Axiata Group Berhad (AXIATA) Earnings Call Transcript & Summary

Ladies and gentlemen, my name is Clare Chin, Head of Investor Relations at Axiata Group Berhad. Thank you for standing by, and welcome to Axiata's quarter 3 results briefing, and apologies for our slight delay. Today, we have with us Dato' Izzaddin Idris, Axiata Group's CEO; and Vivek Sood, Axiata Group's CFO; as well as representatives from our operating companies. There will be a short presentation followed by a Q&A session. Lastly, 2 housekeeping matters. You will be on mute throughout the presentation, and also note that we will end the call promptly at 4:30 p.m. Without further ado, I would like to hand the conference over to Dato' Izzaddin.

Thanks, Clare. A very good afternoon to everyone on the call. Thank you for joining us this afternoon on our announcement of our third quarter results, which the press release was issued during lunch break earlier this afternoon. I hope you have had a chance to pick it up. In terms of the year-to-date performance for all OpCos, we're happy to report a very strong performance across all OpCos. And this is largely demonstrated or supported by the higher data consumption. Briefly, revenue ex device went up by 7.7% and EBITDA margins largely stable at about 44%. And the higher underlying PATAMI of MYR 914 million. This was supported by the improved EBITDA, lower net finance cost and taxation, but of course, partially offset by the accelerated depreciation of 3G assets at Celcom and Robi, that's about MYR 151 million net. Now in terms of data consumption, perhaps I should give you some color as to the higher data consumption. Year-on-year, for example, Celcom, to date, as of September, the blended average consumption is about 24.7 gig per subscriber per month. That's up 30.7%. Likewise, in XL, the average data consumption is about 13.8 gigabytes per subscriber per month. That's up by 34%. And that's the sort of same trend you see in all the other markets. So in other words, we're pretty much encouraged by the higher data consumption. All OpCos did well, except XL, we will cover that later on. And in terms of reported PATAMI, recorded -- we recorded a PATAMI of MYR 703 million. That's a margin of about 3.7% for the year. And of course, year-to-date, we also benefited from the strengthening of the ringgit against all our OpCo currencies. Sri Lankan rupee was the one that was affected most. Now year-to-date operating free cash flow for the year, that declined slightly to about MYR 2.3 billion whilst our balance sheet remained healthy. The slight decline in OFCF is after the result of adjustment for noncash right-of-use depreciation, but also the big item there is the accelerated CapEx by itself, yes. Now this is to enhance our network coverage and capacity to meet the rising demand, as I've mentioned earlier, and as well improving the quality of service. Balance sheet, as I've said, remain healthy. Gross debt/EBITDA at about 2.49x, cash balance of about MYR 7.3 billion. And Vivek afterwards will give a bit of a perspective on our borrowings with only 2 years -- that 18% of our debt is maturing within 2 years, so that's -- as well as something like 70% of our debts are on fixed rate. So that's a pretty good balance sheet to move on with. Moving on OpCo by OpCo. Celcom continued momentum with an addition of about 1 million subscribers year-on-year. Year-to-date revenue is about 4.6%, and this is driven largely by the strong prepaid performance. If you remember, in the previous year, we had a charge of about MYR 101 million gross for an employee restructuring program but that's no longer in these 9 months. EBITDA rose to about 7.3%, largely attributable to better credit and inventory management as well as cost optimization efforts around network and staff costs. Year-to-date, PATAMI went up by about 6.9%, and again, this is impacted by accelerated depreciation, which however, was cushioned by lower net finance costs. For XL, the momentum post Lebaran continued into the third quarter. Year-to-date revenue pretty stable at 0.7%. And despite the competitive pressures in the first quarter as well as higher sales and marketing expenses, PATAMI is down significantly by 51%. But that was a gain that was recognized in the last year, yes, the gain on tower disposal. Without which, our PATAMI improved to a lower net finance cost -- attributable to lower net finance costs and taxation charges. Robi recorded a very strong data revenue growth. Quite evidently, our strategy there has borne good results, higher data consumption. The margin compression however is, as a result, higher network costs and sales and marketing expenses. You can see that year-to-date revenue went up by 0.7%. PATAMI, however -- sorry. Sorry, let me say that again. Year-to-date revenue went up by about 8.1%, as I've said, because of the higher data consumption. And this is in line with the higher data subscribers that Robi managed to bring on. Year-to-date free cash flow is about 12.3% on the back of EBITDA, slightly lower CapEx. PATAMI rose by 44.3%, rising from better operational performance and lower net finance costs. Dialog continues to be the star performer, consistent performance, sustained growth momentum across all the segments: mobile, fixed and TV. Data revenue likewise went up by 15.3% -- sorry, I keep missing this. EBITDA went up by 19.1%, PATAMI by 45%, as I've said, driven by improved performance across all segments: mobile, fixed and TV. Free cash flow, however, came down a bit by 23%. Now that's attributable to the higher CapEx spend from a decision to accelerate some preponement CapEx in anticipation of the increased demand. And so as I've mentioned, improved bottom line despite lower revenue. Excluding device, core revenue went up by 4.4%. Now this, however, is insufficient to counter the drop in ILD of about 20.6%. As a result, revenue ex device went down by about 1.1%. Year-to-date EBITDA, however, went up by about 2.7% on lower direct costs, and PATAMI improved significantly as a result of the higher EBITDA, coupled with lower depreciation and amortization charges. Next slide, yes. Smart continued its steady performance. Year-to-date, revenue ex device high by about 10.7%. Now this excludes a reclassification of dealers discounts because what had happened is we needed to adopt the new -- while dealers revenue is account for the dealers discounts that we have given. So now they are shown gross, yes. Without this, year-to-date revenue is up by 5%, again from higher data consumption. Likewise, free cash flow went up by about 1.9%, moderated by the higher CapEx and year-to-date PATAMI dropped slightly by 6.4%, mainly due to the impairment of financial services investment that we've made, i.e., Pi Pay. Axiata Digital, happy to continue to report improved performance, narrowed losses. Year-to-date revenue more than doubled to MYR 643 million, higher revenue at ADA. Axiata Digital, as a result of improvement in its customer engagement business, net loss narrowed down by 60% to MYR 97 million. Now just some perspective and Vivek will give the details later. Year-to-date, Boost recorded a half the loss compared to last year at about MYR 170 million, and ADA recognized a PATAMI of about MYR 27 million compared to a loss of MYR 6 million last year. That's the performance of the 2 companies and will continue to move in the right trajectory. Yes. Insofar as edotco is concerned, strong contribution from the 2 key markets, Malaysia as well as Bangladesh. New orders coming from Bangladesh, and total for the year will be about 1,700 towers. Year-to-date revenue went up by 3.9%, EBITDA up by 2.7%. And as a result, PATAMI rising by 19.7%, which is also supported by some unrealized ForEx gain. Insofar as our financial year '21 headline KPIs are concerned, we're likely to exceed the guidance that we've given earlier. So for the full year, the guidance is revised upwards very, very slightly to mid-single-digit growth in revenue ex device and EBITDA. Downside will continue for the fourth quarter, inflationary pressures on SIMs and delay in network equipment delivery arising from the global supply chain disruption that we're all familiar, Sri Lanka macroeconomic challenges as well as regulatory uncertainties in various markets we operate and slower-than-expected recovery in XL. Remember, we talked about the spectrum that was only awarded in April. Unfortunately, the rollout has not been as what we had earlier planned. The Board of Axiata Group Berhad has also approved a pledge next -- for the next 10 years towards Axiata Foundation. We are pledging something MYR 150 million for the next 10 years. This is a continuation of the last 10 years. Because the last 10 years, we pledged MYR 100 million -- MYR 100 million, sorry. So for the next 10 years, it's another MYR 150 million. And this is for the education pillar. It's a continuous commitment towards the education pillar, which is predominantly aimed to advance the skills and knowledge of young Malaysians for them in the digital economy. A bit on the progress insofar as Axiata 5.0 is concerned. As a part of the ongoing portfolio optimization reports -- efforts rather, as you know, we have disposed 5% stake to an Indonesian investor by the name of Ferrymount Investments, which is an SPV between Tiga Capital and Provident Capital. That's for about just about USD 100 million. We are on track with the Celcom-Digi merger. You would have read the announcement yesterday that MCMC has accepted our submission. Digital banking license application. We are continuously engaging Bank Negara. We are 1 of the 9 shortlisted parties out of the 24 other submitting parties. And we are moving closely to conclude the due diligence that's been undertaken for the joint acquisition with XL, the joint acquisition of Link Net, the fixed broadband business. edotco remains focused on identifying new opportunities for expansion. And so far as the 5G SPV, the engagements with Digital Nasional Berhad is very encouraging developments and we're progressing in the right direction. So perhaps then I'll hand over the session now to Vivek to take us through the details of the performance of each of the businesses. Vivek?

