Malaysia-based Axiata Group has reported a 37% slump in net profit for the first quarter ending in March, due in part to higher capex, financing and depreciation costs.
Net profit fell to 368 million ringgit ($90.1 million) despite a 5.4% year-on-year increase in revenue to 5 billion ringgit.
Axiata’s domestic subsidiary Celcom Axiata had what the company called a “challenging quarter,” with revenue declining 13.4% year-on-year.
As a result of new regulations, Celcom had to temporarily suspend almost all value added services during the quarter due to customer complaints, resulting in VAS revenue falling by 19.8%. Celcom’s normalized profit fell 22.3%.
But Indonesia’s XL Axiata had a strong first quarter, with net profit more than doubling and revenue growing 2.5% as a result of the strong performance of the Axis brand, acquired in 2014.
Axiata Group also reported a steady performance in its emerging markets segment of Sri Lanka, Bangladesh and Cambodia. But the contributions from regional associates Idea Cellular in India nd M1 in Singapore both declined.
“The first quarter showed mixed results with XL, Dialog and Smart performing exceptionally well while Celcom’s performance impacted the Group’s results,” Axiata Group CEO Dato’ Sri Jamaludin Ibrahim said.
“However, I am pleased to note there are many positive signs; Celcom has been aggressively rolling out more LTE sites and a number of competitive and exciting data products and services over the last two months. I am confident with these initiatives in place, Celcom will be back on track to finish the year respectably.”