Axiata Group Berhad Issuer Summary

Report date: 2026-05-18
Issuer: Axiata Group Berhad
Ticker: AXIATA
Country: Malaysia
Sector: Telecommunications / Digital Infrastructure
Relevant debt issuers: Axiata Group Berhad, Axiata SPV2 Berhad, Axiata SPV5 (Labuan) Limited
Primary analytical focus: holding-company level senior unsecured debt and sukuk

1. Business Snapshot and Recent Developments

Axiata Group Berhad (“Axiata”) is a Malaysia-listed regional telecommunications and digital infrastructure holding company. It should not be analysed as a single-country mobile operator, but as a portfolio company combining businesses in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia, multi-country tower operations, Indonesian fixed broadband and fibre, and digital financial and data businesses. Accordingly, the credit analysis cannot stop at Axiata’s consolidated EBITDA. The key question for bond investors is how much of the cash generated at the operating-company level can reach Axiata itself, or funding vehicles such as Axiata SPV2 Berhad and Axiata SPV5 (Labuan) Limited, through dividends, asset disposals, refinancing and intercompany transactions to service debt.

Axiata’s current business can be divided broadly into three groups. The first is Digital Telcos, centred on Malaysia’s CelcomDigi, Indonesia’s XLSMART, Sri Lanka’s Dialog, Bangladesh’s Robi and Cambodia’s Smart. The second is Infrastructure, comprising EDOTCO’s tower business and Link Net’s fibre and broadband business in Indonesia. The third is Digital Businesses, primarily Boost and ADA. This mix provides resilient telecoms demand, diversification across multiple markets and long-life infrastructure assets. At the same time, it creates multiple credit issues: structural subordination, minority interests, local regulation, foreign exchange, dividend restrictions, subsidiary debt and integration costs.

2025 was a turning point for Axiata in terms of portfolio simplification and balance-sheet repair. The largest event was the completion of the XL and Smartfren merger on 2025-04-16. This created XLSMART, a larger telecoms platform in Indonesia. The company presents XLSMART as a core asset intended to drive industry structure improvement and synergy capture in the Indonesian market. From an accounting perspective, however, the former XL consolidation cannot simply be extended for like-for-like comparison. When analysing Axiata’s FY2025, it is necessary to distinguish between the continuing operations in the audited consolidated financial statements, the Combined Operations metrics presented by the company for investors, and holding-company cash, borrowings and dividend receipts.

FY2025 results were positive from a credit perspective. In its FY2025 release dated 2026-02-26, Axiata reported PATAMI, or profit attributable to shareholders of the parent, of approximately RM365mn, profit excluding non-cash one-off impairments and disposal effects of approximately RM762mn, and Underlying PATAMI of RM536.7mn, up 36.3% year on year. Net Debt / EBITDA improved from 2.74x at end-FY2024 to 2.46x at end-FY2025, meeting ahead of schedule the company’s earlier target of below 2.5x by end-2026. Adjusted operating free cash flow was RM1.622bn, while dividends received from operating companies were approximately RM1.7bn. According to the company release, CelcomDigi accounted for RM574.7mn and XLSMART for RM390.6mn of this amount, with the XLSMART contribution including a special dividend in December. Telecoms credit quality cannot be judged from accounting profit alone, but the important point in 2025 is that profit, cash flow, dividend receipts and debt reduction all moved in the same direction.

This does not mean that the issues have disappeared. Axiata is not a low-risk domestic utility, but a holding company with telecoms and infrastructure assets across several emerging Asian markets. The 2025 improvement reflected a combination of portfolio restructuring, partial early redemption of EMTNs, structural changes related to XLSMART, operating-company deleveraging and dividend receipts. Whether the credit profile can be viewed as stable depends on whether, from 2026 onward, CelcomDigi and XLSMART synergies, the dividend capacity of Dialog, Robi and Smart, EDOTCO’s funding, Link Net’s fibre transition, and profitability improvements at Boost and ADA continue.

The shareholder structure is also a supporting credit factor. In Axiata’s FY2025 Integrated Annual Report, the shareholder structure as of 2026-03-31 shows Khazanah Nasional Berhad holding 36.69%, Permodalan Nasional Berhad 18.28% and the Employees Provident Fund Board 19.36%. The presence of large Malaysian government-linked and public-sector-oriented shareholders supports Axiata’s domestic importance, capital-market access and investor recognition. However, based on the public materials reviewed, no explicit government guarantee for Axiata’s debt has been confirmed. In addition, because the full Moody’s and S&P reports were not reviewed directly for this work, this report does not make a definitive assessment of whether rating uplift exists or how many notches it may involve. Accordingly, this report does not treat Axiata as government-guaranteed debt. Rather, it assesses Axiata as an issuer whose strategic ownership supports funding stability, but whose repayment capacity ultimately depends on business cash flow and parent-company liquidity.

