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Jakarta, August 5th 2021 PT XL Axiata Tbk (XL Axiata) returned to growth in the second quarter of 2021. This achievement was marked by an increase in total revenue of 8% QoQ to IDR 6.73 trilion, an increase compared to the first quarter of this year. In addition, EBITDA also grew by 8% QoQ, with a margin of more than 50%. In the second quarter, the company recorded a net profit of IDR 395 billion or an increase of 23%, while contributing to the total net profit of the first half of this year of IDR 716 billion.

XL Axiata President Director & CEO Dian Siswarini said, "In the midst of the pandemic and a challenging industry competition throughout the second quarter of 2021, we have managed to improve our business performance with growth across all financial metrics. This positive achievement is due to the strong sales and the increase in traffic that we achieved during the last Eid period. At the same time, we continue to focus on digitizing all business lines in-line with our Operational Excellence strategy, including reducing costs to maintain profitability and increase efficiency. We also offer the right products according to customer needs by optimizing the use of data analytics to do upselling through our omni-channel sales channels.”

Dian added, throughout the first semester of 2021, the company managed to reduce operating expenses by 2% compared to the same period last year (YoY). The decrease in operating costs occurred in interconnection costs and other direct costs by -22 % YoY, mainly due to lower interconnection as a result of legacy services traffic decrease (SMS and voice). In addition, labor costs also fell by -6% YoY due to provision reversal in Q1. Infrastructure costs decreased by 13% YoY. Meanwhile, marketing costs increased by 31% YoY.

On the network side, XL Axiata also continues to expand its broadband data network to various corners of the archipelago, especially in areas outside Java. In addition, the fiberization process continues to be expanded to improve the quality of data services. Until the end of semester 1-2021, the company has succeeded in increasing the total number of BTS to 156,709 units, or an increase of 12%. The number of 4G BTS rose to 65,658, from 49,744 in the same period the previous year. Meanwhile, for the area served by 4G reaches a total of 458 cities/regencies.

In terms of products, in the second quarter of 2021, the company launched new products, one of which is the XL SATU Fiber package, which is a pioneer of convergence services in Indonesia. This product combines XL cellular services with XL Home fixed broadband services. Meanwhile, digitization efforts to increase sales of XL Axiata products are also continuously carried out, starting from detecting the needs of each customer based on service usage profiles, providing digital tools that make it easier for customers to buy products, to providing promos according to customer profiles.

Improve of quality and coverage of the XL Axiata network, provision of products that suit customer needs, as well as digitization for the increase of sales, have succeeded in driving increased traffic in data usage. It was noted that during the first half of 2021, total traffic increased by 33% YoY to 2,963 Petabyte. This increase in traffic led to an increase in data revenue. In terms of QoQ, data revenue in the second quarter of 2021 increased by 9% to IDR 5.90 trillion. The growth in data revenue was able to increase the contribution to total service revenue to 94%.

The increase in service quality in general also contributed to the increase in the number of customers. Until the end of the second quarter of 2021, it was noted that the total number of subscribers increased to 56.77 million, from the previous as many as 56.02 million in the first quarter. The blended ARPU also increased from IDR 35 thousand in the first quarter to IDR 37 thousand in the second quarter. Meanwhile, the smartphone penetration rate has increased from 90% in the first quarter to 91% in the second quarter.

The company's current balance sheet also remains healthy with a relatively high cash balance. Free Cash Flow (FCF) is at a healthy level of IDR 1.91 trillion, then the company's management is also able to maintain a healthy balance sheet with a well-managed and stable net debt level. Net debt increased by 19 % YoY, to IDR 8.09 trillion. The net debt ratio to EBITDA is also still good, reaching 0.6x. The company has no USD denominated debt. As much as 71% of the existing loans have floating interest rates and the payments are managed for the next two years.

To finance network development and drive revenue growth, XL Axiata has spent more on capex. Until the end of semester 1-2021, capitalized capex increased by 22% YoY to IDR 4.57 trillion.

Business Opportunity

Several positive opportunities within the Indonesian Telecommunications Industry are targeted. One of them is related to the possibility of operator consolidation, because it will have a healthy impact on the telecommunications industry. Furthermore, the digital way or working, school and everyday life will create long-term demand for data. Another opportunity is an increase in the demand for fixed broadband (FTTH) services, where XL Home services are available with an increasing service area. In addition, the existence of the Job Creation Law is also positive in the long term, including for the efficiency of capex and opex in providing 5G services.

On the other hand, there are several challenges that must be faced in 2021. One of them is the continued intense competition between operators. The increasing intensity of competition since the end of 2020 has had an impact on the growth of the industry. In addition, the Covid-19 pandemic is likely to continue to overshadow the second half of 2021. Various restrictions imposed by the government will slow down economic recovery.

Covid-19 Handling

In facing Covid-19 pandemic, the company has implemented several initiatives to protect employees and business continuity. These initiatives include vaccinating more than 97% of employees and more than 70% of employees' family members, providing in-house doctors to serve Covid-19 tests for more than 8,000 employees, and continuing the work from home (WFH) policy that has been implemented since March 2020. Furthermore, a 24-hour hotline for employees who need company support is also provided, implementing daily health protocols, providing PPE for front-liners, implementing active digital work methods for all activities, and organizing a Let’s Learn Program (LLP) for pandemic situations.

The company has also carried out several initiatives to make it easier for customers, including providing data quota subsidies for students to support government programs, providing free access to Hotlines 112, 117 & 119, and increasing capacity at 6,000 4G BTS around referral hospitals for Covid-19.  XL Axiata also provides a 15% discount for the upgrade plan of XL Prioritas up to 100 GB. Furthermore, the company also ensures the availability of SIM Card in 15.000 credit shops/MSMEs and adds the digital sales channels and for refills.

Meanwhile, initiatives for the community include organizing the Vaccination Center of Indonesia Bangkit to help vaccine injection for more than 60 thousand residents in Greater Jakarta. In addition, the company also organizes other social programs, including smartphones donation for underprivileged students, supporting virtual learning for

underprivileged students in West Java & West Sulawesi, as well as donation for communities affected by natural disasters in various regions. There is also a support program for SMEs.