Kuala lumpur: Axiata Group Bhd is on track to achieve a gearing ratio of 2.5 times net debt to earnings before interest, taxes, depreciation, and amortisation (EBITDA) by the end of 2026, as the level stood at 2.76 times as at June 30, 2025. Its chief financial officer, Nik Rizal Kamil Nik Ibrahim Kamil, highlighted a significant reduction in borrowings to RM17.7 billion as of June 2025, compared to approximately RM22 billion in the first quarter, due to the deconsolidation of the debt from XL Axiata.
According to BERNAMA News Agency, the merger of XL Axiata and Smart Friend completed in mid-April resulted in the new merged entity XL Smart, in which Axiata now holds 36.9 percent, becoming a joint control entity. This transition allowed Axiata to equity account the entity as an associate, thus eliminating the necessity to consolidate XL's substantial debts, thereby improving the group's borrowing position. At the group core level, the group reduced core debt by about RM1.4 billion, primarily due to the repayment of a multi-currency term loan maturing in June, amounting to US$250 million or about RM1.1 billion.
Nik Rizal emphasized the group's capital prudence as part of Axiata's new engagement model and strategy. Capital intensity is scrutinized at the operating companies (OpCos) level through the OpCos board investment committee, which quarterly reviews capital expenditure and investments to ensure disciplined capital allocation. The focus is on balancing growth requirements, particularly for telcos, with necessary investments in the 5G space.
Nik Rizal further explained that investing in modernizing and upgrading the network to 5G requires significant capital, including spectrum payments. He asserted that the capital discipline and prudent capital allocation practiced over the past two years position the group well to enable its OpCos to fund future growth initiatives.
For the second quarter ended June 30, 2025, Axiata Group posted a higher net profit of RM270.82 million compared to RM134.90 million in the same period last year, although revenue declined to RM2.97 billion from RM3.32 billion previously. The group attributed the lower revenue to the unfavorable impact of foreign currency translation, as the currencies of the OpCos depreciated against the ringgit.
Vivek Sood, Axiata's group chief executive officer and managing director, commented that the performance reflects the strength of the group's strategic realignment and disciplined execution, emphasizing operational excellence, improved market structure, and balance sheet strengthening. By repositioning the portfolio into long-term strategic businesses and medium-term monetizable assets, Axiata sharpens its focus on connectivity and convergence while unlocking value across its infrastructure and digital verticals. The XLSMART merger completion and Axiata's exit from Myanmar exemplify decisive actions under their 5*5 strategy, enhancing financial flexibility and market stability.
Looking ahead to the second half of 2025, Vivek noted Axiata's intensified commitment to portfolio objectives, prioritizing improved cash flow and enhanced yield. Key priorities include driving operational performance and executing necessary portfolio moves to ensure optimal capital allocation in line with the strategic objective of enhancing dividend yield.
Additionally, Vivek mentioned Axiata Group's openness to asset monetization opportunities to ease its debt load and strengthen its balance sheet by reducing leakages at the group level. He stressed the importance of being a high-dividend company, achievable only through minimized group-level leakages.
Regarding the rumored takeover by a Khazanah Nasional Bhd-Employees Provident Fund consortium, Vivek refrained from confirming or denying the speculation, citing the inability to comment on speculative matters. Reports in April suggested the consortium was interested in Axiata's 63 percent stake in its telecommunications tower arm, Edotco Group Sdn Bhd, in a move to aid debt reduction.