XL Axiata is the third-largest network operator in Indonesia. (Antara Photo/Teresia May)

Tower Sale Helps XL Axiata Narrow Losses Amid Weak Rupiah, Decline in SMS


FEBRUARY 01, 2016

Jakarta. XL Axiata, the third-largest network operator in Indonesia, managed to narrow its losses to Rp 25.3 billion ($1.7 million) last year from Rp 803 billion in 2014, thanks to the company's telecommunication towers sale and leases.

In a listing on the local bourse on Monday, XL Axiata's revenue declined 2.5 percent to approximately Rp 23 trillion last year compared to some Rp 23.5 trillion in the year before as subscribers continue to shift from text messages to smartphone messenger apps.

Revenue from text messaging services dropped 17 percent to Rp 3.89 trillion last year, while revenue from calls and Internet data rose by 4 percent and 12 percent to Rp 8.3 trillion and Rp 7 trillion respectively.

The company, a local affiliate of Malaysia's Axiata Group, also faced pressure from the battered rupiah  which fell some 11 percent against the US dollar last year  as foreign exchange losses from its financing widened to Rp 2.5 trillion from Rp 992 billion in 2014.

Still, the network operator was able to offset some of the losses with a Rp 2 trillion gain from the sale and leasing of its telecommunication towers last year compared to Rp 271 billion in the year before  a gradual effect from the company's Rp 5.6 trillion sale and leaseback with local tower operator Solusi Tunas Pratama in 2014.

XL Axiata sold 3,500 towers to Solusi Tunas Pratama in 2014 to help reduce its climbing debt and lower operating expenses. The sale was paid for by cash, before XL Axiata would then lease the towers back for 10 years.

Right issue plan

The carrier has been trying to reduce the burden of its dollar-denominated debt amid further weakening of the rupiah. As of October, the company claimed to have paid off a total of $580 million in unhedged dollar-denominated debt, leaving only hedged dollar debt in its books.

It recently anounced a plan to offer 2.75 billion shares in a rights offering in May, awaiting the approval from its extraordinary shareholders as well as the financial regulator. Proceeds will be used to repay some of its $500 million dollar-denominated debt to its holding company, Axiata.

XL Axiata has also been reportedly mulling to sell more of its towers for the same reasons.

XL Axiata