AXIATA: Strategic Transformation Fuels Optimism for Telecoms Major, Strong Outlook Projected

A leading telecommunications group is reaffirming its strategic direction for dividend and valuation expansion, with robust earnings growth anticipated from FY27, driven by stronger integration synergies across its key markets. An investment bank has maintained its positive outlook on the stock, citing ongoing strategic execution and asset deleveraging efforts.

Strategic Progress and Performance Outlook

The company recently reviewed its “5×5 Strategy,” emphasizing portfolio transformation and growth as core priorities for the 2026-2028 period. Management has set clear financial targets, including a Dividend Per Share (DPS) growth of at least 10% year-on-year from FY26 and a net debt/EBITDA target below 2x, excluding asset monetisation impacts. These targets are underpinned by several factors: deeper integration synergies across its Malaysian, Indonesian, and Sri Lankan operations; an improving macroeconomic environment in Bangladesh; upside potential from 5G monetisation; and successful price repair initiatives in Indonesia, Sri Lanka, and Bangladesh. Within its digital businesses, Boost is notably expected to achieve EBITDA-positive status by the end of 2026.

Asset Monetisation and Deleveraging Efforts

Significant progress is being made on infrastructure asset monetisation, with the divestment of edotCo in FY26 identified as a key focus. The group is also firmly on track to achieve a net debt/EBITDA target of 2.5x by the end of FY26. This is being driven by ongoing reductions in group and holdco debt, coupled with USD debt reduction and refinancing across frontier markets. Overall debt decreased substantially in the first nine months of FY25, following the deconsolidation of XLSmartfren’s debt, repayment of holdco debt, and early redemption of USD holdco bonds, alongside other market-wide debt reductions.

Challenges and Risks

Despite the positive momentum, the company faces certain headwinds. Caution regarding ongoing market investability concerns in Indonesia could potentially affect the sale of its 73.5%-owned Link Net. Furthermore, the stock’s valuation is currently perceived as undemanding, trading at 1.8 standard deviations below its historical EV/EBITDA mean. This valuation likely prices in concerns related to execution risks and policy headwinds. Key risks identified in the report include potential delays in realizing integration synergies, intense competition in frontier markets, weaker-than-expected earnings, and the continued strength of the Malaysian Ringgit.

Investment Rationale

The investment bank maintains a positive “BUY” recommendation, reiterating its confidence in the company’s robust strategic execution, aggressive asset monetisation initiatives, and disciplined deleveraging efforts. These factors are expected to continue driving value creation and sustainable growth for shareholders.