Axiata On Track To Achieve Gearing Ratio Of 2.5 Times Net Debt To EBITDA In 2026
KUALA LUMPUR, Aug 28 (Bernama) -- Axiata Group Bhd is on track to achieve a gearing ratio of 2.5 times net debt to earnings before interest, taxes, depreciation, and amortisation (EBITDA) by the end of 2026, as the level stood at 2.76 times as at June 30, 2025.
Its chief financial officer, Nik Rizal Kamil Nik Ibrahim Kamil, said the group managed to record a significant reduction in borrowings to RM17.7 billion as of June 2025, compared to approximately RM22 billion in the first quarter, due to the deconsolidation of the debt from XL Axiata.
“We have completed the merger of XL Axiata and Smart Friend in the middle of April, and hence for the two and a half months in quarter two, the new merged entity XL Smart, in which Axiata now holds 36.9 per cent, became a joint control entity and as such equity accounted as an associate.
“As such, we no longer needed to consolidate the large debts in XL, and that improved the group's borrowing position quite decently,” he told a virtual media briefing on the group's second quarter financial performance here, today.
At the group core level, Nik Rizal said the group also reduced core debt by about RM1.4 billion, mainly due to the repayment of the multi-currency term loan that was up for maturity in June, amounting to US$250 million or about RM1.1 billion.
Meanwhile, he said the group has also exercised capital prudence as part of the new engagement model and strategy for Axiata
“We look at capital intensity down at the operating companies (OpCos) level, where, as part of the new engagement model, we have established the OpCos board investment committee, which reviews, on a quarterly basis, for example, capital expenditure and investments that need to be made to ensure discipline around capital allocation.
“So, that's how we balance in terms of the growth requirements and for some of our OpCos, especially the telcos, the next wave of growth or investments will need to be in the 5G space,” he said.
Explaining further, Nik Rizal said it takes a lot of capital to essentially invest in modernising and upgrading the network to 5G, including spectrum payments.
“This is where capital discipline and prudent capital allocation that we've been doing over the last two years will ensure that we are in a good position to enable our OpCos to fund these growth initiatives going forward," he said.
For the second quarter ended June 30, 2025, Axiata Group posted a higher net profit of RM270.82 million as compared to RM134.90 million in the same period last year, while revenue declined to RM2.97 billion from RM3.32 billion previously.
In a filing with Bursa Malaysia, the group said the lower revenue was mainly due to the unfavourable impact of foreign currency translation, as the currencies of the OpCos depreciated against the ringgit.
Its group chief executive officer and managing director, Vivek Sood, said Axiata’s performance reflects the strength of the group’s strategic realignment and disciplined execution, with a clear emphasis on operational excellence, improved market structure, and strengthening of the balance sheet.
“By repositioning our portfolio into long-term strategic businesses and medium-term monetisable assets, we are sharpening our focus on connectivity and convergence while unlocking value across Axiata’s infrastructure and digital verticals.
“The completion of the XLSMART merger and our exit from Myanmar reflect decisive actions under our 5*5 strategy, removing structural risks and enhancing our financial flexibility. With all our mobile markets now consolidated down to three players, we are seeing greater market stability,” he said.
In the second half of 2025, Vivek said Axiata will intensify its commitment to portfolio objectives by prioritising improved cash flow and enhanced yield.
“Our key priorities will include driving operational performance and executing necessary portfolio moves to ensure optimal capital allocation in line with our strategic objective of enhancing dividend yield,” he added.
On another note, Vivek said Axiata Group is also open to pursuing asset monetisation opportunities to ease its debt load, with the focus on strengthening the balance sheet by plugging leakages at the group level.
“On asset monetisation, we are ready to talk about it, and we will communicate that to the market or as required by regulators. It is very important to note that we are a yield company; we are a high-dividend company, and this is only possible if leakages at the group level are reduced. That is a clear strategy,” he said.
Regarding the alleged takeover of the group by a Khazanah Nasional Bhd–Employees Provident Fund consortium, Vivek neither confirmed nor denied the matter, saying he could not comment on issues that may be speculative.
In April, news reports claimed the consortium was eyeing Axiata’s 63 per cent stake in its telecommunications tower arm, Edotco Group Sdn Bhd, in a deal aimed at helping the group pare down debt.
-- BERNAMA