PETALING JAYA: The monetisation of Axiata Group Bhd
’s telecommunication tower business, Edotco, is still on the table and is expected to take place this year.
In a note, UOB Kay Hian Research (UOBKH) said the process may include an initial or partial trade sale of assets and even an initial public offering (IPO) beyond this year.
“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 10 times the enterprise value against earnings before interest, tax, depreciation and amortisation.”
Meanwhile, UOBKH Research expects Axiata’s key operating companies (OpCos) to report resilient earnings in the second quarter of financial year 2026 (2Q26).
This is despite concerns over inflationary pressure and consumer affordability across frontier markets.
“That said, a key risk to the second half of financial year 2026 earnings is likely shrinking consumer wallets due to the prolonged Middle East conflict.
“Management remains confident that its key OpCos will grow and achieve targeted dividend contributions.
“This will pave the way for Axiata to achieve at least a 10% annual dividend growth rate in the medium term.”
To recap, OpCos contributed RM1.7bil in dividends in 2025, with Edotco making a maiden dividend payout of RM53.9mil to its shareholders.
Some of the key OpCos are CelcomDigi, XL Smart, Dialog and robi.
UOBKH Research has maintained its “buy” call on Axiata, with a lower target price of RM2.50 from RM3 previously.
In a separate note, BIMB Research said Axiata is still in the early phase of portfolio transformation.
Recognising the increasingly utility-like nature of traditional telecommunications services, the research house said Axiata is actively expanding into adjacent growth areas.
These include fixed-mobile convergence, enterprise solutions and fixed wireless access, particularly in under-fibre markets such as Bangladesh, Indonesia and Sri Lanka.
Beyond telecommunications, management sees significant long-term opportunities within its technology portfolio.
Its medium-term goal is to increase the technology segment’s contribution to around 20% of group value by 2028 and move towards a more balanced portfolio mix of approximately 60:40 or potentially 50:50 over the next 10 years.
“In the near term, management remains particularly optimistic on Indonesia.
“While merger integration costs and accelerated depreciation continue to weigh on XLSmart reported earnings, management emphasised that these are temporary in nature.
“Accelerated depreciation associated with network integration is expected to be largely completed by the end of 2026.
“As a result, 2027 should represent the first full year reflecting the economic benefits of the merger, with dividend contributions from XL Smart expected to resume from 2028 onwards.”
To recap, XLSmart’s net loss contribution in 1Q26 stood at about RM50mil or 30% of Axiata’s bottomline.
BIMB Research has a “buy” call and a RM3 target price. CGS International (CGSI) Research noted Axiata’s ongoing efforts to also monetise Link Net.
“In our view, the monetisation of Link Net appears to be delayed due to shifting macro conditions in that market, with discussions largely ongoing with domestic parties.
“We believe investors have largely discounted any monetisation efforts, with Axiata’s shares trading at a 40% discount to their revalued net asset value, which we estimate at RM3.19.”
Looking ahead, CGSI Research views asset monetisation as the key re-rating catalyst for Axiata shares. However, it believes that delivery of a 47% financial year 2026 (FY26) to FY28 core net profit compound annual growth rate, as per its estimates, provides a compelling alternate catalyst.
“A 5.8% FY26 dividend yield, meanwhile, provides downside support,” it added.
