EXCL – Leveraging AI to optimize network infrastructure & maintain cash-cost

EXCL – Leveraging AI to optimize network infrastructure & maintain cash-cost XL Axiata (EXCL) has spent 80% of its total capital expenditure (capex) budget for this year up until the third quarter of 2024. Director and Chief Technology Officer of EXCL, I Gede Darmayusa, stated that XL Axiata has allocated approximately IDR8 tn for capex in 2024. This means that EXCL has already spent around IDR6.4 tn from January to September 2024. By the third quarter of 2024, the majority of the capex allocation has been used to expand data transport, add to the core business, and improve network operations. He said almost all capex in the radio segment is accompanied by improvements in its operations. Thus, efficiency can be maintained in the medium to long term. EXCL aims to no longer have additional operational costs (opex) in the coming years, despite plans for expansion. This includes the expansion of BTS towers. President Director and CEO of EXCL, Dian Siswarini, added that this is indeed a challenge. However, with EXCL's innovation in artificial intelligence (AI) technology, the company hopes to achieve its target. (Source : Kontan) Comment : Like other MNOs, EXCL's adoption of AI is not merely a trend but a strategic move to transform and improve performance. In fact, EXCL has been utilizing AI since 2020. Therefore, we support the adoption of AI within the company, given that AI can maintain opex stability while increasing infrastructure capacity and data traffic. It's worth noting that EXCL's EBITDA in 1H24, which reached approximately IDR1 tn, was driven by operational optimization using AI. The company has previously stated that with AI, operational cost optimization can reach 20-25%. However, we argue that the use of AI has not yet directly impacted EXCL's revenue. The impact of AI on revenue is expected to be realized in the medium to long term.