Thank you, Dato'. A very good afternoon to all of you, and good morning to some who are sitting on the other side of the [ trade ]. Let me start with the reported results. A strong quarter and year-to-date performance with 5.9% growth in revenue and 5.5% growth in EBITDA. All OpCos delivered performance growth year-on-year, except in Ncell. Ncell was impacted marginally because of the lower international long-distance revenue consequent to the pandemic effect this year. The PATAMI grew by 13.2% and largely coming out of higher EBITDA and lower finance costs, to some extent, offset by the one-off gains last year we got in XL on tower sale around MYR 300 million equivalent. And this year, there has been an additional charge on account of accelerated depreciation, which is around net MYR 151 million. So if you adjust for these 2, the performance on a year-to-date basis on PATAMI has been extremely strong. If you look at the quarter-over-quarter numbers, we've seen a 2.4% growth in revenue and 1.7% growth in EBITDA and around 26% growth in PATAMI. Next slide. On the underlying performance, underlying is based on constant currency. And as Dato alluded, ringgit strengthened across all our currencies, specifically Sri Lankan rupee. And if we adjust for the currency and take it on constant currency, our underlying performance for the year to date grew by -- revenue grew by 7.7%, EBITDA by 7.6%, pretty much in line with the growth in revenue, and EBITDA margin remained stable at 44%. Higher PATAMI at MYR 9.14 million came from improved EBITDA, lower net finance costs and lower taxation. And this was partly offset by expected depreciation on 3G assets at Celcom and Robi. If you recall last year, at year-end, we did accelerate our investments in 3G with the intention of shutting down 3G in all markets by the end of this year, except Bangladesh, which would be 2023. And the execution is pretty much in plan except Celcom may have something going to make there. Revenue growth has been extremely good across markets with Dialog growing at 19.5%, Robi growing at 8.1%, Celcom at 4.6%, Smart at 10.7% and digital -- Axiata Digital more than 100%. And this is coming essentially from the ADA business, which is the analytics and advertising business for Axiata. As I said, quarter-on-quarter growth of 2% coming from across all OpCos except in Ncell and, to some extent, edotco. EBITDA, strong growth, 7.6%, coming across different markets. Celcom at 12.8%. But if you recall last year, we had the restructuring program in Celcom in quarter 2. If I adjust for that, Celcom EBITDA growth is around 6.8%. And the other one to highlight is really the reduced losses coming out in Axiata Digital business, which is both the ADA as well as the Boost business. We continue to perform well on our operational excellence program on cost saving. We've delivered for the year-to-date around MYR 378 million on OpEx and around MYR 815 million in CapEx. I think the question really is, where does this CapEx saving go? But as you know, all the markets during this period of time continue to have much greater growth in data consumption than the estimates we had. And the fact that we've been able to give that kind of data consumptions with similar kind of CapEx level is because of the substantial savings we could get on CapEx through network optimization as well as [ winning ] negotiations. Quarter-on-quarter, EBITDA growth of 0.4% having contributed by all OpCos except edotco. Edotco was impacted because of a restructuring program, which we carried out of -- impact of around MYR 40 million during the quarter. This strong EBITDA performance, lower net finance cost and taxation benefits resulted in our underlying PATAMI on a year-to-date basis growing by 74% and around 30% growth -- 29% growth on quarter-on-quarter in the underlying PATAMI. As I said, the contributors for that have been EBITDA, losses -- reduced losses in Axiata Digital businesses. Accelerated depreciation, which has been partly in quarter 3, has been offset because most of it has been already taken care of and lower net finance cost and taxation. And then I talked about the quarter-on-quarter performance of 29% growth in underlying PATAMI. Next slide. This is just to depict how the underlying performance has been delivered from last year year-to-date, which is MYR 546 million to this year year-to-date at MYR 949 million. If you see largely coming out of the EBITDA development, reduced losses in Digital business, taxation and finance costs. D&A has been higher, MYR 373 million, mainly because of the accelerated depreciation where the impact has been around -- at a gross level, around MYR 200 million for year-to-date. And if I look at the reconciliation between the reported PATAMI versus the underlying PATAMI, it's essentially on account of ForEx. And as you know, ringgit, while has strengthened against all other operating currencies this year, has actually weakened against dollar. And that's -- the consequent impact has been unrealized ForEx losses, which is the main contributor for the difference between the reported numbers and underlying numbers. Next slide. This is just a depiction of OFCF. I think Dato alluded to that. So we -- our cash flows have been pretty stable. And if I adjust for the lease payments, again, cash flows generated during the 3 quarters is around MYR 1 billion and largely coming -- the impact coming out of improved cash flows from Celcom but reduced cash flows coming in from XL and Dialog. XL has been acceleration of CapEx investments, and Dialog is essentially a phasing issue where there have been some CapEx which has been [ prebooked ] to provide better quality of service but does not mean that full year CapEx guidance is going to be exceeded. Edotco essentially because last year, because of pandemic, we could not roll out some of the towers. This year, edotco has increased around close to 3,000 towers during the year, and that's one of the reasons for the CapEx increase happening on the edotco business. Next slide. This is the balance sheet position. Our gross debt-to-EBITDA is 2.49x which is pretty much stable. Cash at MYR 7.3 billion, which is a strong cash position resulting in net debt-to-EBITDA of 1.83x. So pretty stable balance sheet. We have a policy of looking at around close to 50% ForEx hedging. And at this point in time, we are at pretty close to that at 48%, which is including the natural hedge of dollar reserves in some of the markets. As you know, last year, we did carry out a MYR 1.5 billion bond issuance program, which resulted in us getting fixed interest for a period of 10 years and 30 years. And consequent of that, we have fixed our interest at 69%, and that does bring in some bit of stability, given as we see interest rates in most of the markets are expected to grow up over the next year or 2, but this would push on our position because we actually manage to get -- lock in our long-term debt at very attractive interest rates. And consequent to that, our debt profile in terms of maturity is also fairly strong. We have only 18% of our debt within 1, 2 years, a majority of that actually over 5 years, if you look at 56% of our debt. Our cash position, fairly strong across OpCos. The key holders of cash are essentially Celcom at the group level and edotco. Edotco is