Axiata Group Bhd; Fully Valued; RM6.86
Price Target: RM5.75; AXIATA MK

XL Axiata released its 3Q13 results last Friday, below our estimate mostly from lower-than-expected voice and SMS revenues. This was despite strong subscriber gains of 3.9m (7.2% growth q-o-q) in subscribers during the quarter. Voice pricing on XL’s products were still ~50% lower than its peers, though there was a 7-8% increase in the quarter.

While network expenses may decelerate in momentum on the back of sufficiently built 3G base stations and consolidation of Axis’ assets, dilutive impact of Axis’ losses could offset EBITDA margin growth from the former. We maintain our earnings forecasts and Fully Valued call on Axiata Group Bhd, pending its results release at the end of Nov 2013.

Source: HwangDBS Research - 4 Nov 2013