Malaysia mobile telecommunications operator Axiata Group said Friday that the divestment of a unit in India and a 10% rise in the ringgit hit earnings in the April to June period.
The group, which has a presence in South and Southeast Asia, posted a net loss of 3.36 billion ringgit ($818.78 million) in the fiscal second quarter, compared to a net profit of 407 million ringgit in the same quarter last year. Revenue fell 3.2% to 5.87 billion ringgit.
The reported net loss is partly due to a one-off non-cash provision of 3.4 billion ringgit after divesting a stake in Indian mobile operator Idea Cellular. The divestment was a result of a recent merger between Idea and Vodafone Mobile Services, a consolidation caused by the entry of Reliance Jio in 2016, which shook up the Indian telecoms sector through the offer of unlimited free calls and handset subsidies.
Incumbent operators have since registered write-downs and losses as Jio spent an estimated $40 billion, far exceeding the industry’s total investment in over two decades, on new technologies and 4G network rollouts.
Axiata’s stake in Idea has been halved to 8.17%, rendering it a financial investment and not an associate anymore.
“Our results this quarter will set the stage positively for the future, barring any unforeseen circumstances,” said Jamaludin Ibrahim, the group’s president and chief executive officer, hinting there would be no more write-offs from the Idea divestment.
In addition to the impairment, Axiata’s earnings were also weighed down by a stronger ringgit and tougher competition. Four out of six countries where the company operates logged a decline in revenues — Indonesia, Bangladesh, Nepal and Cambodia. Malaysia and Sri Lanka recorded revenue growth.
https://asia.nikkei.com/Business/Malaysia-s-Axiata-hit-by-India-telecoms-disruption