On 2026-02-10, Axiata announced that Nik Rizal Kamil Nik Ibrahim Kamil would become Group CEO and Managing Director effective 2026-06-01, succeeding Vivek Sood. Nik Rizal is already Group CFO and has also been involved on the boards of CelcomDigi, XLSMART, Robi, EDOTCO and Link Net. From a credit perspective, this is less a sign of abrupt change in management direction than an event to confirm continuity in financial discipline and portfolio management. The key point to monitor under the new leadership is whether the debt reduction and capital allocation discipline advanced under the 5*5 strategy can be maintained under Axiata28: Advancing Asia.

2. Portfolio and Franchise Assessment

The strength of Axiata’s business base lies in the essential nature of telecoms services, its customer base across multiple countries, and the long-life nature of infrastructure assets such as towers and fibre. Demand for mobile telecoms, data communications, fixed broadband and tower usage is unlikely to disappear abruptly even in an economic downturn. Customers may downgrade tariff plans, but they are less likely to give up connectivity itself. This supports a floor for operating cash flow relative to discretionary consumer goods or commodity-price-linked businesses.

At the same time, telecoms is not a low-investment utility business. Continued funding is required for 5G, network quality, fibre, cybersecurity, tower leases, spectrum, handset sales, customer acquisition, dealer commissions and regulatory compliance. In emerging markets, tariff regulation, spectrum allocation, tax audits, SIM registration, foreign-exchange controls, administrative responses to network outages and social pressure to restrain tariffs can also affect credit quality. Axiata’s assets are defensive, but this is not a business in which free cash flow automatically becomes abundant.

CelcomDigi is one of the highest-quality assets for Axiata’s credit profile. Axiata owns 33.1% of CelcomDigi and retains economic exposure to a major Malaysian telecoms asset. CelcomDigi operates in Axiata’s home market, has transparency as a listed company, and is an important source of upstream dividends. According to the company’s FY2025 materials, CelcomDigi’s integration synergies are progressing as planned, with a target of RM700mn to RM800mn of synergies from 2027 onward. This is credit positive, but Axiata does not directly control all of CelcomDigi’s cash. CelcomDigi’s dividend decisions, Malaysia’s competitive environment, spectrum costs and network investment all affect parent-company liquidity at Axiata.

XLSMART is the most important change for Axiata from 2025 onward. Indonesia has a large population and substantial room for growth in telecoms demand, but it is also a market with significant pressure from competition, ARPU, network investment, spectrum and the rupiah. The XL and Smartfren merger aims to improve market structure, increase scale and create synergies. Axiata’s FY2025 materials indicate achievement of FY2025 synergy targets, ARPU improvement and integration progress. However, integration costs, accelerated depreciation, impairment related to Link Net and network integration costs may weigh on short-term earnings. XLSMART is a medium-term source of credit improvement, but actual performance from 2026 onward must be confirmed.

Dialog, Robi and Smart are cash-flow sources in frontier markets. Sri Lanka, Bangladesh and Cambodia are subject to high volatility in macro conditions, exchange rates, tax systems and regulation. At the same time, telecoms demand is close to basic infrastructure, and if operations remain stable, dividend contributions can be expected. The FY2025 release shows dividend contributions from Dialog, Robi and Smart, and states that Robi reduced borrowings to nearly zero near year-end. This is positive evidence that local businesses are not merely absorbing funds from the parent, but are in a position to return cash to the parent.

EDOTCO is Axiata’s most infrastructure-like asset. Tower businesses are supported by tenant contracts, network sharing and long-term infrastructure demand, and are more likely than mobile retail operations to have contracted revenue characteristics. Axiata describes EDOTCO as an independent tower company operating across nine countries. In FY2025, Axiata showed profitability improvement excluding Myanmar-related effects, a strong EBITDA margin and dividend contribution. However, tower businesses often use debt and leases, and are sensitive to customer concentration, country risk, interest rates, foreign exchange and refinancing costs. If EDOTCO can deleverage through its own resources and pay dividends to the parent, it is credit supportive. Conversely, if refinancing or country exits require parent support, it becomes a credit constraint.

