Axiata Group Bhd fell into the red in the first quarter ended March 31 registering a net loss of RM147.41 million against a net profit of RM239.02 million in the same quarter a year ago, due to the share of losses reported by its associate company Idea Cellular Ltd, which operates in a backdrop of devastating price wars and a hyper-competitive Indian market.
Axiata recorded a non-cash dilution loss of RM357.6 million from non-participation of preferential new shares issued in Idea. Axiata holds a 16.3% stake in Idea.
The share of results from associates and joint ventures were also lower as the losses widened to RM86.1 million from RM30.5 million as the India associate continues to face intense market aggression.
Excluding the impact of Idea, Axiata’s net profit would have been up by 34.6% or RM386.9 million.
Axiata’s revenue fell 2.3% to RM5.75 billion from RM5.88 billion in the previous year’s corresponding quarter, mainly due to unfavourable foreign exchange translation impact arising from a stronger ringgit.
“While we remain in line with expectation, our investment in Idea continues to be challenging. The current state of the industry in India has led to foreign operators either exiting the market or consolidating. Delays in the proposed merger between Idea and Vodafone India will bring further impact to Axiata. We also expect regulatory matters in Sri Lanka, Malaysia and Bangladesh as well as currency fluctuations as challenges for the year,” said Axiata president and group CEO Tan Sri Jamaludin Ibrahim in a statement.
He, however, said the group is set to gain from edotco’s growth and expansion. It will also continue to invest in key digital businesses such as digital financial services and enterprise solution/Internet of Things.
At market close, Axiata’s shares fell 1.17% to RM5.07 with some 1.26 million shares done.