PETALING JAYA: Axiata Group Bhd

remains optimistic on stronger shareholder returns, supported by debt reduction and improving dividend flows despite foreign exchange (forex) and geopolitical headwinds.

“Lower debt servicing costs would improve the translation of operating company dividend flows back to shareholders.

“Should we successfully complete the planned tower and Link Net monetisation exercises in 2026, the proceeds would further reduce holding company debt.”

“Excluding forex fluctuations, Axiata’s underlying quarterly performance is running at around RM400mil, which places us on track for annual earnings exceeding RM1bil,” group chief executive officer and managing director of Axiata, Vivek Sood said at the group’s briefing yesterday.

Meanwhile, the group is strengthening currency resilience by reducing balance sheet exposure across its regional markets, with forex volatility largely affecting translation rather than core profitability.

Management noted its strong cash position in Cambodia and low leverage in Sri Lanka and Bangladesh have helped limit direct financial risks.

“In Cambodia, for example, we are sitting on a cash surplus of more than US$200mil, while leverage levels in Sri Lanka and Bangladesh markets remain relatively low,” Vivek said.

He explained that currency pressure mainly affected the translation of revenue and before interest, taxes, depreciation and amortisation (Ebitda) into ringgit terms rather than profitability.

“The impact on profit is less pronounced and that is why earnings performance has remained relatively stronger despite currency headwinds.

“Although reported revenue was marginally lower in the first quarter, our focus on cost efficiency continued to drive improvements, resulting in Ebitda growth of 11.5% and Ebit growth of about 25% on a reported basis.”

Axiata is also accelerating dividend upstreaming from operating companies, including quarterly payouts in Sri Lanka, to mitigate currency depreciation risks and enhance cash repatriation efficiency, Vivek told reporters at the press conference yesterday.

The group also expects merger synergies from Malaysia and Indonesia to fully materialise by 2027, although management remains cautious amid current geopolitical uncertainties.

“We expect the full impact of synergies to come through by 2027, including annualised savings of RM700 to RM800mil in Malaysia and RM300 to 400mil in Indonesia.”

Axiata recorded a 71.3% jump in net profits in its first quarter of financial year 2026 (1Q26) driven by ebitda, forex gains, and lower finance costs.

The group’s net profit rose to RM273.80mil from RM159.84mil in the same quarter last year. Meanwhile, revenue dropped 3.1% during the quarter from RM2.89bil to RM2.80bil due to unfavourable impact of foreign currency translation due to the depreciation of the operating companies’ currencies against the ringgit.

“The group is mostly exposed to second-order effects through its reliance on global vendors, international financing and overall regional economic sentiment that may affect consumer demand.

“Axiata continues to closely monitor the situation, with prudent liquidity and risk management, as well as periodically assessing potential impact on the group’s operations and financial performance,” it said.

The group added it remains on track to deliver profitability and valuation growth as it monitors opportunities and risks for the financial year ending Dec 31, 2026.

Separately, Axiata announced that it had appointed its group chief financial officer, Nik Rizal Kamil Nik Ibrahim Kamil, as the new group chief executive officer and managing director, effective June 1.

In a filing with Bursa Malaysia yesterday, the company said Nik Rizal will succeed Vivek, who has stepped down upon retirement after more than three years in the role.