Link Net, Boost and ADA combine optional value with execution risk from a credit perspective. Link Net is an Indonesian fibre and fixed broadband platform and may have long-term open-access infrastructure value. During a business-model transition, however, profitability is vulnerable to pressure. Boost offers growth opportunities in digital finance and digital banking, but comes with loan growth, credit costs, regulation and capital requirements. ADA operates in data, AI and digital marketing. FY2025 showed profitability improvement, but it is harder to view as a stable source of debt service than mature telecoms operations. These assets would be positive if value crystallisation or strategic disposals are realised, but they should be viewed conservatively at this stage.

Portfolio Role by Business

This portfolio is of sufficient quality to underpin an investment-grade credit profile. However, that quality does not appear in the simple form of Axiata itself directly holding all cash. The value of the telecoms assets reaches the parent only through local customer bases, spectrum, equipment, brands, regulatory engagement, relationships with minority shareholders and dividend policies. Therefore, Axiata’s credit analysis must always consider asset value together with dividend upstreaming, holding-company debt, capital allocation and refinancing access.

3. Segment and Cash-Flow Quality

In the FY2025 audited financial statements, revenue from continuing operations was RM23.023bn and EBITDA was RM9.356bn. These figures are the base indicators of Axiata’s consolidated earnings capacity, but they do not fully capture the economic reality after portfolio restructuring. In particular, jointly controlled or associate-like assets such as CelcomDigi and XLSMART are difficult to capture from consolidated revenue or consolidated EBITDA alone. Axiata itself separately explains dividends received from operating companies, Combined Operations and holding-company borrowings in its FY2025 release. This is an appropriate disclosure direction for credit analysis.

The quality of cash flow varies by asset. CelcomDigi and Dialog have relatively mature telecoms cash flows. Robi and Smart carry greater market risk, but FY2025 confirmed dividend contribution and deleveraging. XLSMART has a large market opportunity, but post-integration performance needs to be confirmed. EDOTCO has infrastructure-like earnings, but comes with debt, lease, FX and country risks. Link Net, Boost and ADA have potential for value crystallisation, but should not be overvalued at this point as stable sources of parent-company debt service.

The approximately RM1.7bn of operating-company dividends received by Axiata in FY2025 is a very important metric for bond investors. According to the company release, CelcomDigi contributed RM574.7mn and XLSMART RM390.6mn, with the remainder likely to comprise dividends from other operating companies including frontier markets. However, because the XLSMART amount includes a special dividend, the full RM1.7bn should not be treated as a recurring baseline from 2026 onward. Consolidated EBITDA is an indicator of funding capacity, but what matters to parent-company creditors is cash that actually reaches the parent. Even if CelcomDigi, XLSMART, Dialog, Robi, Smart and EDOTCO generate local profits, cash retained for capex, spectrum, taxes, local debt, regulation, minority dividends or foreign-exchange controls does not immediately translate into repayment capacity at Axiata itself.

Country-level cash-flow risks also need to be separated. In Malaysia, CelcomDigi’s integration, 5G network policy, spectrum costs, competition and dividend policy are important. In Indonesia, XLSMART’s ARPU, integration synergies, network investment, rupiah FX and the competitive structure of the telecoms market are important. In Sri Lanka, macro stabilisation, renewed foreign-currency shortages, tax policy and disaster effects may affect Dialog’s cash flow. In Bangladesh, tax disputes, SIM and telecoms regulation, price competition and taka FX influence Robi’s dividend capacity. In Cambodia, constraints from market size, competition, regulation, dollarisation and the local-currency environment are risks for Smart.

The quality of FY2025 earnings shows both improvement and points requiring caution. The return to reported profit and the increase in Underlying PATAMI are positive. The company highlights earnings and cash flow in frontier markets, stable contributions from joint-control companies, debt reduction, and deleveraging at EDOTCO, Dialog and Robi. This is more important than a purely accounting return to profit. On the other hand, non-cash impairments, disposals, integration costs, and accounting exclusions and reclassifications are involved, so FY2025 profitability alone should not be used to determine a permanent earnings level. It is necessary to confirm whether the same direction of cash flow is reproduced from 2026 onward.

4. Financial Profile and Deleveraging

Axiata’s financial profile improved clearly in FY2025. The company’s Net Debt / EBITDA declined from 2.74x to 2.46x. Borrowings in the audited financial statements decreased from RM23.191bn at end-FY2024 to RM15.052bn at end-FY2025. FY2025-end borrowings consisted of RM8.402bn non-current and RM6.651bn current borrowings. Deposits, cash and bank balances were RM3.747bn, down from RM4.860bn at end-FY2024, but because the decline in borrowings was larger, net leverage improved. However, total debts under the GAFS were RM17.160bn, comprising borrowings plus lease liabilities of RM1.802bn and supplier finance arrangements of RM306mn, while the gearing ratio was 0.71x. In telecoms and tower businesses, leases are close to fixed obligations, so the debt burden should not be understated by looking only at borrowings.

