KUALA LUMPUR (Bernama) : Axiata Group Bhdis allocating RM6.8bil in capital expenditure (capex), mainly to modernise the group’s network and towers expansion.

President and group chief executive officer Tan Sri Jamaludin Ibrahim said about RM2bil of the capex would be used to expand its footprint in Java, Indonesia and another RM1bil to expand 4G coverage in Malaysia.

He said the capex would be funded through internally generated fund.

“We still have very strong earnings before interest, tax, depreciation and ammortisation (ebitda) margins and we do expect ebitda growth to be much faster than revenue growth which would create additional cash for us to invest in capex,” he told reporters at the group’s financial year 2018 results briefing here today.

“There is no real pressure for funding at this point of time. We do expansion plan but right now we can fund it internally, so we are not under pressure to do initial public offering,” he said.

However, Jamaludin said he foresees the needs for telcos in Malaysia to consolidate, either at the company or network levels, to reduce the capex burden if the country decided to move into 5G spectrum in the future.

He said this is due to the marginally negative or flat revenue growth recorded by telcos despite continuously spending for capex.

“The revenue in Malaysia is either marginally negative or flat and yet we (industry players) are still investing over RM3bil and it is not sustainable in the long run.

“Come 5G, it will be tougher. So, some sort of consolidation has to happen, either companies or network collaboration, as it becomes an economic must,” he said.

On the disposal of Singapore’s M1 Ltd, he said the decision was made to allow the group to focus on other areas of business that could generate better return, as well as avoiding being a minority shareholder in a privatised company.

“We don’t want to be a minority in a privatised company because you are not liquid. So, generally, you want to avoid that as much as possible,” he said.

He said proceeds from the disposal would also enable the group to invest in existing business such as fixed wireless network, fixed broadband network and digital business or new areas such as enterprise segment, as well as for convergence.

“We like the investment in M1 that delivers annual yield roughly on average 7% and RM1.1bil in dividend so far. But from our point of view, that dollar in Singapore is better being used somewhere else where there is better return for shareholders, not really in short term but also in the long run,” he said.

On another development, he said the company is still awaiting formal notification regarding the tax case surrounding its Nepal subsidiary, Ncell Pvt Ltd.

“We haven’t been told through a formal channel, only from informal challenge. What exactly will be asked from us and what exactly the amount we don’t know because the court order has not been out yet,” he said.

He added that the development surprised the group as it has received a full tax clearance in 2017.

It was reported earlier this month that a court in Nepal had ordered Axiata and Ncell to pay RM2.16bil in capital gains tax arising from Axiata’s acquisition of Ncell from Swedish company Telia Sonera.

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