largely also going to be used for further expansion of the tower business. Next slide. Quickly touching on the performance of each of the OpCos. I think Celcom has delivered well with 4.6% growth in revenue. Year-to-date, 6% growth if I consider even the devices year-on-year, which is strong growth, mainly coming out of prepaid as around close to 800,000 new prepaid customers and a 12% growth on the prepaid business on a year-to-date basis, which is a strong growth; also contributed by the MVNO, which is equivalent to around 12% growth. I think postpaid business has been fairly stable. If any, impact has come because of the interconnect and roaming revenues coming down. And that's the result of around 4.6% year-to-date growth, 1.2% quarter-on-quarter growth. EBITDA margins remained fairly stable for us, in fact, improved on a year-to-date basis, at 13.4% growth in EBITDA. If I adjust for the restructuring charges last year, EBITDA growth of 7.3%, mainly coming out of improved revenue as well as better management of credit and inventory during this year compared to last year and also cost excellence program, which has been focused on in Celcom during the year. And that consequent result has been a strong cash flow generation, around close to 28% growth on a year-to-date basis, 14.7% growth for the quarter-on-quarter and result in improved PATAMI of close to 7%. If I -- this PATAMI is after adjusting for MYR 161 million of accelerated depreciation. So if you adjust for that, the PATAMI growth has been fairly reflective of the EBITDA growth and the cash flow improvement. Next slide. XL, I think, quarter has been reasonably good with 1.5% growth in quarter-on-quarter. However, year-to-date has been impacted by a poor quarter 1 of 2021, which was impacted by high competitive intensity as well as the demand for running programs like the school program in that market. And that's -- the consequent result has been reasonably flat revenue compared to last year and flat EBITDA compared to year last year. But we've seen quarter-on-quarter progress happening in that market, which is good news. CapEx has been higher. And we're also looking at a higher guidance of CapEx for this year compared to what was earlier projected. And that's the consequent result has been lower FCF and a lower PATAMI. Now PATAMI looks lower because last year, we did get around MYR 1.6 trillion benefit of sale of towers in the first and second quarter of last year. And if I adjust for that, PATAMI growth has been fairly stable. Next slide. Robi, solid performance coming essentially out of growth in data revenue and stable to positive development in the voice revenue, 8.1% growth and quarter-on-quarter growth of 2.3%. EBITDA margins have been slightly impacted on a year-to-date basis this year because of higher spend on the network cost because of continued expansion on coverage as well as sales and marketing expenses. Free cash flow remains stable and PATAMI, a strong PATAMI growth of 44.3%, mainly coming out of lower finance costs in Bangladesh because of the lower interest rates regime prevailing at this point in time and some benefits coming out of the taxes. That's the Robi performance. Next slide. Dialog continues to have very consistent performance. In fact, it's doing extremely well despite the challenging macro environment in that market. And we continue to face with the macro headwinds but the company delivers very strong performance on all lines, be it mobile, fixed, TV as well as the enterprise business, which is through a new acquisition of H One completed last year. And that's reflective of strong EBITDA growth of 19% year-to-date, 10% growth on quarter-on-quarter basis with a strong EBITDA margin of 42%. FCF marginally lower. As I said, this is on preponement of CapEx spend, and it does not reflect that full year guidance is going to be exceeding. It's just the timing of the spend and that's to take the advantage of improved quality of service for the customers. And the lower interest rates and high EBITDA is reflective of 45% improvement in PATAMI for the year. Next slide. Ncell, I think the core revenue has been growing at 4.4%, but it is insufficient to take care of the drop in ILD revenue. ILD revenues dropped by around 20.6% year-to-date. And one of the reasons is, obviously, because of pandemic. There have been the migrants back into Nepal and that's reducing the overall traffic into Nepal. Because of the lower ILD revenue, we are seeing revenue ex device at negative 1.1% However, a company manages its costs, specifically direct costs, pretty well, which is reflective of EBITDA growth of 3.7% and a strong PATAMI growth of nearly 70% coming in. And that's because of the lower CapEx spend relative and some impact of taxes because last year, there was tax also, including taxes for the previous year. Next slide. Smart continues to have very steady performance. It's -- the performance has been extremely kind of predictable in that sense because we continue to deliver in line and better than expectations month-on-month, quarter-on-quarter. As Dato said, there is higher revenue coming essentially because of the accounting adjustments, which has been done. But on a cash flow basis, marginally improvement of 1.9%, mainly because of increased CapEx specifically to cover some of the rural parts of the country. And PATAMI has been fairly stable with a growth of 6.4%. Next slide. Digital business is something to highlight. I think the -- as you know, we have 2 pillars of Digital business, the analytics data business and advertising business and the digital financial services. Two-pronged actions on those. One is the ADA business continues to deliver well on top line growth as well as profit improvement there. So I think this year, if you look at the PATAMI of the ADA business for the full year is around positive MYR 27 million with a revenue -- net revenue of MYR 605 million. So that continues to do well. And the second is lower losses coming in the Boost business. While there has been an impact on GTV offline business, the business has been able to manage the online growth of GTV during the year, so far reflective of GTV growth of 9%. And the revenue growth has been fairly stable compared to last year, but lower losses coming out with the efforts around lower marketing spend, which has resulted in overall profit improvement from last year for the Digital business of nearly MYR 110 million. So that's, I think, the direction in which we are moving ahead with these businesses yet. Next slide. Edotco continues to do well with growth coming in the key markets, Malaysia and Bangladesh, with both improved mostly coming out of increase in number of towers, which has resulted in a 3.9% growth on a year-to-date basis and EBITDA growth of 2.7%. The impact of EBITDA has been also because of the one-off retirement benefit provision made in Malaysia in quarter 3. Free cash flow, as I said earlier, is mainly because of the increased CapEx on account of higher site orders, which is coming, which is positive because these are basically future revenue stream, which the business will be able to capture. However, PATAMI continues to be well, partly also because of the unrealized ForEx gains coming for the business. Next slide. I'll hand over back to Dato on the look-forward.