The important point here is not to confuse definitions of debt. Axiata’s FY2025 audited borrowings were RM15.052bn, down significantly year on year. Meanwhile, in investor materials the company shows holding-company borrowings of approximately RM7.0bn and holding-company cash of RM826mn. Consolidated borrowings, holding-company borrowings, public debt of funding vehicles, and local debt at operating companies each have different meanings. The decline in consolidated borrowings is positive, but parent-company repayment capacity needs to be assessed by looking at holding-company cash, dividend receipts, near-term maturities, bank lines, and guaranteed or vehicle-level debt.

In the FY2025 audited financial statements, current liabilities exceeded current assets, resulting in net current liabilities of RM6.108bn. Taken in isolation, this appears to indicate weak liquidity, but for a telecoms group, liquidity management assumes bank borrowings, capital-market refinancing, operating cash flow and operating-company dividends. In addition, current borrowings at end-FY2025 included Sukuk 2026, which had a scheduled maturity on 2026-03-24. Subsequent events in the GAFS disclose that Axiata drew down a RM2.0bn revolving credit facility on 2026-03-19 and refinanced Sukuk 2026. Therefore, payment risk on the near-term public sukuk maturity has been addressed, but liquidity has not been fully relieved through a cash repayment; rather, part of the public debt has been replaced by bank debt.

Selected Credit Metrics

This table deliberately presents multiple bases. Axiata’s credit analysis requires separate review of the audited consolidated financial statements, the company’s Combined Operations presentation, holding-company cash and borrowings, and operating-company dividends. Credit improvement is most convincing when all of these move in the same direction. FY2025 is close to that condition. Conversely, if consolidated EBITDA remains firm in the future but holding-company dividends decline, or if holding-company borrowings rise again, the credit view should be weakened promptly.

Free cash flow has improved, but the buffer is not very thick. Adjusted operating free cash flow of RM1.622bn supports debt reduction together with operating-company dividends. However, Axiata also declared total dividends of 10 sen per share for FY2025, which implies an approximate aggregate amount of around RM919mn based on the number of shares outstanding. This is more than half of FY2025 Adjusted operating free cash flow and above Underlying PATAMI of RM536.7mn, so it is not a light burden. Shareholder returns themselves are consistent with FY2025 earnings improvement, but if progressive dividend growth is prioritised excessively, it may reduce credit headroom against telecoms investment, integration costs, spectrum, EDOTCO refinancing and frontier-market FX risk. Future credit assessment should focus on whether dividends are aligned not only with normalised earnings, but also with recurring cash received at the parent.

5. Capital Structure, Liquidity and Funding Access

Axiata’s public debt mainly consists of investment-grade senior unsecured debt and sukuk issued through Axiata itself and its funding vehicles. The official Debt Securities page and FY2025 audited financial statements confirm Axiata SPV2 Berhad’s Multi-Currency Sukuk Programme and Axiata SPV5 (Labuan) Limited’s EMTN Programme. As of 2025-12-31, Sukuk 2026 was USD500mn, with a nominal amount of RM2.0235bn, a contractual rate of 4.357% and scheduled maturity on 2026-03-24. Sukuk 2030 was USD500mn, with a nominal amount of RM2.0235bn, a contractual rate of 2.163% and maturity on 2030-08-19. The SPV5 EMTN had a nominal amount of RM2.3426bn at end-2025, a fixed rate of 3.064% and maturity on 2050-08-19.

The treatment of Sukuk 2026 requires care. At end-FY2025, it was an important near-term maturity included in current borrowings. However, subsequent events in the GAFS disclose that Axiata drew down a RM2.0bn revolving credit facility on 2026-03-19 and refinanced the USD500mn Sukuk maturing on 2026-03-24. This is positive in that it addressed liquidity risk on the near-term public bond maturity. At the same time, the maturity burden did not disappear; the public sukuk was, in part, replaced by bank debt. The maturity, interest rate, security and guarantees, covenants and undrawn availability of the RCF could not be sufficiently extracted from the public materials reviewed for this work and should be confirmed in the next update.

