PETALING JAYA: Growth opportunities tied to 5G expansion and merger synergies are expected to support Axiata Group Bhd
moving into 2026.
However, near-term earnings headwinds and macroeconomic risks across frontier markets may continue to weigh on its sentiment, according to Phillip Capital Research.
The research house said Axiata stands to benefit from operational synergies arising from the XLSmart merger in Indonesia, particularly through network integration cost savings, while improving 5G monetisation prospects across Indonesia, Sri Lanka and Cambodia could provide longer-term earnings upside.
“That said, near-term contribution is expected to be modest given the early stage of deployment.
“Across its frontier markets, Robi (Bangladesh) remains the most vulnerable, while Smart (Cambodia) appears relatively resilient due to lower energy disruption risk, supported by Cambodia’s 60% hydropower-based electricity supply,” Phillip Capital added.
Phillip Capital also expects Axiata’s first-quarter ended March 31, 2026 (1Q26) earnings to decline year-on-year following the absence of contributions from XL after the XLSmart merger, although quarter-on-quarter earnings may remain broadly stable.
The research house projected Axiata’s core net profit for the coming 1Q26 to come in at around RM120mil to RM130mil.
Despite the softer earnings outlook, Phillip Capital expects the company to maintain healthy dividend payouts, forecasting a dividend per share (DPS) of 10 sen to 13 sen for 2026 to 2028, translating into dividend yields of between 4.1% and 5.4%.
This would be broadly in line with management’s guidance of delivering at least a 10% annual DPS growth from 2026 onwards, supported by steady dividend inflows from its operating companies.
The research house maintained its “hold” recommendation on Axiata, but raised the 12-month target price to RM2.63 from RM2.48 per share after rolling forward its valuation horizon.
While acknowledging the growth potential under Axiata’s “5x5” and “Axiata28” strategies, the research house said earnings volatility arising from macroeconomic headwinds, currency fluctuations and regulatory risks continue to temper its near-term outlook.
Meanwhile, the potential monetisation of infrastructure assets could help narrow Axiata’s steep valuation discount, according to CGS International (CGSI) Research.
The research house reiterated its “add” call on the stock with an unchanged target price of RM3.22 per share.
CGSI Research said monetisation exercises involving Axiata’s tower unit, Edotco Group Sdn Bhd, remain the key catalyst for a potential re-rating, with the company currently trading at a 36% discount to its revised net asset value (RNAV).
“We see the monetisation of its infrastructure assets as the key catalyst to driving down the 36% discount to RNAV its shares trade on,” CGSI Research said, adding that a 4.5% dividend yield provides downside support.
Axiata recently hosted an analyst call to address queries on energy market disruptions, Edotco’s valuation and the company’s dividend policy.
Its management disclosed that 55% of Edotco’s financial year ended Dec 31, 2025 earnings before interest, taxes, depreciation, and amortisation was generated from emerging markets such as Malaysia and the Philippines, while the remainder came from frontier markets including Cambodia.
