Robi Axiata Ltd (Robi) announced its financial results for the first six months ended on 30 June 2014. During the first half of the year, Robi added another 1.7 million new subscribers to reach 24.0 million, which represents 20.6% mobile subscriber market share of the country.
During the first half of the year, the company delivered strong revenue growth of 6.9% compared to the same period last year, with remarkable data revenue growth of 113.7%. Data revenue growth was propelled by the significant investment in network to drive 3.5G and 2.5G data usage. Earnings before interest, tax, depreciation and amortization (EBITDA) grew by 14.5% during the first six months of the year compared to the similar period of previous year. However, Profit After Tax (PAT) dropped by 2.6%, largely due to additional investment in spectrum and CAPEX (Capital Expenditure) to support 3.5G network operation in the country.
QoQ performance (Q2 2014 vs Q1 2014)
On QoQ basis, total subscriber base of the company increased from 23.9 million to 24.0 million – recording a 0.3% growth. Robi’s subscriber growth slowed-down in the current quarter primarily due to renewed competitive pressure in the market, and focus on acquisition of quality subscribers.
Despite slow growth in subscribers, the company delivered strong 5.0% QoQ growth in top line to register BDT 12.3bn revenue in Q2 2014. An impressive 28.3% growth in data revenue driven by 3.5G data adoption helped to deliver strong growth in top line.
On QoQ basis EBITDA grew by 3.8% to 4.9bn in Q2 2014. EBITDA growth was restricted by increased market related expenses and network costs to support the 3.5G network. PAT for the quarter saw a fairly robust 8.9% growth from Q1 2014 to record BDT 1.1bn in Q2 2014. Despite sharp increase in depreciation and amortization expenses from incremental investments, growth in PAT was driven by EBITDA growth and lower interest costs.
Investment in mobile network infrastructure
Robi continued to invest heavily to fast-track its 3.5G network and also to improve 2G customer experience both in voice and data services. The company has introduced HD voice quality service, first ever in the country to enhance customer experience in voice services. The total CAPEX investments made in Q2 2014 amounted to BDT 4.9bn, representing cumulative investment of BDT 9.9bn during the first six months of the year. The company has now deployed 3.5G network coverage almost in all the major districts in Bangladesh.
YoY performance (Q2 2014 vs Q2 2013)
On YoY basis, the company delivered a record 17.6% growth in subscriber base over last 12 months to reach 24.0 million in Q2 2014 from 20.4 million in Q2 2013. Customer centric product and service offerings and better data network experience helped Robi to achieve such strong growth in subscriber base.
The company also delivered a moderate 5.8% YoY revenue growth to reach BDT 12.3bn in Q2 2014 from BDT 11.6bn in Q2 2013. Due to significant price pressure in the market, the company has experienced slower growth voice revenues. In contrast Data revenue has witnessed an unprecedented growth of 122.4% during the same period – a clear reflection of changes in subscriber behavior and competitive dynamics.
On a YoY basis EBITDA registered another healthy double digit growth of 15.0% to 4.9bn in Q2 2014 from 4.2bn in Q2 2013. EBITDA growth was offset by incremental network operational expenses to run 3.5G network and increased marketing costs.
In Q2 2014, Robi recorded PAT of BDT 1.1bn, a sluggish 2.6% rise from Q2 2013. PAT growth was significantly lower than EBITDA growth primary due to large CAPEX investment to support the 3.5G business, in the form of 3G license acquisition fee and the country wide rapid network rollout. During the period of last 12 months, the company invested BDT 28.0bn which includes BDT 8.7bn on account of 3G license acquisition fees.
Robi Managing Director and CEO, Supun Weerasinghe said “Robi has recorded stable growth across all parameters since the start of the year. We are investing significantly towards expanding our 3.5G network across the country and to support growth in data usage. However, given the slow growth in voice revenues and imposition of new taxes, the overall growth may be impacted in the next half of the year.”
Robi Chief Operating Officer, Mahtab Uddin Ahmed, reiterated that Robi had introduced “unified data pricing across the country, which has made adoption of data services easier and cost effective. From super damal samal price offers, attractive bundle offer to flat rate talk times, Robi is making the customer experience simpler by introducing Robi Store Locator.”
Talking about HD voice, the COO stressed that Robi was the “first operator in Bangladesh and among a very small number of operators globally to introduce HD voice in its network. HD voice clarity, while only available on enabled handsets, is a mind altering experience and Robi has upgraded its network to provide this service in the interest of an enhanced customer experience.”
Payment to stakeholders
In first half of 2014, the company has paid out more than BDT 12.1bn to the government exchequer representing 50.7% of company revenue. Since inception in 1997, Robi has paid out more than BDT 131bn to the government exchequer while, between 1997 and 2005, only paying BDT 1.4bn in the form of dividends to its shareholders. There has been no further dividend paid since 2006.
Robi Axiata Limited is a joint venture between Axiata Group Berhad, of Malaysia and NTT DoCoMo Inc, of Japan. Robi is the second largest mobile phone operator in Bangladesh in terms of revenue, with over 24 million subscribers, as of June 2014. Robi network provides nationwide coverage to nearly 98% of the population with more than 9,450 2G sites and more than 1,430 3.5G sites. Robi proudly claims to have the widest international roaming service in the market, connecting over 500 operators across 207 countries. It is also the first operator in the country to introduce GPRS and 3.5G services in Bangladesh. The Company has introduced many first of its kind digital services in the country and has invested heavily in taking mobile financial services to the underserved communities in the rural and semi-urban areas.