For the SPV5 EMTN, partial early redemptions were carried out in 2024 and 2025. According to the FY2025 audited financial statements, between 2025-07-11 and 2025-08-08, Axiata redeemed principal of RM631.3mn, equivalent to USD149.1mn, for RM456.2mn, equivalent to USD107.7mn, and recognised a redemption gain of RM175.1mn. A partial early redemption equivalent to USD272.1mn was also carried out in 2024. This shows that Axiata is actively managing long-term debt using market prices and available liquidity. This is credit positive, but the extent to which cash liquidity is used, and whether debt reduction can be achieved through recurring cash flow without relying on redemption gains, also need to be monitored.

Liquidity should be viewed in three layers. First, on a consolidated basis, Axiata has deposits, cash and bank balances of RM3.747bn. Second, at the holding-company level, the company release shows cash of RM826mn and borrowings of approximately RM7.0bn; this is closer to the position of parent-company creditors. Third, at the operating-company level, each country has its own cash, local borrowings, leases, capex, tax obligations and spectrum-related burdens. Even if consolidated cash appears sufficient, part of it may be required for local working capital or subject to regulatory constraints. Reflecting the RCF refinancing of Sukuk 2026, Axiata’s short-term liquidity has been maintained, but for credit analysis it is more accurate to describe this as refinancing into bank debt rather than repayment of the maturity with cash.

Holding-Company Liquidity Bridge

Debt and Liquidity Snapshot

Axiata’s funding access is currently a credit strength. Investment-grade ratings, strategic Malaysian shareholders, a track record in sukuk and EMTN issuance, and banking relationships support refinancing under normal market conditions. However, Axiata is also an issuer that depends on market access. If interest rates rise, credit spreads widen, Malaysia risk worsens, the rating outlook changes and operating-company dividends decline at the same time, refinancing costs would increase. FY2025 deleveraging has reduced this risk, but has not eliminated it.

6. Structural Position of Bondholders

Creditors of Axiata itself and its funding vehicles are structurally subordinated to creditors at the operating companies. This is not a defect specific to Axiata, but a normal feature of a regional telecoms holding-company structure. Cash generated at Dialog, Robi, Smart, EDOTCO, Link Net, CelcomDigi and XLSMART is first used for local working capital, taxes, capex, leases, local borrowings, minority shareholders and regulatory requirements. Parent-company creditors depend on cash that reaches the parent after these claims through dividends or other fund transfers.

This structural subordination is mitigated by the quality of the assets. CelcomDigi is a major Malaysian telecoms asset, XLSMART is a large Indonesian telecoms platform, and Dialog, Robi and Smart support local telecoms demand. EDOTCO has infrastructure value. These assets can generate dividends for the parent, support market confidence and, if necessary, provide options for asset sales or capital partnerships. However, under stress, structural subordination becomes clear. If local businesses prioritise spectrum costs, tax payments, capex and debt repayment, dividends to the parent are deferred.

The legal terms of the bonds also need to be confirmed. This report analyses Axiata parent and SPV debt as a senior unsecured profile linked to parent credit, but the guarantees, keepwell arrangements, covenants, change of control provisions, negative pledge, events of default, tax gross-up, governing law, listing venue and early redemption terms of individual bonds need to be reviewed separately. In particular, the sukuk issued by Axiata SPV2 and the EMTN issued by Axiata SPV5 have different product structures. An issuer summary provides the base for issuer credit analysis; it is not a substitute for bond-specific legal recovery analysis.

The most useful metric for assessing structural subordination is the ratio between holding-company dividend receipts and debt burden. FY2025 operating-company dividends of approximately RM1.7bn are important when compared with holding-company borrowings of approximately RM7.0bn. However, the RM390.6mn from XLSMART includes a special dividend, so the full amount should not simply be viewed as recurring parent-level repayment capacity. A conservative approach requires separating CelcomDigi’s RM574.7mn, other dividends including frontier markets, and normalised dividends from XLSMART. If dividends were to halve while debt maturities concentrate, parent-company credit would appear weak even if consolidated EBITDA were large. When analysing Axiata, dividend upstreaming and holding-company cash management should be checked before consolidated EBITDA.

7. Rating Agency View and Support Considerations

In the FY2025 audited financial statements, Axiata’s ratings remain Moody’s Baa2 and S&P BBB. This indicates an investment-grade credit, but not one with the large buffer of an A-category issuer. Axiata has scale in telecoms assets, regional diversification, strategic shareholders, investment-grade market access and FY2025 debt reduction. At the same time, it faces structural subordination, emerging-market risk, integration execution risk, capex and spectrum burdens, and constraints on holding-company liquidity. This combination is consistent with the Baa2 / BBB rating position.

