Annual Report 2008 - Axiata Group Berhad - Investor Relations

Group Financial ReviewThe regional telecommunications industry recordedslower growth over the past year in an environment ofuncertainty with currency fluctuations and challengingeconomic conditions. Although the general businessenvironment remained challenging, the Group hascontinued to maintain its position in terms of revenueand subscriber market share in most markets ascompared to the previous year.For the year ended 31 December 2008, the Group’soperating revenue grew by 13.5% to RM11.3 billioncompared to RM10.0 billion the previous year, largelydriven by strong revenue growth in Celcom and XL.Celcom showed a strong performance contributing48.5% to total operating revenue of the Group. Revenuefrom Celcom was 10.1%* higher as compared to revenuerecorded in the preceding year. The positiveperformance was brought about by strong growth inthe prepaid segment as a result of aggressive marketingcampaigns throughout the year. The overall growthwas also driven from improvement in postpaid revenue,due to the 1+5 Plan, Celcom Executive Plan andBroadband packages. Celcom added 1.6 million newcustomers in 2008, bringing the total customers to 8.8million, a growth of 21.6% from 7.2 million as at end of2007.Total revenue contribution from other markets namelyBangladesh, Cambodia and Pakistan reduced slightlyby 0.2% to 8.6% of Group revenue but collectivelygrew 10.9% YoY.The fluctuation of the RM against local currencies in allmarkets had unfavourably affected the Group’stranslated revenue for the year. At constant currency,the Group revenue for the year grew by 20.3% fromthe previous year.For the year ended 31 December 2008, the Group’soperating costs rose by 19.3% to RM7.0 billion ascompared to RM5.9 billion recorded in 2007 mainlydue to inflationary effects and cost escalation in linewith revenue growth in all markets. With rising costpressures and greater competition, the Group EBITDAmargin declined to 38.4% from 41.4% the previousyear.Depreciation, impairment and amortisation charges ofproperty, plant and equipment (PPE) and intangibleassets increased 28.2% to RM2.3 billion as comparedto RM1.8 billion recorded in 2007. In 2008, Group BTShad increased to more than 30,000 in line with revenuegrowth, which is the key driver for the increase indepreciation costs.Our international operations continued to provide theGroup with an outstanding growth of 18.1% wherebyXL, in terms of RM, grew by 22.9%. As a result, overseascontribution grew to 51.5% from 49.5% in the previousyear with XL making up 63.3% of the total overseasoperating company revenue. Revenue from XLaccounted for 32.6% of the Group’s revenue, anincrease from 30.1% in the preceding year. Revenuecontribution from our OpCo in Sri Lanka, Dialog Group,declined to 10.3% as compared to 10.6% in 2007.Depreciation of RM and local currency in all marketsagainst the USD has resulted in net loss on foreignexchange in 2008, predominantly arising fromtranslation of USD denominated debt as well aspayables in other foreign currencies.The weakening of the IDR against USD has resulted inforeign exchange loss of RM354.4 million from XL in2008, as compared to RM124.4 million in the previousyear, mainly from debt and payables in USD and otherforeign currencies. Higher foreign exchange loss in 2008was also the result of the translation loss of RM84.3million from USD borrowings for the investment in Idea.42Axiata Group Berhad Annual Report 2008(formerly known as TM International Berhad)