XL suffers net loss

after acquiring Axis

XL Axiata, the countrys second-largest mobile
operator, saw its bottom line slip into the red
in the first half of this year due to rising costs
and currency volatility, as well as its
acquisition of the heavily indebted Axis
Telekom Indonesia.
XL reported Thursday that it rounded up the first half with a net loss of Rp 482.52
billion (US$41.26 million). It was a steep fall compared with the Rp 670.43 billion
net profit the company earned during the same period last year.

However, XL registered a 12.24 percent year-on-year (y-o-y) increase in revenue to
Rp 11.55 trillion from the Rp 10.2 trillion the previous year, which was significant
growth compared with the 1.68 percent increase it booked in the first half of 2013.

The surge in revenue, however, could not offset the rising costs and currency
volatility, which took a large chunk from the companys earnings, XL president
director Hasnul Suhaimi explained.
XLs net loss is the result of the rupiahs depreciation against the US dollar during
the first half, as well as rising interest costs related to the Axis acquisition, Hasnul
added.

Meanwhile, the companys total operating expenses jumped by nearly 19 percent to
Rp 7.28 trillion in the first half of the year, up from Rp 6.13 trillion last year. The
highest increase came from infrastructure costs, which rose by 42.7 percent y-o-y to
Rp 4.01 trillion.

In contrast to its first-quarter financial improvement, during which XL saw its
foreign exchange (forex) gains pull up its net income, XL suffered forex losses of
Rp 516.1 billion by the end of the second quarter.
The losses in forex grew by more than four times compared with Rp 112.88 billion
in the first six months of 2013, the companys published financial statement
revealed.

In addition, XLs financial report stated that, as a result of additional loan funds to
acquire Axis, the companys net financing costs went up by nearly 80 percent to Rp
727 billion, from Rp 406 billion recorded in the same period last year.

As of June, XLs US dollar-denominated debts stood at $1.57 billion, a sixfold
increase from $310 million last year.

Axis officially merged with XL in April through a $865 billion deal, in an attempt
to expand XLs network.
XL funded its acquisition of Axis using $500 million from its parent company,
Malaysias Axiata Group Berhad, while the remaining $365 million came from
bank loans and tower sales.

In the second quarter, all Axis subscribers were migrated to XLs billing system,
while traffic migration has been completed in over 60 percent of Axis footprint.
The integration is expected to be completed by the end of the year.

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