Unpacking Axiata’s Latest Financials: A Story of Resilience and Strategic Shifts

Axiata Group Berhad, a prominent telecommunications conglomerate in Asia, has just released its unaudited interim results for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s performance amidst a dynamic market landscape. While top-line revenue faced headwinds, a significant surge in profit after tax caught the eye, driven by strategic financial management and a clear focus on future growth.

Let’s dive deeper into the numbers and strategic moves shaping Axiata’s journey.

Q1 2025 Performance: A Closer Look at the Numbers

Axiata’s financial performance for Q1 2025 presents a mixed picture, with revenue experiencing a decline primarily due to currency translation impacts. However, the company demonstrated strong cost management and favourable financial dynamics that significantly boosted its bottom line.

Group Financial Highlights (Q1 2025 vs Q1 2024)

Here’s a snapshot of the key financial indicators comparing the latest quarter to the same period last year:

Group revenue decreased by 11.3% to RM5,088.9 million, primarily due to the depreciation of operating companies’ currencies against the Malaysian Ringgit. At a constant currency rate, the decline was a more modest 2.3%, impacted by lower contributions from digital telco operations in Bangladesh, Infrastructure (Link Net) operations in Indonesia, and Digital operations (ADA).

EBITDA and EBIT also saw declines of 12.5% and 12.2% respectively (3.0% and 2.0% at constant currency), reflecting the lower revenue. However, the impressive surge in PAT and PATAMI (53.0% and over 100% respectively) was mainly driven by foreign exchange gains in Q1 2025, a significant turnaround from foreign exchange losses in Q1 2024, coupled with lower finance costs and taxes. This highlights the importance of financial hedging and treasury management in a volatile currency environment.

Geographical and Segmental Performance Rundown

Axiata’s diversified portfolio across various geographies and segments tells a nuanced story:

• Indonesia (Digital Telco): Revenue decreased by 8.2% (but increased by 1.9% at constant currency) to RM2,339.5 million, driven by higher interconnect, data, and digital revenue. However, PAT dropped by 35.7% (28.6% at constant currency) due to higher operating costs and lower toplines.
• Bangladesh (Digital Telco): Faced significant macroeconomic challenges, leading to a 21.0% revenue decrease (7.0% at constant currency) to RM856.8 million. Despite this, PAT marginally declined by 0.1%, and at constant currency, it increased by 17.6% due to lower finance costs, taxes, depreciation, and amortisation.
• Sri Lanka (Digital Telco): Revenue remained relatively stable, decreasing by only 0.4% (but increasing by 0.3% at constant currency) to RM650.4 million, benefiting from the consolidation of Airtel Lanka’s revenue. Notably, EBITDA surged by 44.4% and PAT by 48.3% due to effective cost rescaling efforts.
• Cambodia (Digital Telco): Revenue slightly decreased by 2.3% (but grew by 3.6% at constant currency) to RM461.6 million, propelled by data revenue growth. EBITDA also grew by 5.3% (11.8% at constant currency), indicating strong operational efficiency.
• Infrastructure (EDOTCO): Revenue decreased by 4.3% (but increased by 3.3% at constant currency) to RM660.4 million, supported by organic growth in the Philippines, Pakistan, and Myanmar. PAT increased by more than 100%, benefiting from lower depreciation and amortisation (due to reassessment of asset useful life) and foreign exchange gains.
• Infrastructure (Link Net): Revenue declined significantly by 20.0% (11.2% at constant currency) to RM220.4 million, largely due to the transfer of its business-to-consumer segment to XL. This resulted in a PAT loss of RM96.5 million.
• Digital (ADA): Revenue decreased by 4.6% to RM225.7 million due to lower customer engagement revenue. However, EBITDA jumped by 79.8% and PAT by 61.2% from effective cost management.
• Digital (Boost): Revenue increased by 36.0% to RM45.6 million, driven by higher interest income from loan disbursements and Boost Bank. Despite this, EBITDA and PAT recorded losses, primarily due to higher operating costs.

Financial Health: Balance Sheet and Cash Flow

Examining Axiata’s financial position provides further insights:

Axiata’s total equity slightly decreased from RM27,576.7 million at the end of 2024 to RM26,978.1 million as of March 31, 2025, with net assets per share at 225 sen (down from 231 sen). Total borrowings saw a slight reduction from RM23,190.9 million to RM22,846.7 million, indicating ongoing debt management efforts.

From a cash flow perspective, cash flows from operating activities decreased to RM1,550.8 million (from RM1,896.7 million in Q1 2024). However, cash flows used in investing activities significantly reduced to RM891.3 million (from RM1,359.6 million in Q1 2024), partly due to lower capital expenditure on property, plant and equipment. Cash flows used in financing activities also saw a reduction. Overall, Axiata achieved a net increase in cash and cash equivalents of RM166.6 million in Q1 2025, a positive reversal from a net decrease of RM6.3 million in the same period last year.

Strategic Outlook and Potential Hurdles

Axiata is actively implementing its “5*5 Strategy” to drive sustainable growth and value creation across its diverse portfolio. The company has re-aligned its holdings into two key categories:

• Long-term Strategic Holdings: Digital Telcos like CelcomDigi (CDB), XL Axiata and Smartfren (XLSMART), Smart, Robi, and Dialog. The focus here is on growing long-term cashflows, particularly through realizing merger synergies.
• Medium-term Value Illuminator and Monetisable Holdings: EDOTCO, Link Net, ADA, and Boost. These entities aim to attract external capital to improve their business sustainability and provide proceeds for debt reduction and new profitable growth opportunities.

A significant development is the completion of the merger between XL and Smartfren in Indonesia on April 16, 2025, forming XLSMART, where Axiata holds an effective shareholding of 36.9%. This strategic move is expected to