The presence of government-linked shareholders should be treated as a supporting factor, not the conclusion itself. Khazanah’s 36.69% ownership, alongside PNB and EPF as large shareholders, indicates Axiata’s strategic and capital-market importance in Malaysia. This ownership structure supports market access and investor recognition. However, because the full Moody’s and S&P reports were not reviewed for this work, this report does not make a definitive assessment of whether rating uplift exists or how many notches it may involve. Based on public materials, no explicit government guarantee for Axiata’s debt has been confirmed. The repayment sources themselves are business cash flow, dividends, asset management and access to financial markets.

Upgrade potential appears limited in the near term. For Axiata to strengthen its credit profile further, it would need not only to keep Net Debt / EBITDA stable below 2.5x, but also to stabilise holding-company dividend coverage, demonstrate XLSMART integration results, maintain CelcomDigi dividends, achieve autonomous deleveraging at EDOTCO, reduce losses or crystallise value at Boost and ADA, and manage smoothly the RCF that replaced Sukuk 2026. FY2025 was a year of improvement, but it remains an early performance record after portfolio restructuring and not yet a long-term track record.

Downgrade risk mainly comes from financial policy and holding-company liquidity. A combination of Net Debt / EBITDA rising again toward 3.0x, thinning holding-company cash, declining recurring dividend receipts, delayed XLSMART integration, need for parent support to EDOTCO, higher debt from shareholder returns or M&A, and increased costs or covenants from refinancing into bank debt would be clearly negative for credit. Axiata has rating headroom, but it is not unlimited.

8. Key Credit Strengths

The first strength is the essential nature of telecoms services. Demand for mobile data, voice, broadband, enterprise connectivity and tower usage is unlikely to disappear abruptly despite economic cycles. Because Axiata is connected to this basic telecoms demand across several markets, the downside resilience of its business portfolio is reasonable.

The second strength is regional diversification and scale. Axiata is diversified across Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia, and tower, fibre and digital businesses. The whole group is not determined solely by a regulatory or FX shock in a single country. Multinational diversification increases complexity, but it also reduces dependence on any one market.

The third strength is FY2025 deleveraging. Net Debt / EBITDA improved to 2.46x and audited borrowings declined to RM15.052bn. The company states that it reduced holding-company borrowings to approximately RM7.0bn. This has greater credit value than a simple improvement in earnings. If holding-company debt becomes lighter, operating-company dividends can more readily support debt service.

The fourth strength is dividends received from operating companies. The receipt of approximately RM1.7bn in FY2025 shows that Axiata’s assets are returning cash to the parent. For holding-company credit, actual dividend receipts are more important than asset value. However, because the amount includes a special dividend from XLSMART, it should not be treated as a steady-state repayment source as-is. If ordinary dividends from CelcomDigi, XLSMART, Dialog, Robi, Smart and others become stable, they would provide significant support to parent-company debt credit quality.

The fifth strength is strategic shareholders and investment-grade market access. The presence of Khazanah, PNB and EPF, the Baa2 / BBB ratings, and the track record of public sukuk and EMTN issuance support Axiata’s refinancing capacity. For an emerging-market telecoms holding company, market access is as important a credit factor as the operating assets.

The sixth strength is the direction of portfolio simplification. Under the 5*5 strategy, Axiata pursued market consolidation, balance-sheet repair, non-core asset rationalisation and capital allocation discipline. If this continues under the new Axiata28 strategy rather than proving one-off, the holding-company credit outlook should become easier to stabilise.

9. Key Credit Constraints

The largest constraint is the structural subordination of holding-company creditors. Parent-company creditors do not have direct access to customer tariff revenue at local operating companies. Local creditors, lease creditors, tax authorities, spectrum authorities, minority shareholders and capex come first. This structure is less visible in benign periods, but surfaces under stress as delays in dividend upstreaming.

The second constraint is integration execution risk. CelcomDigi and XLSMART offer important credit-relevant synergy opportunities, but integration is always difficult. Network integration, customer migration, brand rationalisation, system integration, staff and distribution-channel adjustment, regulatory engagement, spectrum usage and redesign of investment plans are all required. If synergies are delayed, margins, dividends and capex are all affected.

The third constraint is emerging-market macro, FX and regulatory risk. Sri Lanka, Bangladesh, Cambodia and Indonesia have growth in telecoms demand, but are also exposed to currency depreciation, tax disputes, administrative intervention, import restrictions, foreign-currency funding and social pressure on tariffs. Even if local businesses are profitable, value can be reduced through ringgit translation or dividend remittance.

