KUALA LUMPUR (Nov 29): Axiata Group Bhd widened its net loss to RM797.41 million in the third quarter ended Sept 30, 2023 (3QFY2023) from RM52.4 million a year ago mainly due to asset impairment and lower share of results from subsidiary CelcomDigi Bhd (CDB).

The impairment of RM1.01 billion during the quarter followed the reclassification of its Nepal unit Ncell as an asset held for sale, resulting in widened discontinuing operations loss of RM824.5 million.

Net profit from continuing operations stood at RM27.09 million, against a net loss of RM412.11 million a year ago, driven by lower foreign exchange losses mainly from US dollar-denominated borrowings and working capital, lower finance costs and higher share of profits from associates.

Quarterly earnings were also further impacted by CDB's lower share of results, relative to the contribution as a wholly owned subsidiary in the previous year, according to Axiata’s Bursa Malaysia filing on Wednesday (Nov 29).

Following the completion of the merger between Celcom and Digi.com Bhd last November, the group’s share of the financial results of CDB is recorded under continuing operations from Dec 1, 2022 onwards, while Celcom’s financial results prior to that were presented as discontinued operations.

“As such there is no profit contribution from discontinued operations for the quarter under review compared to recognition of gain on disposal of Celcom of RM402.0 million as a result of the completion of final closing adjustments in 2QFY2023,” said Axiata.

Quarterly revenue improved to RM5.7 billion from RM5.37 billion.

For the nine months ended Sept 30, 2023, the telecommunications giant’s net loss widened to RM1.3 billion from RM201.76 million a year ago, despite higher revenue of RM16.43 billion compared with RM14.84 billion.

The cumulative net loss was due to higher net finance costs and lower share of results of CDB compared to Celcom’s contribution as a subsidiary in the previous year.

Commenting on its results, Axiata chairman Tan Sri Shahril Ridza Ridzuan said in a statement: "The group continues on its value creation journey despite the significant macroeconomic challenges this year. We remain focused on adapting our strategy, refining our investment portfolio and cultivating the right strategic partnerships to position the group for long-term success.”

Axiata group chief executive officer and managing director Vivek Sood said: “I am pleased to highlight that operational performance of our continued operations has been strong and we remain on track towards meeting our 2023 headline KPIs (key performance indicators).

“While concerns of macroeconomic volatilities persist, we believe risks will subside as interest rates start to lower in 2024. Our assets will continue to grow as market structure improves, price stability prevails and demand for mobile, digital and enterprise solutions remain.”

The group’s stable underlying performance was led by a 13% growth in year-to-date revenue, largely driven by consolidation at Link Net, better operational performance at Robi and XL and edotco’s consolidation of acquisitions in the Philippines and Indonesia.

Meanwhile, the group’s net debt/earnings before interest, taxes, depreciation and amortisation (Ebitda) increased to 3.17 times from 3.06 times in the previous quarter mainly due to reduction of Ebitda as a result of the reclassification of Ncell.

The group generated an adjusted operating free cash flow of RM958 million in the third quarter of 2023.

Post paring down of debts and payment of dividends, the group’s cash balance stands at a healthy RM5.7 billion.

Axiata shares closed three sen or 1.3% lower at RM2.32 during noon break, valuing the company at RM9.18 billion.

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