Axiata Berhad : Stays Focused on Regional Expansion and ESG Initiatives to Drive Future Growth

• Axiata Net-Zero Carbon Roadmap launched as pathway towards net-zero by 2050
  
• Shareholders approve the proposed Link Net acquisition in Indonesia at EGM, taking Axiata another step closer towards tapping into growing demand for converged services in a high growth market
  
• Continued momentum in national contribution and digital inclusion initiatives across footprint in FY21
  
• Strong operational performance, cash flow and financial position to steer the Group through challenges and opportunities as it positions the business to meet with demands of a digitally inclined future
  
• Strategic journey to unlock new growth areas gains traction, Group charts significant milestones under the Axiata 5.0 Vision to expand its Digital Telcos, Digital Businesses and Tower Company
  

KUALA LUMPUR, 26 MAY 2022 - Axiata Group Berhad ("Axiata" or "the Group") concluded its 30th Annual General Meeting with shareholders acknowledging the Group's regional expansion plans aimed at driving sustainable value creation for its customers, employees and communities.

The Group's Environmental, Social and Governance ("ESG") initiatives also gained traction with the launch of Axiata's Net-Zero Carbon Roadmap ("the Roadmap") at the AGM Press Conference. The Roadmap paves the path for the regional mobile telecommunications and digital conglomerate to achieve net-zero by no later than 2050 and sets the 2020 carbon emission baseline and intermediate 2030 target to reduce operational emissions (Scope 1 and Scope 2) by 45% from the 2020 baseline.

Guided by the Roadmap, Axiata will embark on a 3-objective strategy to:

1. Accelerate decarbonisation of its network operations by reducing network energy consumption through enhancing energy efficiency and increasing network renewable energy consumption from self-generation or purchased electricity
   
2. Accelerate transformation of its value-chain including tracking of suppliers' operational carbon emissions
   
3. Delivering an inclusive climate agenda by removing carbon emissions through natural or technological solutions and contributing to decarbonisation solutions
   

Proposed Link Net acquisition approved by Axiata's shareholders at Extraordinary General Meeting
On 27 January 2022, Axiata, via its indirect wholly-owned subsidiary Axiata Investments (Indonesia) Sdn Bhd ("AII"), and XL Axiata announced the signing of a conditional share purchase agreement to jointly acquire an aggregate 66.03% equity interest in PT Link Net Tbk (Link Net) from Asia Link Dewa Pte. Ltd. and PT First Media Tbk ("Proposed Acquisition")¹. At an Extraordinary General Meeting (EGM) held following the AGM, Axiata's shareholders approved the Proposed Acquisition and the Proposed Mandatory Tender Offer by AII to acquire all the remaining Link Net shares not owned by AII and XL Axiata, after the Proposed Acquisition, bringing the deal closer to completion. Through the Proposed Acquisition, Axiata seeks to capitalise on the fast-growing fixed broadband market and enterprise market segments in Indonesia, as well as creating significant synergies for Link Net and XL Axiata through sharing of networks and extensive relationships with customers in Indonesia. The Proposed Acquisition will still be subject to the approvals or consents of relevant regulatory authorities and/or parties being obtained, as required.

Supporting governments and communities across our footprint
Overall, Axiata's ESG approach takes a holistic view in ensuring sustainable business practices to create long-term value for its stakeholders through national-building contributions, digital inclusion and climate action.

For the financial year ended 31 December 2021 ("FY21"), Axiata contributed a total of USD11.1 billion to the Gross Domestic Product of the 11 countries it operates in, and directly and indirectly supported some 700,000 jobs. Through the Axiata Young Talent Programme (AYTP) in Malaysia, XL Future Leaders in Indonesia and SmartEdu in Cambodia, a total of 2,693 Malaysian, 1,100 Indonesian and 41 Cambodian youths, had the opportunity to grow their potential, skillsets and knowledge to thrive in the digital economy.

In 2021, the Axiata Digital Innovation Fund in Malaysia, Smart Axiata Digital Innovation Fund in Cambodia, Dialog Axiata Digital Innovation Fund in Sri Lanka and Robi Venture in Bangladesh collectively provided funding to 45 digital start-ups and ventures to advance the development of local digital ecosystems in their respective countries.