The fourth constraint is the investment burden of telecoms and infrastructure businesses. 5G, 4G quality maintenance, fibre, base stations, tower leases, data centres, cybersecurity, devices and selling expenses, and spectrum costs require ongoing cash outflows. Axiata cannot merely maximise parent-company dividends; it also needs to maintain the competitiveness of local networks.

The fifth constraint is earnings uncertainty in digital businesses and less mature infrastructure assets. Boost, ADA and Link Net may have future value, but at present they are not as stable as mature telecoms businesses as repayment sources. Link Net’s open-access transition, Boost’s loan growth and ADA’s competitive environment require monitoring from both profitability and capital-consumption perspectives.

The sixth constraint is reliance on debt maturities and refinancing. Axiata has investment-grade market access, but Sukuk 2026 was refinanced with a RM2.0bn RCF, and the group must continue to manage Sukuk 2030, EMTN 2050, bank borrowings, local debt and leases. FY2025 deleveraging has increased headroom, but holding-company cash is smaller than consolidated cash, and the cushion is not unlimited if the refinancing environment deteriorates.

10. Downside Scenarios and Monitoring Triggers

The first downside scenario is a renewed increase in leverage. If Net Debt / EBITDA rises again toward 3.0x, the FY2025 improvement would not be viewed as sustainable. Potential causes include XLSMART integration costs, EDOTCO refinancing, Link Net investment, funding for digital businesses, M&A, shareholder returns and FX-driven debt inflation.

The second downside scenario is weakening dividend upstreaming. If CelcomDigi or XLSMART fail to realise synergies, Dialog, Robi and Smart retain cash locally, and EDOTCO prioritises refinancing or capex, Axiata’s parent-level cash coverage would weaken. For parent-company debt, a decline in dividend receipts is a faster warning signal than consolidated EBITDA.

The third downside scenario is a failure of XLSMART integration. Indonesia is a pillar of Axiata’s medium-term credit story. If ARPU improvement does not continue, synergies are delayed, customer churn occurs, capex exceeds expectations, dividends are weak, or impairments and integration costs continue, the credit benefit from portfolio simplification would diminish.

The fourth downside scenario is regulatory or tax shock in Malaysia and frontier markets. For CelcomDigi, 5G policy, spectrum, competition and dividend policy are important. For Dialog, Robi and Smart, tax, tariff regulation, FX, foreign-currency remittance, disasters, and political and social conditions are important. Individually these may be small, but if they occur across multiple markets at the same time, they can pressure parent-company liquidity.

The fifth downside scenario is refinancing and asset-value risk at EDOTCO. The tower business has contracted revenue, but tends to depend on debt and leases. If higher interest rates, customer consolidation, slower tenant additions, currency depreciation, country exits and lower asset sale prices occur together, dividends to the parent could decline or parent support could become necessary.

The sixth downside scenario is a loosening of financial policy. If, following the FY2025 improvement, Axiata shifts toward excessive shareholder returns, growth investment, acquisitions or support for digital businesses, rating headroom could quickly thin. Axiata’s investment-grade profile depends heavily not only on the strength of its telecoms assets, but also on financial discipline.

Monitoring Framework

11. Credit View and Monitoring Focus

Axiata’s current credit profile is appropriately assessed as that of a low- to mid-investment-grade regional telecoms holding company. FY2025 balance-sheet repair, Net Debt / EBITDA of 2.46x, operating-company dividends of approximately RM1.7bn, holding-company debt reduction, Baa2 / BBB ratings and strategic Malaysian shareholders support a stable credit view. However, the RM1.7bn dividend receipt includes a special dividend from XLSMART, and Sukuk 2026 was not repaid in cash but replaced with a RM2.0bn RCF. Structural subordination, emerging-market risk, integration execution risk, capex and spectrum burdens, and relatively thin parent-company liquidity prevent Axiata from being treated as a simple defensive telecoms company.

The credit direction is stable to moderately improving. However, the pace of improvement is not fast. Axiata made meaningful progress in FY2025, but the post-restructuring performance record is still in its early stage. Only once CelcomDigi and XLSMART synergies, EDOTCO refinancing, continued dividends from frontier markets, and earnings improvement at Boost and ADA are confirmed from 2026 onward will it be easier to conclude that the FY2025 improvement was structural rather than one-off.

The probability of rapid credit deterioration does not appear high at present. This is because debt reduction has actually progressed, the rating has been maintained at investment grade, operating-company dividends have been received, and strategic shareholders and capital-market access are present. However, the scope for rapid improvement is also limited. Axiata has a holding-company structure, depends on dividend upstreaming and is exposed to several emerging markets, so it will not become a low-risk issuer like a high-rated single-country telecoms operator.