Thanks. As I mentioned earlier, the guidance we'd like to give for the full year performance is from a low single digit for both revenue and EBITDA to a mid-single-digit guidance for both revenue growth as well as EBITDA. Insofar as CapEx is concerned, as both Vivek and I mentioned earlier, the higher CapEx at XL, which is for network improvement, quality and coverage, we are giving a guidance of slightly higher than the MYR 6.5 billion given earlier to MYR 6.9 billion for the full year. Insofar as we are concerned, as I mentioned earlier on, global supply chain disruption leading to inflation and pressure on SIMs as well as delay in delivery, Sri Lankan macroeconomic risk as well as a weakening Sri Lankan rupee, several -- well, rather regulatory uncertainties in several of the markets we operate, and that continues to pose as a risk as well as slower-than-expected recovery in Ncell. At the same time, we see much more improved data monetization for telcos better capacity utilization. There's a lot of analytics that we apply in the business to make sure that the capital allocation for the CapEx is money well spent. It's the same for Axiata Digital, both the 2 businesses improved offline payments with Boost synergistic benefits for ADA as well as the digital telcos. And as we have mentioned just now, a pickup in site rollouts for edotco with the easing of lockdown restrictions across the various markets. Now I'd like to take this opportunity to also announce or inform you of our Axiata Investor Day, yes, on 8th of December at 2 p.m. The formal invitations will go out shortly to all of you. I do hope that you'll be able to join us. We are going to showcase the 2 digital businesses, namely Boost Holdings and ADA, Axiata Digital and Analytics, to sketch for you their trajectory and their path to grow the businesses. Of course, no session would be without Celcom also to give a bit of color on the ambidextrous organization as Dato Idham refer Celcom to these days, focusing on convergence as well as enterprise. And as well as XL, we will also have a short presentation by XL to address some of the common concerns that investors and analysts have raised around the Indosat-Hutchison merger and what is our strategy moving forward in Indonesia. So I think that's the presentation for this afternoon. Over to you, Clare.

