"The priority will always be in terms of deleveraging, but of course this will then free up cash flows to ensure that we can progressively increase the annual dividend payment that we make to our shareholders.” — says incoming CEO and MD Nik Rizal Kamil Nik Ibrahim Kamil
KUALA LUMPUR (May 25): Axiata Group Bhd (KL:AXIATA) said shareholders can expect progressively higher dividends in the coming years as the group pushes ahead with its divestment plans, including stake sales in tower company edotco Group Sdn Bhd and Indonesia-based fibre company Link Net Tbk PT, to pare down debt and strengthen cash flows.
The telecommunications group said the planned monetisation exercises form part of its three-year growth road map dubbed “Axiata28: Advancing Asia”, which targets at least 10% annual dividend growth from the financial year ending Dec 31, 2026 (FY2026), alongside lower leverage and improved shareholder returns.
Axiata’s dividend remained unchanged at 10 sen per share for FY2023, FY2024 and FY2025, while management guidance points to a rise to 11 sen in FY2026 and 12.1 sen in FY2027.
Outgoing group CEO and managing director Vivek Sood said the group expects stronger cash generation from its operating companies as debt servicing costs decline following planned asset monetisation exercises.
“If we are able to do the monetisation which we’ve been planning to do in 2026 for the towers (edotco) as well as LinkNet, we should be able to further pare down holding company debt, which does mean that whatever the cost of servicing the debt in the holding company comes down substantially,” he told reporters during the group’s first quarter results briefing on Monday.
“You would see clear translation of the dividend flow from the operating companies back to the shareholders,” he added.
Vivek said Axiata is also expecting the full impact of merger synergies from CelcomDigi Bhd (KL:CDB) in Malaysia and XLSmart in Indonesia to materialise from 2027 onwards.
“We’ve said around RM700 million to RM800 million run-rate savings in Malaysia and around US$300 million to US$400 million in synergy savings from Indonesia,” he said.
“If those synergies are going to translate into better earnings, I think we should be able to get better dividend flow coming from these markets,” he added.
Vivek, who has led the group since 2023, is set to be succeeded by chief financial officer Nik Rizal Kamil Nik Ibrahim Kamil as group CEO and managing director on June 1.
Nik Rizal, who was present at the results briefing, maintained that any proceeds raised from the monetisation exercises would primarily be used for deleveraging.
“The priority will always be in terms of deleveraging, but of course this will then free up cash flows to ensure that we can progressively increase the annual dividend payment that we make to our shareholders,” he said.
Axiata’s net debt-to-Ebitda target under the Axiata28 strategy is below two times by 2028, compared with its earlier target of 2.5 times.
As at March 31, 2026, the group’s net debt stood at about RM15.1 billion, slightly up from RM15.05 billion as at Dec 31, 2025.
Debt reduction outweighs earnings quality concerns
In March, S&P Global Ratings cautioned that divestments of edotco and LinkNet could weaken Axiata’s earnings resiliency and increase its exposure to higher-risk frontier markets such as Bangladesh, Sri Lanka and Cambodia.
Responding to the concerns, Nik Rizal said the rating agency’s assessment was largely based on sovereign risk exposure rather than the group’s cash-generating ability.
“What is more important for Axiata, as how we see the group, is the cash generation and the cash flow that is generated by these operating companies and the ability for these companies to pay out dividends,” he said.
He noted that only about RM50 million of the RM1.7 billion dividends upstreamed to Axiata in FY2025 came from edotco, as the tower unit remains in a growth phase, requiring continued reinvestment.
Vivek added that reducing debt through monetisation would also lower the group’s overall risk profile.
“The context of monetisation to be used for paring down our debt also helps because overall if the debt is down, the risk associated with the earnings quality also comes down substantially,” he said.
Axiata has previously identified edotco, LinkNet, fintech platform Boost and digital analytics company ADA as among the assets being evaluated for monetisation as part of its broader portfolio optimisation strategy.
"We are still evaluating the path for monetisation for this portfolio of assets within the Axiata group. And whilst we do that, we still continue on track with the value illumination work with regard to increasing the value for these assets," Nik Rizal added when asked about the progress of the monetisation efforts.
Shares of Axiata closed up seven sen or 3.6% at RM2.02 on Monday, valuing the group at RM18.56 billion.