to 4.5 billion rupees. Profit after tax, however, was impacted primarily by the devaluation of the Sri Lankan rupee.

Group profit after tax normalised for the exceptional (non-cash) foreign exchange loss and one-off acquisition expenses were up 85% year-on-year.

In Bangladesh, Robi Axiata Ltd's revenue was up 27% while EBITDA rose 26% year-on-year.

Subscriber soared 40% with profit after tax improving by more than 100% to116 million taka.

In India, Idea Cellular Ltd finished the year strongly as the fastest growing Indian mobile operator with a 27% year-on-year revenue growth, nearly double the industry growth rate. Idea's financial year ended on March 31. EBITDA in the period remained steady up by 26%.

Commenting on the results, an analyst from CIMB Research said they were within market consensus.

Earlier in a note to clients, CIMB Research said first-quarter telco results should be mixed. It downgraded the sector on Monday from “overweight” to “neutral” following its recent downgrade of Axiata.

Source: www.thestar.com.my

Sharp fall of Indian, Indonesian and Sri lankan currencies and regulatory risks in India and Bangladesh to affect Axiata's valuations as overseas units contributes 34% of Axiata's earnings - CIMB Research

(AXIATA closing stock price today (14.5.2012) was RM 5.39)

CIMB Equities Research is downgrading Axiata from Outperform to Neutral given the sharp fall of the Indian rupee, Indonesian rupiah and Sri Lankan rupee in recent months.

"In addition, regulatory risks in India and Bangladesh are rising with potentially exorbitant spectrum prices. These overseas units contribute to 34% of Axiata's earnings and 37% of our SOP valuation," it said on Monday.

CIMB Research said after announcing higher dividends, Axiata's share price has rerated significantly and valuations are no longer compelling.

However, it said that downside risks should be limited by its rising free cashflow.

"Our target price (RM5.48) is maintained. Switch to StarHub or Jasmine," it said.

Source: www.thestar.com.my

Axiata Group's Bangladesh unit Robi Axiata lost RM 55.16 million legal battle against regulator in unpaid taxes, further legal options to be considered - Executive Vice President Mahmudur Rahman

(AXIATA closing stock price today (14.5.2012) was RM 5.39)

Axiata Group Bhd's Bangladesh unit, Robi Axiata Ltd, has to pay the government nearly Tk 1.5bil (RM55.16mil) in unpaid taxes after the mobile operator lost a legal battle against the country's telecommunications regulator.

The Financial Express reported the Bangladesh Telecommunications Regulatory Commission (BTRC) lawyer, Khandaker Reza-E Raquib as saying, victory in the crucial case would also pave the way for the realisation of about Tk 10bil (RM368mil) in unpaid revenue from three other operators.

After a hearing of almost four months, the High Court last Sunday, decided that Robi had no authority to deduct any amount from any account. This included such taxes as the value added tax, late fees and other taxes from the Spectrum Assignment Fee or the Licence Renewal Fee, as these exclusively belonged to the BTRC. The court also said the operator would have to pay a late fee of 15 per cent on the total payable amount as penalty.

Following the judgment, BTRC is now entitled to receive Tk 1.41bil(RM51.85mil) as Spectrum Assignment Fee and Licence Renewal Fee up to Feb 15, 2012, along with the 15 per cent late fee amounting to Tk 5.69mil (RM209,233).

Robi's executive vice president Mahmudur Rahman, told the Financial Express that the company would consider further legal options, after getting a copy of the full judgment in about two weeks.

Source: www.thestar.com.my