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Smart acquisition paid off for Malaysian firm

Smart acquisition paid off for Malaysian firm

Axiata, the Malaysia-based parent company of Cambodia’s second-largest telecommunications provider, Smart, posted a rise in total revenues for 2013 to $5.5 billion. The boost represents a 4.1 per cent increase from the fourth quarter of the previous year.

Driven by its Malaysian, Bangladeshi and Cambodian operations, Axiata’s end-of-year financials – which were revealed in a statement on its website yesterday – show that compared to 2012, gross revenue from the Cambodian side increased 206 per cent last year, while net profit increased 182 per cent.

Attracted by the large pool of subscribers to Smart, Axiata’s local subsidiary, Hello, bought the firm in February of 2013 for $156 million. In the financial statement yesterday, the acquisition was named as the stand-out reason for the positive financial results.

Smart’s prepaid phone user revenue contributed 73 per cent to the end-of-year total, while its subscriber base rose from 800,000 in 2012 to more than 3.4 million in 2013.

Thomas Hundt, CEO of Smart, admitted that 2013 had been both a stressful and a highly exciting year, referring to the deal to form the company now known only as Smart.

“We are cautiously optimistic for 2014. We see continuous growth, especially but not limited to our mobile internet service,” he said.

Hundt last month announced Smart’s new 4G LTE network rollout. He said yesterday, however, that the company would focus investment on expanding Smart’s existing 3G network.

Kevin Der Arslanian, telecommunications analyst and partner at consulting firm China Metrix in Shanghai, said Smart would not have been able to post such great numbers without the Hello merger.

“It allowed Smart to reduce its costs, improve its service and relieve its financial pressure at almost no cost,” he said. “Overall a textbook example of a win-win scenario and proof that consolidation in Cambodia’s telecom market is the solution.”

Der Arslanian said he expects greater results in the Cambodian telco market in the coming years as demand for mobile data services increase.

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