Advertisement
Singapore markets closed

  • Straits Times Index

    3,280.10
    -7.65 (-0.23%)
     

  • Nikkei

    37,934.76
    +306.28 (+0.81%)
     

  • Hang Seng

    17,651.15
    +366.61 (+2.12%)
     

  • FTSE 100

    8,139.83
    +60.97 (+0.75%)
     

  • Bitcoin USD

    62,918.89
    -1,604.82 (-2.49%)
     

  • CMC Crypto 200

    1,304.48
    -92.06 (-6.59%)
     

  • S&P 500

    5,099.96
    +51.54 (+1.02%)
     

  • Dow

    38,239.66
    +153.86 (+0.40%)
     

  • Nasdaq

    15,927.90
    +316.14 (+2.03%)
     

  • Gold

    2,349.60
    +7.10 (+0.30%)
     

  • Crude Oil

    83.66
    +0.09 (+0.11%)
     

  • 10-Yr Bond

    4.6690
    -4.7060 (-50.20%)
     

  • FTSE Bursa Malaysia

    1,575.16
    +5.91 (+0.38%)
     

  • Jakarta Composite Index

    7,036.08
    -119.22 (-1.67%)
     

  • PSE Index

    6,628.75
    +53.87 (+0.82%)
     

Digilife Technologies not renewing distribution agreement with Indonesian telco XL Axiata

Bryan Wu
·2-min read

The strategic decision for non-renewal will result in a reduction in overall revenue and profitability for the FY2024.

Digilife Technologies BAI has announced that its subsidiary PT Selular Global Net (SGN) has decided not to participate in the distribution agreement renewal process of Indonesian telecom operator XL Axiata on Feb 20.

As such, XL Axiata has notified Digilife Technologies that the telecom distribution agreement between SGN and XL Axiata shall not be renewed after its term expires on Feb 29. Following the non-renewal, SGN will cease to be a distributor for XL Axiata, with a transition period expected to be completed by March 31.

ADVERTISEMENT

In terms of rationale, Digilife Technologies says the strategic decision for non-renewal was made after careful consideration of several factors, including XL Axiata’s change in distribution strategy.

In January, the telco announced its intention to consolidate its distribution channels from 21 distributors to just six, with SGN being one of them. However, Digilife Technologies says this consolidation strategy included substantial reductions in distributor margins and required significant additional capital investment, with “uncertain returns”.

Additionally, the company says it views the distribution business in Indonesia as a legacy model that could face disruption in the future due to the emergence of new digital channels and organised retail across Southeast Asia, including Indonesia.

The non-renewal will result in a reduction in the overall revenue and profitability of the group for the FY2024 ending Dec 31. For FY2023, XL Axiata’s distribution business contributed approximately 19% to overall group revenue.

However, Digilife Technologies notes that the revenue reduction will be accompanied by a corresponding reduction in associated costs. XL Axiata will facilitate the transition in accordance with its guidelines and policies, resulting in the release of working capital used by the company.

The company says it also intends to explore increasing its distribution volumes with other telecom operators in Indonesia.

Shares in Digilife Technologies closed 4 cents higher or 2.78% up at $1.48 on Feb 20.

See Also: