Jakarta, May 11th, 2020. PT XL Axiata Tbk (XL Axiata) had a good start to 2020 with a decent performance despite a challenging business environment with intense competitive pressures. Revenue increased by 9% compared to the same period last year (YoY) and 1.3% compared to the previous quarter (QoQ) in a seasonally tough quarter. EBITDA increased by 40% compared to the same period last year (YoY) driven by the increase in revenue, cost efficiencies and implementation of IFRS16 while net profit also increased significantly to IDR 1.5 trillion.
President Director & CEO of XL Axiata, Dian Siswarini said, “The first three months of the year are typically a seasonally weak quarter for operators. However, the positive momentum from 2019 coupled with our innovative product proposition and strong network quality has carried us through for a continued strong performance in Quarter-1 2020”.
XL Axiata has succeeded in increasing the penetration of its smartphone users to 86% at the end of the quarter. This has helped drive data revenue up by 17% compared to the same period last year (YoY) and now revenue from data accounted for 91% of the company's total service revenue.
Total data traffic during the quarter increased by 41% compared to the same period last year (YoY) and 7% compared to last quarter (QoQ). Since people started to work and study from home in Mid-March, amidst the outbreak of Covid-19, data traffic has increased by 15% compared to the same period prior to the working from home. At the same time, XL Axiata has launched a program that provide free 2GB daily quota to its customers and the public who need data services to help work or study from home.
XL Axiata customers declined slightly to 55.5 million this quarter due to intensed competition. However, the average revenue per customer (ARPU) remained stable at 36 thousand quarter on quarter (Qoq) and increased by 6% compared to 1Q 2019. In addition, XL Axiata also introduced several new offering during the quarter, namely, the UNLIMITED TURBO XTRA Feature and 1 hour Unlimited for XL prepaid customers, along with the Edu-Pack package for AXIS customers, and myPRIOHOME for Priority (Prioritas) post-paid customers.
Positively, operational expenses decreased by 10% YoY and 13% QoQ. This is contributed by the lower infrastructure costs (-23% YoY and -24% QoQ) as a result of adopting the new IFRS 16 accounting standard. Meanwhile, interconnection fees and other direct costs fell by 9% YoY due to the decline interconnection from legacy voice & SMS traffic. Also, Marketing costs were down by 1% YoY due to the shift in spending to digital.
XL Axiata has continued to invest in expanding and improving its network quality across Indonesia. Towards the end of March 2020, XL Axiata has more than 133 thousand BTS, an increase of 9% compared to last year (YoY), of which over 43 thousand are 4G BTS. XL Axiata‘s 4G network is now present and serving customers in 449 cities or districts spread across various regions of Indonesia. Despite COVID-19 pandemic, network roll-out has continued according to plan with no interruption and majority are expected to be delivered before Lebaran.
The company's balance sheet remains strong with a higher cash balance from the tower sales proceed that was concluded by the end of the quarter. Net debt to EBITDA is below 1x and the company's Free Cash Flow (FCF) increased by 82% YoY to IDR 1.4 trillion despite continued network investment.
At the end of March 2020, XL Axiata does not have any debts in US dollars, with a composition of 46% of total debt on a floating interest rate with spread maturities.
Preparations to Anticipate for Covid-19
Relating to the Covid-19 pandemic, management has prepared various anticipatory measures to ensure telecommunications services can continue to serve the public in the current state of emergency.
Since the work from home policy was implemented on March 17th 2020, the Company has also implemented a Business Continuity Plan to ensure the customer service transition can be carried out smoothly by the company. For the purposes of network rollout, everything continues according to plan. There are no significant delay, with all network equipment and materials are delivered on time.
“The Covid-19 pandemic will accelerate the switch to digital. Many things that were previously done manually are now done digitally. Moreover, as people continue to work and study from home, demand for internet access will continue drive up data traffic. During this period, we have also seen traffic movement out of Greater Jakarta (Jabotabek) area to other regions. Hence our continued investment in building our network across Indonesia for the last 3 years especially in outside Java will give us advantage against some of our peers. Because we believe that increasing data demand must be in line with network quality improvement,” Dian explained.
Since the outbreak of Covid-19 in Indonesia, XL Axiata has implemented a number of social programs. This includes the launching of a the free 2GB daily data access in order to access applications that support work and learning activities from home, along with government health websites, e-learning platforms, and online university channels to help customers remain productive. Donations have also been made in the form of cash and non-cash such as personal protective equipment (PPE), free services for Covid-19 mitigation officers, as well as strengthening networks in the area around the Covid-19 referral hospital. In total to date, XL Axiata has supported more than IDR 100 billion in kind for all Covid-19 prevention programs, including free data access.