XL Axiata Installs "Yellow Signs" for Digital Business

The digital business, which has now been run for several years by the three largest telecommunications operator companies in Indonesia, is now starting to show signs of starting to gasp for breath.

When Indosat Ooredoo has blatantly stop at a red light, Telkomsel precisely show position is at the green light. For example, they plan to inject additional capital for Blanja of Rp500 billion. The XL Axiata, on the other hand, shows its position in the yellow light.

Currently, XL Axiata (XL) is conducting a review of all digital businesses that the company has engaged in since it first entered in 2013. Later there will be some products that are maintained or discontinued.

XL's digital services cover seven segments, namely digitalentertainment (Yonder and Tribe), business innovation, (XL Cash), mobile advertising (m-Ads), cloud computing (XCloud), internet of things (XL IoT), and e-commerce business (Elevenia).

"When we first entered [digital business] in 2013, we placing bets with a lot of play in all digital segments. Now we are again scanning which one to transfer, which one to turn off," said XL Axiata President Director and CEO Dian Siswarini, Friday last week.

So far, Dian is reluctant to reveal in more detail how long the company will complete the review process and which product segments have the potential to be discontinued or continued.

It's just that there is a possibility that XL will retain Elevenia. The reason is, Dian claims that Elevenia's business growth is recorded at more than 50% every year. Currently, Elevenia is still at a loss and has not had a significant impact on the company.

To support Elevenia's business to be faster, it is looking for new investors to inject fresh funds. It is targeted that this process will be completed in August 2017. Dian has not disclosed detailed information regarding the corporate action.

"Elevenia is now in progress fundraising, has been running about three months ago. The enthusiasm of [potential investors] is good, now they are being picky. Are we leaving? The answer has not been determined, it is still under analysis. Because Elevenia is good in terms of transactions and unique visitors-his."

Apart from Elevenia, Dian said that XL's digital business that will most likely be maintained is internet of things (IoT).

Meanwhile, for the XL Tunai electronic money service, his party is still considering whether to follow in the footsteps of Dompetku or not. According to Dian, the use of XL Tunai has an impact on increasing the loyalty of XL users because their cellphone numbers can be used for online transactions.

"Meanwhile, if spin-off, the e-money license is not transferable. For development payment in the future, we are sure payment in the future is on the smartphone. But the problem is, e-money it is one of the sources of funds, whereas payment The source of funds can come from anywhere. We're considering that."

Need big financial support

In line with the previous statement by Indosat CEO Alexander Rusli, Dian said that the digital business has different metrics from the telecommunications operator business. In the first year of operation, it is certain that it has not created income. The assessment of performance measures is also different, usually seen from transactions, the number of visitors, active users, and others.

"So for a digital business, if you want to grow large transactions, you need a bigger capital injection."

As an illustration in order to support Elevenia's business, XL has twice injected capital into Elevenia since it was first established in 2013. In total, the disbursement of funds provided by XL Axiata to its e-commerce subsidiary reached $68,3 million (more billion Rupiah).