KUALA LUMPUR (July 2): Axiata Group Bhd’s (KL:AXIATA) gearing could improve with Edotco Group Sdn Bhd divestment, which is estimated to rake in proceeds of between RM3.1 billion and RM5.6 billion, said Maybank Investment Bank.

“Our updated simulation of Edotco divestment at 6.5-9.0 times enterprise value over earnings before interest tax and amortisation (EV/Ebitda) implies potential proceeds of RM3.1-5.6 billion to Axiata.

“By our estimates, Axiata’s net debt to Ebitda would drop from 2.4 times pre-divestment to 0.6-1.2 times (compared with 2.4 times in end-1Q25),” it said in a note on Thursday.

Edotco operates and manages more than 47,000 towers across eight countries — Malaysia, Indonesia, Bangladesh, Cambodia, Sri Lanka, Pakistan, the Philippines and Laos.

Axiata has a 63% stake in Edotco, while sovereign wealth fund Khazanah Nasional Bhd owns 32% and the rest is held by Retirement Fund Inc, also known as KWAP.

"Management has already articulated an intention to divest the infrastructure assets (Edotco and Linknet), and is working on formalising potential transactions in 2026. We note Edotco is of more significance to Axiata given its relative size and profitability," said Maybank IB adding that hese potential transactions are anticipated to be formalised this year.

The research house reiterated its ‘buy’ call on the telco firm with an unchanged target price of RM2.90.

Assuming an 11 sen dividend-per-share in FY26, Axiata offers a dividend yield of 5%.

“We continue to view Axiata’s overall risk-reward as being positive, with net profit recovery and balance sheet repair being potential re-rating catalysts,” it added.