The most important monitoring point going forward is parent-company liquidity. It is necessary to confirm not consolidated cash of RM3.747bn, but holding-company cash of RM826mn, dividend receipts, bank lines, near-term maturities, and the terms of the RM2.0bn RCF that replaced Sukuk 2026. The second point is whether Net Debt / EBITDA is maintained around 2.5x. The third is whether the integration of CelcomDigi and XLSMART translates into ordinary dividends and cash flow. The fourth is whether Dialog, Robi, Smart and EDOTCO continue to return cash to the parent rather than absorbing cash locally. The fifth is whether Boost, ADA and Link Net avoid excessive capital consumption.

From an investment perspective, Axiata is not a simple telecoms bond that can be bought and left alone. The credit foundation is sufficient, but there are many monitoring items. When analysing Axiata bonds, consolidated EBITDA and ratings should not be reviewed in isolation. Holding-company borrowings, recurring dividend receipts, local debt at operating companies, RCF, sukuk and EMTN maturities, integration progress and shareholder-return policy should be monitored as a package.

Short Summary & Conclusion

Axiata Group Berhad is a Malaysia-listed regional telecommunications and digital infrastructure holding company. In FY2025, Net Debt / EBITDA improved to 2.46x, while operating-company dividends and debt reduction supported credit quality. The company has an investment-grade foundation, but creditors depend on dividend upstreaming from CelcomDigi, XLSMART, Dialog, Robi, Smart, EDOTCO and others, and structural subordination and emerging-market risk cannot be ignored. The credit view is stable to moderately improving, but recurring dividends excluding the XLSMART special dividend, the terms of the RCF that replaced Sukuk 2026, XLSMART integration, CelcomDigi dividends and EDOTCO refinancing need to be monitored closely.

Sources

• Axiata Group Berhad, "Axiata posts RM365 million in profits for FY25, strengthens balance sheet and improves cash flow", 2026-02-26. https://www.axiata.com/media/news/2026/axiata-posts-rm365-million-in-profits-for-fy25
• Axiata Group Berhad, Quarterly Results 2025, including 4Q25 results materials dated 2026-02-26. https://axiata.listedcompany.com/quarterly-results.html/year/2025
• Axiata Group Berhad, Governance and Audited Financial Statements 2025. https://www.axiata.com/2025IAR/documents/Axiata-Governance-and-Audited-Financial-Statements-2025.pdf
• Axiata Group Berhad, Integrated Annual Report 2025. https://www.axiata.com/media/0dbo52nk/axiata_integrated_annual_report_2025.pdf
• Axiata Group Berhad, Debt Securities. https://axiata.listedcompany.com/credit_rating.html
• Axiata Group Berhad, Corporate Structure. https://www.axiata.com/about-us/corporate-structure
• Axiata Group Berhad, Shareholdings. https://axiata.listedcompany.com/shareholdings.html
• Axiata Group Berhad, Investor Relations home page, reviewed for the 1Q26 results briefing calendar. https://axiata.listedcompany.com/
• Axiata Group Berhad, "Axiata Group announces appointment of Nik Rizal Kamil Nik Ibrahim Kamil as Group Chief Executive Officer and Managing Director, effective June 2026", 2026-02-10. https://www.axiata.com/media/news/2026/axiata-group-announces-appointment-of-nik-rizal-kamil-nik-ibrahim-kamil-as-group-chief-executive-officer-and-managing-director-effective-june-2026

Unverified / Pending Items

• The full Moody’s and S&P reports, detailed rating drivers, and wording on support uplift and downgrade triggers were not directly reviewed in the public materials used for this work.
• The offering circulars, guarantees, keepwell arrangements, covenants, events of default, change of control provisions and tax gross-up terms of individual bonds need to be confirmed before bond-specific assessment.
• For Sukuk 2026, the GAFS subsequent events confirmed refinancing through a RM2.0bn RCF drawdown on 2026-03-19. However, the maturity, interest rate, security and guarantees, financial covenants and undrawn availability of the RCF were not sufficiently extracted in this work.
• Official Q1 2026 results had not been released as of 2026-05-18, and Axiata’s IR page showed an Analyst Briefing for 1Q26 Results scheduled for 2026-05-26.
• Detailed local debt maturities, restricted cash, dividend restrictions and remittance restrictions for XLSMART, EDOTCO, Dialog, Robi and Smart were not sufficiently extracted in this work. The OpCo analysis in this report mainly relies on Axiata’s FY2025 group disclosures and appendices.