Okay. Thank you, Dato. So let's move on to the Q&A session. [Operator Instructions] So as usual, we will also be joined by our colleagues from Celcom, CEO Dato Idham; CFO, Jennifer as well as CMO Allan. From XL is CFO, Pak Budi; and edotco we have CEO, Adlan; as well as Dr. Hans, Group EVP. So feel free to engage with them if you wish during this Q&A session. So we'll start the Q&A session now. Any first questions?

So we have Foong on the line. So please, Foong from CIMB.

A couple of questions from me. Firstly, I wanted to ask about the recently proposed tax on foreign [indiscernible] that was in the budget 2022. And if that is passed, what would be the impact on Axiata's earnings and cash flows going into next year? And does this change Axiata's plan to be a high dividend company by 2024 because that really relies, right, on, OpCos streaming back dividends back to HoldCo? So that's question number one. Number two, with regards to new, recent case about the 5G wholesale pricing from DNB mentioned by the Finance Minister, any thoughts on that? Is that sufficiently low enough? And what are some of the other key critical areas you think needs to be sorted out before we can proceed with the commercial wholesale agreements? Or are we all set to go here? And third question on the XL and Axiata joint acquisition of Link Net, appreciate if you can give us a bit more color as to why it has taken so long to crystallize that decision to acquire. What are some of the considerations that are currently being undertaken? Those are my 3 questions.

Okay. I'll try to respond on the first question and perhaps Vivek can chime in. On the second question, I'll give some color or I'll try to give some color on this, although you would appreciate here Foong, the discussions or negotiations with Digital Nasional is ongoing. I think it'd be very premature for any of us to say anything in this forum because the many aspects of that process, not just the financial or commercial terms, but as well as the technical configuration that the MNOs, including us, that are in discussions with Digital Nasional. But perhaps on the tax bit, yes, Cukai Makmur, the tax on foreign source income, well I guess, as you qualify, if it's approved as proposed, it will have an impact. However, we are maintaining our plans based on our current -- looking at the initial estimates of how that would impact us to also -- to retain that plan to be the different company by 2024. Now having said that, just so you know, we're in the midst of getting our business plan for financial year 2022 approved by the Board -- to be formally approved by the Board. We are anchoring that business plan on dividend growth, well at least from this year to next year, towards that MYR 0.20 -- minimum MYR 0.20 for 2024. So the short answer to your question, we still are maintaining that -- those plans, notwithstanding the possibility of foreign source income being taxed, which could have an impact on Axiata's dividend flow next year. 5G wholesale pricing is, as I mentioned, discussions are ongoing. Then -- and it would be a bit premature for us to make any comments in this forum. Sorry, Vivek, you want to mention anything about the tax effect?

