The various credit agreements worth nearly US$200 million secured by mobile network operator PT XL Axiata (EXCL) this week will not only aid the company's capital expenses but also its cash flow equilibrium, analysts and company representatives have said.
XL Axiata signed a credit agreement with Bank of Tokyo Mitsubishi worth $100 million and with Bank Sumitomo Mitsui Indonesia valued at Rp 1 trillion ($89.4 million).
A spokesperson for XL Axiata, Turina Farouk, said the operator took out the credit facilities because it "did need external funding" this year, with bank loans being an alternative.
"We became interested in the credit facility offer from Sumitomo Mitsui because the loan is in rupiahs. Besides, we find the interest rate competitive," she said.
She added that the operator would utilize the credit facility for "general corporate purposes".
The credit facility from Sumitomo Mitsui is open for three years since the date of withdrawal. No collateral was involved in the agreement.
Similarly, the $100 million credit facility from Tokyo Mitsubishi was without collateral, and was available for a three-year period since withdrawal.
XL Axiata has stated that it intends to utilize the Tokyo Mitsubishi credit facility for its annual capital expenditure (capex).
According to Danareksa Sekuritas analyst Chandra Pasaribu, the loan agreements secured by XL would aid it in paying off debts.
"The credit facilities can be utilized to refinance due debts," he said.
XL Axiata reported a 16 percent year-on-year increase in its total liabilities to Rp 23.5 trillion in the first half of the year.
The country's third-largest operator by market share based on subscribers booked Rp 10.3 trillion gross revenue, or 1 percent higher than the previous year.
However, it recorded a 54 percent profit dip for the period, sinking to Rp 670 billion, partly due to a Rp 69 billion unrealized foreign exchange loss.
However, Fitch Ratings has not downgraded the operator's rating, currently at BBB with stable outlook, because 92 percent of its foreign debt, standing at $319 million or 19 percent of their overall debt, was hedged.
Chandra added that the credit facilities had helped maintain the operator's cash flow equilibrium as well, given that the operator has financial obligations not only in debt repayment but also in business
expansion expenses.
"XL Axiata has budgeted between Rp 8 trillion and Rp 9 trillion for its capital expenses this year, and it will not be pulling back on capital expense plans because it is in the midst of upgrading the capacity and quality their third generation [3G] networks," he said.
"Thus, the credit facilities ensure that XL Axiata's cash flow has remained in good shape despite commitments in covering both debts and capital expenses," he said.
However, he added that if the rupiah were to depreciate further against the dollar, XL Axiata would have to recalculate its capital expense allocation.
The rupiah has depreciated by 10 percent between January and August this year.
"It is too early to recalculate capital expenses because the rupiah has been weakening only in the last two months. But if the trend were to continue, or if the rupiah were to remain at the 11,000 level per dollar, then XL Axiata might have to reconsider its capital expense allocations," he said.
