Company Coverage
Axiata Group (AXIATA MK): Monetisation Still On The Table; OpCos Resilient In 2Q26
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM1.91
RM2.50
30.9%
RM3.00
Analyst
Highlights
- Management continues to articulate that the edotco’s monetisation process will happen in 2026. The process may include an initial or partial trade sale of assets and even an IPO beyond this year. Our assessment suggests that edotco’s monetisation must happen at 10x EV/EBITDA to be earnings accretive.
- OpCos are expected to deliver resilient 2Q26 results, despite inflationary pressure shrinking consumer wallets in frontier markets. In the longer run, Axiata aims to deliver an annual dividend growth of 10%.
- Maintain BUY with a lower SOTP-based target price of RM2.50. We have raised the holding company discount, factoring in timeline uncertainty with regards to asset monetisation. Downside is supported by a 6% dividend yield.
Analysis
- Tower asset monetisation to materialise in 2026. In an analyst briefing, management indicated that the long-awaited monetisation of edotco may proceed through a phased approach, with an initial or partial monetisation potentially being completed in 2026. The group is actively evaluating various monetisation structures, including an IPO or a hybrid strategy comprising an IPO alongside the divestment of selected regional assets, subject to valuation considerations and prevailing market conditions. Our analysis suggests that valuation for edotco is earnings accretive at 10x EV/EBITDA.
- We expect resilient 2Q26 OpCos performance. We expect Axiata's key operating companies to report resilient earnings in 2Q26. This is despite
concerns over inflationary pressure and consumer affordability across frontier markets. That said, a key risk to 2H26 earnings is likely shrinking consumer wallets due to the prolonged Middle East conflict.
- Grow underlying dividends by 10%. Management remains confident that its key OpCos will grow and achieve targeted dividend contribution. This will pave the way for Axiata to achieve at least 10% annual dividend growth rate in the medium term. To recap, OpCos contributed RM1.7b in dividends in 2025, with edotco making a maiden dividend payout of RM53.9m to its shareholders.
- Link Net monetisation in the longer run. Market volatility and weak foreign investor sentiment towards Indonesia have delayed Axiata's plans to monetise Link Net despite earlier progress in its InfraCo monetisation strategy. Management remains in active discussions with a strategic domestic party, although the timing of any transaction remains uncertain at this stage. Despite generating positive EBITDA, Link Net remained loss-making, reporting a net loss of RM377m in FY25. Management expects the business to return to profitability by end-28. A near-term divestment of Link Net would lift Axiata’s earnings, as it continues to drag group earnings. Excluding Link Net’s contributions, Axiata's 2025 net profit would have more than doubled to RM716m from RM339m.
Highlights
- Management continues to articulate that the edotco’s monetisation process will happen in 2026. The process may include an initial or partial trade sale of assets and even an IPO beyond this year. Our assessment suggests that edotco’s monetisation must happen at 10x EV/EBITDA to be earnings accretive.
- OpCos are expected to deliver resilient 2Q26 results, despite inflationary pressure shrinking consumer wallets in frontier markets. In the longer run, Axiata aims to deliver an annual dividend growth of 10%.
- Maintain BUY with a lower SOTP-based target price of RM2.50. We have raised the holding company discount, factoring in timeline uncertainty with regards to asset monetisation. Downside is supported by a 6% dividend yield.
Analysis
- Tower asset monetisation to materialise in 2026. In an analyst briefing, management indicated that the long-awaited monetisation of edotco may proceed through a phased approach, with an initial or partial monetisation potentially being completed in 2026. The group is actively evaluating various monetisation structures, including an IPO or a hybrid strategy comprising an IPO alongside the divestment of selected regional assets, subject to valuation considerations and prevailing market conditions. Our analysis suggests that valuation for edotco is earnings accretive at 10x EV/EBITDA.
- We expect resilient 2Q26 OpCos performance. We expect Axiata's key operating companies to report resilient earnings in 2Q26. This is despite
concerns over inflationary pressure and consumer affordability across frontier markets. That said, a key risk to 2H26 earnings is likely shrinking consumer wallets due to the prolonged Middle East conflict.
- Grow underlying dividends by 10%. Management remains confident that its key OpCos will grow and achieve targeted dividend contribution. This will pave the way for Axiata to achieve at least 10% annual dividend growth rate in the medium term. To recap, OpCos contributed RM1.7b in dividends in 2025, with edotco making a maiden dividend payout of RM53.9m to its shareholders.
- Link Net monetisation in the longer run. Market volatility and weak foreign investor sentiment towards Indonesia have delayed Axiata's plans to monetise Link Net despite earlier progress in its InfraCo monetisation strategy. Management remains in active discussions with a strategic domestic party, although the timing of any transaction remains uncertain at this stage. Despite generating positive EBITDA, Link Net remained loss-making, reporting a net loss of RM377m in FY25. Management expects the business to return to profitability by end-28. A near-term divestment of Link Net would lift Axiata’s earnings, as it continues to drag group earnings. Excluding Link Net’s contributions, Axiata's 2025 net profit would have more than doubled to RM716m from RM339m.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM1.91
RM2.50
30.9%
RM3.00
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