Well, I think you covered it well. I think just on the Cukai Makmur, obviously, it's 1-year impact so far as we read. And so it's not a long-term implication, which is there. So I think when we say dividend yield company, I think we are looking at a much long-term view on that, as you've said, 2024, et cetera. So I think there would be impact, but we think this is a onetime impact. As far as foreign source income is concerned, it's still not very clear because our dividend is coming from other countries. There are -- in most of the countries where we have operations, there are double taxation agreements except in Nepal. And so we should be able to get certain benefits coming out of the double taxation agreement as well as we need to understand how this dividend is going to be still a separate chapter or it's going to be part of overall income because we have corporate expenses, et cetera, we will cut. So I think we need further clarity on this before we can say really how much is the impact going to be. So I think, yes, there would be impact, but on the Cukai Makmur is more about 1-year impact. The other 1 is something which we're still evaluating, and we'll wait for the details before we can comment on.

Thanks, Vivek. Dato Idham, do you want to add anything on the 5G wholesale pricing or discussions -- ongoing discussions?

Perhaps we can...

Okay, time up. On Link Net, yes, yes, you recall we announced the intention or -- to enter into discussions with the 2 vendors, CVC and Lippo. Why it's taken a bit of time is we're actually in the -- we actually decided to do a complete due diligence exercise on the business, operational, technical, legal and so on. So it took a bit of time. We are also -- negotiated the sale purchase agreement, both at the tail ends of that exercise. We're hoping to get our formal Board approvals soon and announce the transaction in due course, hopefully before the year-end. The other aspect to this is the capital markets in Asia, they have certain peculiarities. And depending on the configuration, depending on the structure, there's -- we needed to look at the tax aspects of the transactions in terms of structuring as well as funding that acquisition in due course. So that's why it took a bit of time. No -- something blocks insofar as I'm concerned, insofar as I can see, but we hope to do that in the next -- before year-end, for sure.

I understood, Dato. I'm not sure whether Dato Idham is able to...

Say anything?

Say anything at this point, yes. Technically, I mean, I'm not sure whether he still has medical issues. But I just wanted to also -- I mean, I know your point on the discussions with DNB, Dato, and with regards to also the technical configurations and all that still needs to be discussed, but I just wanted to understand whether the wholesale pricing that was mentioned, right, MYR 0.20 per gigabyte, is that something that seems pretty attractive for you guys or not really? Because if I look at, I think, the slides from last year's Investor Day and you guys have shown, right, one of the slides that you guys were also trying to bring down the cost per gigabyte. So is MYR 0.20 per GB something that is very -- is pretty low? Or do you think you could have also done it on your own if you have rolled out the network on your own?

Idham, can you take -- are you able to speak?

Perhaps -- I understand that he's muted on the other side, Celcom?

Can't speak.

Yes. I think there's still a little issue over there. Can we take the next question first and then we circle back? Yes. Give them about another 2 more minutes.

Just maybe a place marker for me. The USD 0.10 per gig, the USD 0.10 per gig we talked about is total cost. So maybe we're not comparing like-for-like to just look at MYR 0.20 per gig there. And there are also other aspects of that number that it's not the 1 number, yes, it's not the total cost. Idham?

Dato, they're trying to re-call on their laptop so take 2 minutes.

Okay. Foong, if you don't mind, we park this question first to get Idham connected and we'll take on other questions first.

Okay, no worries.

Foong, we'll circle back. Apologies on that.

I think is coming in now in the meeting.

Okay. Now in any case, we have a question from Paul, I believe from CLSA. So coming through at the group chat. May I know the reason for the lower net finance costs and taxes for the year? And any guidance on normalized effective tax rate? This is for the group lower net finance cost.

