Summary

  • Axiata reported FY2025 profit after tax and minority interests of RM364.6m and underlying PATAMI of RM536.7m, up 36.3% year on year, with operating free cash flow of RM1.6bn and net debt/EBITDA of 2.46x against 2.74x at end-2024, and a full-year dividend of 10.0 sen (FY2025 results).
  • Both large transactions converted Axiata from majority owner into a roughly one-third holder: 33.10% of CelcomDigi from 30 November 2022, and 34.8% of XLSMART from April 2025 alongside an equal Sinarmas stake (Bursa completion notice, XLSmart disclosure).
  • The Nepal exit is the sharpest test of realised state change: an unconditional agreement completing the same day in December 2023, yet a July 2026 Nepali report said the ownership transfer had still not been formally recognised pending the regulator's decision (disposal announcement, Nepali report).

Axiata's headline improvement is real in the numbers it published, but the mechanism behind it is a transfer of control away from the group. The company's own FY2025 release, published 26 February 2026, reported PATAMI of RM364.6m, RM761.8m excluding one-off non-cash impairment and disposals, underlying PATAMI of RM536.7m, operating free cash flow of RM1.6bn, net debt/EBITDA of 2.46x, and RM1.7bn of dividends upstreamed from operating companies, including RM574.7m from CelcomDigi and RM390.6m from XLSMART (FY2025 results; Integrated Annual Report 2025). Those are management figures; no audited FY2025 statements are in the evidence set.

Two mergers, one structural direction

CelcomDigi completed on 30 November 2022. Axiata's exchange announcement records that 100% of Celcom's shares went to Digi, that Digi paid cash consideration of RM2,468,899,648 adjusted upward by RM776,165,830, and that 3,883,129,144 new Digi shares, equal to 33.10% of the enlarged issued share capital, were allotted to Axiata. Telenor Asia paid RM297,918,107 for equalisation and received 73,378,844 shares, 0.63% (completion announcement). The Malaysian Communications and Multimedia Commission had granted Authorisation No. 1 of 2022 effective 28 June 2022 under section 140(3) of the Communications and Multimedia Act 1998, concluding that competition concerns were significantly mitigated and the merger was in the national interest (commission decision). The published undertaking attached to that authorisation required the merged entity to return 70MHz of spectrum, 10MHz in the 1800MHz band, 20MHz in 2100MHz and 40MHz in 2600MHz, in phases within two to three years of closing; to keep mobile virtual network operators no worse off with three years of wholesale access continuity; and to remove exclusive distributor arrangements in Sabah, Labuan, Sarawak, Terengganu, Pahang and Kelantan within three years, with no new exclusivity for three years afterwards (undertaking). The remedies are part of the asset Axiata now holds a third of, not a separate compliance story.

In Indonesia the sequence was faster. Shareholders of XL Axiata, Smartfren and Smart Telecom approved the merger at an extraordinary general meeting on 25 March 2025, after in-principle approvals from the Ministry of Communication and Digital Affairs, the Indonesia Stock Exchange and OJK. The joint announcement said Axiata and Sinar Mas would each hold 34.8% and become joint controlling shareholders, with more than 94.3 million combined subscribers and projected annual revenue of IDR45.8tn and EBITDA of IDR22.5tn, alongside estimated run-rate pre-tax synergies of USD300-400m after integration (shareholder approval). Those revenue, EBITDA and synergy figures are forward-looking management estimates.

The mechanics were recorded in an Indonesian material-facts filing: on 15 April 2025 the companies signed Merger Deed No. 33, under which Smartfren and Smart Telecom merged into XL as surviving entity and ceased to exist by operation of law, with 5,071,431,786 new shares to be issued to the merging shareholders and a transaction value of IDR22,413,202,000,000 based on stated fair market values. Ministry of Law approvals and notifications dated 16 April 2025 made the merger effective (material-facts filing).

The ownership change came through equalisation rather than the merger itself. Financial media reported that Axiata Investments Indonesia sold 2.38 billion EXCL shares, a 31.45% stake, at IDR3,189 per share on 16 April 2025 to PT Bali Media Telekomunikasi, a Sinarmas Group vehicle, raising an estimated USD475m or about IDR7.6tn and cutting AII's holding from roughly 66.25% to 34.8%, with the buyer and affiliates holding 34.8% as joint controlling shareholders (transaction report).