Axiata Foundation pledged RM115 million for the next 10 years to Axiata Foundation for its Education pillar, to promote accessible quality education and nurture young Malaysian talents in areas of leadership, digitisation, and technology for them to thrive in digital economy and be highly employable. The Foundation's coverage has also been expanded to include Community Investments and the Environment.

The Group's MSCI ESG Rating was upgraded to 'AA' from 'A', and its ESG Rating on the FTSE4Good Bursa Malaysia Index ("FTSE4Good") from three-star to four-star². Axiata remains one of the Top 10 constituents by market capitalisation on FTSE4Good.

Strong FY21 performance
On the business front, in FY21, Axiata stayed the course in executing the 10 key focus areas of the Axiata 5.0 vision covering Sustainable Growth, Operational Excellence and Structural Changes. This enabled the Group to deliver improvements across key metrics where revenue and EBITDA grew 7.0% to RM25.9 billion and 7.0% to RM11.4 billion respectively, on the back of growth across all Operating Companies (OpCos) except Ncell. PATAMI soared more than RM818.9 million from higher EBITDA, lower accelerated depreciation and net finance cost, and PATAMI margin was at 3.2%.

In constant currency, revenue excluding device (ex-device) expanded by 8.3% to RM25.1 billion lifted by all OpCos except Ncell³. EBITDA climbed 8.5%⁴ to RM11.4 billion mainly contributed by Celcom⁵, Dialog⁶, edotco⁷ and ADS⁸.

Axiata ended the year with a resilient balance sheet and strong cash balance of RM7.0 billion and gross debt/EBITDA of 2.56x. It achieved cost excellence savings totalling RM2.0 billion through opex and capex savings of RM696 million and RM1.3 billion. Operating Free Cash Flow dropped 43.1% to RM1.9 billion largely due to XL's accelerated capex and backlog capex at edotco. Driven by its robust performance and healthy balance sheet, Axiata declared a higher dividend per share (DPS) of 9.5 sen in FY21 compared to FY20 DPS of 7.0 sen.

Other key resolutions passed by shareholders at the AGM include the following:

1. Re-election of Directors
   During the AGM, Dato' Izzaddin Idris, Dato Dr Nik Ramlah Nik Mahmood and Dr David Robert Dean, retiring by rotation, were re-elected as Directors. Shareholders also officially re-elected Tan Sri Shahril Ridza Ridzuan and Nurhisham Hussein who were elected to the Board on 29 November 2021 and 25 January 2022.
   
2. Reappointment of Auditors
   Shareholders approved the reappointment of PricewaterhouseCoopers PLT as the Auditors of the Company for the financial year ending 31 December 2022 and to authorise the Directors to fix their remuneration.
   
3. Proposed Shareholders' Mandate for Recurrent Related Party Transactions ("RRPT") of a Revenue or Trading Nature
   Shareholders approved the RRPT mandate at the AGM, providing the authorisation that enables Axiata to secure revenues from related parties in the course of doing business.
   

Commentaries

Axiata's Chairman, Tan Sri Shahril Ridza Ridzuan said, ""Axiata believes the telecommunications industry has a unique role in serving the socioeconomic needs of societies as well as in addressing global goals. In remaining trusted, relevant, and reliable to our stakeholders, Axiata recently established our Board Sustainability Committee to provide the leadership needed to ensure Group-wide alignment on our business strategy and the need to act responsibly. Our ability to work closely with our OpCos, vendors, and partners, and efforts through our solutions and services will define our future trajectory and performance."

"In line with our commitment towards sustainability, today we have reached another significant milestone with the launch of Axiata's Net-Zero Carbon Roadmap and our resolve towards achieving net-zero by 2050. Prior to this, Axiata had already committed to the Science Based Targets Initiative Business Ambition for 1.5°C campaign in 2021. This was an important precursor to ensure that the targets and pathways being pursued under the Roadmap are aligned to science and will contribute toward limiting temperature rise to below 1.5°C."

