JAKARTA: Indonesia's third largest mobile phone operator PT XL Axiata Tbk has postponed a plan to accelerate the repayment of its long-term debts amounting to IDR500 billion as it has less cash than it had expected.President Director Hasnul Suhaimi said the accelerated debt settlement may be delayed to September or third quarter this year from second quarter in the initial plan.Hasnul is not sure either if the company could meet its plan to accelerate debt payments totalling IDR 2 trillion within this year.XL Axiata has earlier planned to make debt prepayment of IDR500 billion in each quarter this year.In IQ/2011, XL repaid IDR900 billion in long-term debts. The payment was channeled to a number of banks, including Bank Mandiri which received IDR400 billion and ANZ Bank IDR250 billion. XL Axiata has total loans of IDR9.08 trillion currently.Johnson Chan, of XL Axiata Corporate Finance, said XL will prepay IDR1 trillion of debts in IIIQ/2011 so the company could still meet its IDR2 trillion debt prepayment target this year.A while ago, Chan stated the loan payment acceleration would be conducted to reduce its interest expenses. The company had huge interest expenses in 2008 and 2009 but it has gradually declined since 2010.XL Axiata, 66.71% owned by Axiata Berhad, spent IDR1.12 trillion in interest expenses in 2008, IDR1.27 trillion in 2009, and IDR842.6 billion in 2010, according to its financial statement.In 2010, the GSM cellular telecommunications provider used its internal cash to make debt prepayments amounting to US$131 billion, IDR4.9 trillion and US$59 million, respectively.XL also settled US$52 million debt that was due in 2010 so its debt position at the end of last year was at IDR10.2 trillion, 24% lower than a year earlier where total debts were at IDR13.5 trillion.In a CLSA Asia-Pacific Markets research report dated June 1, 2011, XL Axiata's net profit was said to benefit from narrower financing expenses by 35% to IDR780 billion from IDR1.21 trillion amid interest expanses reduction.The bright performance was the result of XL's efforts to reduce its gearing level from 407% in 2008 to 84% in 2010. We predict its gearing level will continue to decline. We also estimate XL's revenue will grow 16% this year and 12% in 2012, said the research.Market saturationWith a 70% penetration level, Indonesia cellular market is moving toward saturation and is facing a tight competition, with a total 12 providers sharing the pie.Despite such situation, XL has positioned itself strongly in the cellular market. XL currently serves 41 million and is projected to slow in the coming years due to market saturation and limitedopportunities to speed up revenue growth.For XL, the growth in the number of subscriber would be the driver for its revenue growth. (T05/NOM)
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