Annual Report 2008 - Axiata Group Berhad - Investor Relations

President and Group Chief Executive Officer’s Business Review(cont’d.)This was the best option to give us an immediate nearpan-Indian presence with further growth potentialwhere post merger we will have a population coverageof 80% in India. Furthermore, we could grow with lowerexecution risks given the relatively less rollout requiredand the combined strengths of the merged entities.The Group invested over RM5.5 billion in capitalexpenditure (capex) in 2008, mostly in Indonesia, toaggressively capture the high growth market there,and in Malaysia to expand 3G and HSPA for data andmobile broadband services.Given the volatility of the current economic conditionsAxiata took a pro-active and prudent step to deliver itsbalance sheet through the proceeds of a rights issue ofapproximately RM5.2 billion. We strongly believe thatthis strategic move will make Axiata more flexible andfinancially agile to weather any uncertainties movingforward.major OPERATING COMPANIES REVIEWStrong Operational Growth by CelcomCelcom continued its stellar performance, delivering itsbest quarterly growth in the fourth quarter of the yeardespite the intensifying competition, challenges ofMobile Number Portability (MNP) and operating in ahighly penetrated market. Recording an unprecedented11th consecutive quarter of growth, Celcom saw solidrevenue of RM5.6 billion, a rise of 10% 2 YoY.Its segment-focus strategy yielded encouraging resultswhereby total subscribers grew to 8.8 million driven by1.6 million net additions, leading the industry growth inboth postpaid and prepaid.Celcom maintained its leadership in mobile broadbandwith a unique subscribers YoY growth of four times toover 228,000.Continued efforts in cost management saw EBITDAmargins improving from 44.6% to 45.2% amidst costescalations from MNP and weakened macro-economicconditions. Network cost saving initiatives in particularwas reduced from 13.0% to 12.3% (adjusted for oneoffs)as a percentage of revenue. PATAMI in 2008 wasRM1.3 billion, a spectacular rise of 23% YoY.2008 saw continued focus on operational efficienciesin an effort to further enhance customer delivery.Celcom has also strengthened its management teamwith key appointments, enhancing its momentum goingforward.Continued Challenges in Group’s Emerging Markets’OperationsIn 2007, XL decided to embark on a clear and simplestrategy, ie: offering better value through comparablequality and aggressive pricing. This strategy was furtherenhanced in 2008 and formalised by regionally tailoredpricing, service quality with improved networkprovisioning and controlled cost management.2 Fibrecomm has been excluded for growth comparison purposes as it has ceased to be a subsidiary of the Group post demerger.32Axiata Group Berhad Annual Report 2008(formerly known as TM International Berhad)