KUALA LUMPUR (Feb 23): Axiata Group Bhd is planning a RM7.1 billion worth of capital expenditure in 2023 from RM6.6 billion last year, with the major investment for expansion of its Indonesian venture and its tower business.

The group intends to keep both the Digi and Celcom brands in the market for now, with the network integration seen happening over the next two years.

“I think a large part of the capex will be skewed towards Indonesia, where we will see investments happening both in the broadband business, as well as the mobile business,” said joint acting group chief executive officer Vivek Sood during its financial results briefing on Thursday (Feb 23).

“The second [largest] part of capex would go to (the) tower business… we are getting new opportunities in our existing markets,” Vivek said, adding that other segments would see little change in terms of capex allocations.

Axiata owns 63% in tower operator edotco Group Sdn Bhd.

On the Celom-Digi merger that was concluded in November 2022, Vivek said “things are pretty much in place” for integration activities, but for now, Axiata intends “to keep the two brands in existence”.

“So both Digi and Celcom will continue. We have not decided whether that will eventually come to one brand or will continue as two brands in the future,” he said.

The brands are now housed under the merged entity CelcomDigi, which was established on Dec 1, 2022. 

“But at this point in time, we do think there is value in keeping both brands,” he said. “The business will continue and the consumers will be so, as if nothing has been changed at this point,” Vivek explained.

“I think there is a very strong alignment and plans to deliver on the integration activities which have been put in place, so far so good in terms of organisational integration, as well as the ability to deliver on synergies and implementation plans,” he added.

Meanwhile, Axiata anticipates revenue to grow up to 5% in the financial year ending Dec 31, 2023 (FY2023), and targets earnings before interest and tax (Ebit) to grow at 7%-8% or higher, as part of its headline key performance indicators (KPIs) targets.

This could be achieved from growth across “most of” Axiata’s markets, Vivek said. Aside from Malaysia and Indonesia, Axiata also operates mobile networks in Bangladesh, Sri Lanka, Nepal and Cambodia.

In the fourth quarter ended Dec 31, 2022 (4QFY2022), Axiata recorded a core net profit of RM219.5 million from RM103.9 million — but the latest quarter saw a massive RM4.15 billion goodwill impairment across its mobile operations in Nepal, Indonesia and Sri Lanka, compared with RM338.44 million the year before.

However, 4QFY2022 net profit came in at RM9.97 billion from RM116.02 million, as it recorded a one-off gain of RM13.5 billion from the Celcom disposal as part of the Celcom-Digi merger.  

Quarterly revenue increased by 9.34% to RM5.83 billion, from RM5.34 billion a year before.

The group declared a second dividend of five sen per share. This brings its total FY2022 dividend to 14 sen per share, about 47% higher than 9.5 sen paid in FY2021.

For the full year FY2022, Axiata’s annual net profit stood at RM9.77 billion, from RM881.90 million in FY2021, while annual revenue also rose 8.66% to RM21.73 billion, from RM19.99 billion.

The higher revenue is contributed by higher contributions from all operating companies, except Dialog Axiata in crisis-hit Sri Lanka and Nepal-based Ncell Axiata Ltd.

Axiata’s share price closed two sen or 0.64% higher to RM3.15 on Thursday, giving it a market capitalisation of RM28.91 billion. The stock has lost 19.6% over the past one year, from RM3.92.