So I think at a group level, our net finance cost is down by around MYR 140 million compared to last year. And most of it is coming -- sorry, can you hear me? So most of that is coming from the borrowing which we did last year. So that brings down our overall cost because we did close that last year in August, which reduces our overall group cost as well as the lower cost coming in Celcom, where they have been able to trade on some of their debt, which was at a higher rate and also coming on some of the markets like Robi where the short-term borrowing rates have been considerably lower, given that there has been a surplus of liquidity [indiscernible] As well as the other markets, for example, Indonesia also seeing the interest rates in general coming down. So I think it's to do with the cost of borrowing at group as well as the overall interest rate environment in different markets. Having said that, I think this also does help -- because these are the rates, as I said earlier, pretty much larger volumes of that has been locked in for a longer period of time. As far as the tax is concerned, I think a couple of markets where we've had certain tax benefits coming in. One, we did have in Nepal, which I talked about because last year, Nepal did have to factor in part of the tax, which was relating to the previous period. So that's no longer the case. Second has been last year in Indonesia, there was impact coming in on the deferred tax, which cannot -- could not be utilized within the period available. So that's, I think, the effect, which is resulting in the lower taxes coming. So our effective tax rate has been marginally lower compared to -- at the group level compared to last year. Having said that, it's still effective tax rate is higher than the corporate tax rate because of certain regulations in certain markets, which require us to pay higher than what is the corporate tax rate in those markets.

Idham? Are you on the call?

Okay. Can hear me now, hopefully, you can -- some technical issue at the system level. Okay, sorry about that. Let me just try to add on a little bit to what Dato just said. I think what Dato said is actually we're right at this point in time, there's still a lot of discussion ongoing, is still progressing. It's progressing, it's improving as every time we discuss with the wholesale party, with DNB. Besides the commercial, there's also not just the technicalities of the 2 networks that need to work together but also the kind of experience. We want to make sure when we launch the 5G services, that the experience that the customer has, the way they come on board, the way they register and even when they have a problem, all that is also sorted out properly. So that's something that is being worked on between the organizations. Your question around the cost per gigabyte, yes, that's something is still being worked on with them, what is good enough. We actually -- it all depends on the kind of traffic that we expect to come in the 5G world. We have seen during the 4G to -- well, during the 3G to 4G migration, the traffic has increased quite significantly. And even if you have seen, in the past 12 months alone, in the 4G space, the traffic also, where we are today, if you go back 12, 18 months ago, we never expected for it to be where we are today. So that also will continue when we -- as we move into the 5G space. So some of this is still being worked on, whether the level that we're looking for, what would be the right level to say at the right cost per GB. And that's something that we need still to look at. I don't think we can confirm at this point in time. Whether we could -- your question whether we could have achieved the same level if we were to do it ourselves there, well, there's a lot of things that needs to be looked at. It's not just a comparison just like that. But of course, there's a lot of collaborations happening these days on our network even on the 4G itself and beyond just the passive infrastructure kind of collaboration, we're also doing active infrastructure sharing. So there are methods to reduce the cost. But there is something, I guess, that we can't compare at this point in time. I hope that helps.

Thanks, Paul. Paul, sorry, jumping back to your question. Is that a clarification from Vivek's, is that sufficient?

He actually texted in via the group chat.

Can he respond?

Presumably, that's fine. Yes, he says it's okay. Thank you. So let's move on. I think the next question's coming from Alex from Am.

Okay. Yes. I've got a few -- 3 questions. So first, of course, is Cukai Makmur, just asking in a different way, given the fact that Celcom is really starting to improve so much, would you try to ramp up your CapEx in such a way so that you will minimize your potential tax impact from the Cukai Makmur? And also could you give a bit of estimate on the potential quantum moves in terms of the corporate tax rate overall? Would it be a 1 or 2 percentage points? I know because it was -- I mean you've got operations like, so it wouldn't be just Celcom. So I mean is it only just Celcom? So I'm just wondering, could you give us a bit of estimate on the potential increase in terms of, yes, on your tax rate -- overall tax rate? The second one is regarding Digital Nasional. Supposing telecom nationals unify with the -- go ahead and pick on the wholesale agreement. Would that put pressure on Celcom to also jump in, even though it may not be value accretive for the group?

Okay. Is that the 2 questions?