"As a champion of connectivity and digital inclusion across 11 countries within ASEAN and South Asia, we are well-placed to support our customers in transitioning towards a low carbon future. This Roadmap clearly defines our long-term and intermediate targets, and the work begins now to align our strategies for our next stage of growth."

Axiata's President & Group Chief Executive Officer, Dato' Izzaddin Idris added, "Driven by long-term vision and outlook, in FY21, we strengthened our fundamentals and shored up resilience by executing transformative business initiatives and leveraging on digitisation and analytics for efficiencies. At the same time, we had to respond with agility when growth opportunities emerged and decisions had to be made in the face of persisting uncertainties."

"Performance-wise, the Group recorded strong growth across key metrics and in line with that, declared a higher dividend per share of 9.5 sen in 2021. In positioning for new growth across the region, we were on point in delivering structural changes and portfolio optimisation with the completion of ADA's Awake Asia acquisition and the RM250 million investment from SoftBank Corp., Touch Mindscape acquisition by edotco and disposal of 5% stake in XL to Ferrymount Investments."

"Axiata continues to expand into adjacent businesses. Whilst our mobile business continuing as the foundation, we are well-positioned for organic and inorganic growth opportunities in the fixed, infrastructure, enterprise and digital space. For 2022, the pipeline includes preparations towards launching the digital bank by Boost, completion of the proposed acquisition of 2,973 PLDT towers by edotco to become the leading independent TowerCo in the Philippines, the Celcom-Digi merger and the proposed Link Net acquisition.

"We're cautiously optimistic for 2022, bracing against macroeconomic uncertainty from inflationary pressures, increased energy cost, higher interest rates and currency volatility. Regionally, increased taxes, higher inflation, and forex volatilities loom in Sri Lanka, whilst in Indonesia, higher operating expenditure will be required to deliver growth in hypercompetitive market."

"Against this backdrop, the Group will be disciplined in pursuing cost and operational efficiencies and unlocking value from our acquisitions. Our ESG emphasis remains in place so we can keep delivering on our value creation promise to customers, employees and communities we serve moving forward."

¹Please refer to the press release: https://www.axiata.com/media/news/axiata-and-xl-axiata-sign-conditional-share-purchase-agreement-acquire-6603-link-nets
²The 4-star ESG Rating refers to the Top 25% by ESG Ratings amongst public listed companies in FBM EMAS
³Ncell Axiata Limited
⁴Financial results % growth at constant currency
⁵Celcom Axiata Berhad
⁶Dialog Axiata PLC
⁷edotco Group Sdn Bhd
⁸Axiata Digital Services Sdn Bhd

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About Axiata

As one of the leading telecommunications groups in Asia in pursuit of its vision to be The Next Generation Digital Champion by 2024, Axiata has transformed itself from a holding entity with a portfolio of pure-play mobile assets into a Triple Core Strategy driven business focusing on Digital Telco, Digital Businesses and Infrastructure.

Within ASEAN and South Asia, the Group has controlling stakes in market-leading mobile and fixed operators in the region including 'Celcom' in Malaysia, 'XL' in Indonesia, 'Dialog' in Sri Lanka, 'Robi' in Bangladesh, 'Smart' in Cambodia and 'Ncell' in Nepal. Axiata is actively spearheading efforts to transform its mobile-centric operations into digital converged companies.

Axiata Digital, the digital services arm of Axiata is focused on two digital business verticals namely Digital Financial Services ('Boost') and Digital Analytics & AI ('ADA').

'edotco', the Group's infrastructure company, operates in eight countries to deliver telecommunications infrastructure services, amassing approximately 42,227 owned and managed towers. Presently among the top 10 independent tower companies globally, edotco aims to be one of the top regional telecommunications tower companies and is committed to responsible and sustainable business operations.

As a committed and long-term investor, and in line with its sustainability goals, the Group actively supports and drives young talent development; disaster response and recovery; as well as green initiatives. Axiata's broader goal of Advancing Asia aims to piece together the best in the region in terms of innovation, connectivity and talent.