The exit that is not finished

Axiata announced on 1 December 2023 an unconditional sale and purchase agreement between Axiata Investments (UK) Limited and Spectrlite UK Limited for Reynolds Holding Limited, which owned approximately 80% of Ncell Axiata Limited. The transaction completed the same day because there were no conditions precedent, and the company described it as a clean exit from Nepal, citing unfair taxation, regulatory uncertainty, double-taxation exposure, the 2029 mobile licence expiry and expropriation risk. Consideration was USD50m fixed, USD5m within six months and USD45m within 48 months, plus conditional consideration of 80% of Ncell net distributions for 2023, 40% for 2024-2025, 30% for 2026-2027 and 20% for 2028-2029, with upside if a significant Ncell stake were sold at a higher value before 31 December 2029. Axiata said it retained rights to unpaid 2022 dividends and that no Malaysian shareholder or regulatory approval was required (company statement; Bursa announcement). Reuters reported the same exit at headline level (Reuters).

Host-state recognition is a separate layer. A July 2026 Nepali telecommunications report said the Supreme Court dismissed a writ petition against the Axiata-Spectrlite agreement and directed the Nepal Telecommunications Authority to make the final decision on the ownership transfer. It said Axiata had not obtained prior NTA approval for the sale of the 80% stake, which is required for transfers above 5% of paid-up capital, so the transfer had not been formally recognised, and that the court verdict made completion likely once the regulatory process is followed (Nepali report). That is a secondary account; no NTA order or filing appears in this evidence set. The practical point stands: contractual completion in one jurisdiction is not the same as effective change of control in the market where the licence sits.

Where the cash actually comes from

Group cash now depends on two associates and jointly controlled entities. CelcomDigi closed FY2025 with 20.6 million subscribers, revenue up 2.2%, EBIT up 15.7% and profit after tax up 10.1% to RM1.53bn, declared 14.7 sen dividend per share, and is targeted to reach RM700-800m of merger synergies after 2027. XLSMART delivered approximately USD250m of gross synergies in its first year against a stated USD150-200m target (FY2025 results; 5STAR5 and Axiata28).

The interim picture shows how much of the deleveraging was structural rather than operational. Axiata's 1H2025 release reported PATAMI of RM430.7m, underlying PATAMI of RM203.7m up 39.0%, operating free cash flow after leases of RM868.7m up more than 90%, a cash balance of RM4.9bn, net debt/EBITDA of 2.76x and a first interim dividend of 5.0 sen; it said the group cut debt by RM5.1bn in the half, including a USD250m MCTL repayment funded partly from USD400m of XLSMART equalisation proceeds, and received RM1.0bn of dividends from operating companies (1H2025 results).

The annual report states that net debt/EBITDA of 2.46x surpassed a below-2.5x target ahead of 2026, helped by bond buybacks, debt prepayments and the deconsolidation of XL group debt after the XL-Smartfren merger; that Dialog and Robi are in net cash positions; and that the group aims for below 2.0x by 2028 while growing dividends sustainably. HoldCo debt was cut 26.6% from RM9.5bn to RM7.0bn, with stated priorities including completing CelcomDigi and XLSMART integration for full synergies from 2027-2028 and a targeted 5G wholesale structure in Malaysia (Integrated Annual Report 2025). Management restated the same set on its Q4 2025 call, with HoldCo borrowings about MYR2.5bn lower over the calendar year to just below MYR7bn (transcript).

What the evidence does not settle

Three gaps matter for how the FY2025 improvement should be read. No shareholder agreements, consolidation-basis notes or associate-level cash-flow statements are in the evidence set, so the durability of RM574.7m and RM390.6m of upstream dividends cannot be tested against the associates' own cash generation. The Ncell conditional consideration is not determinable, and the fixed USD50m is staged over 48 months. And the leverage target below 2.0x by 2028, the synergy run-rates and the 2029 Nepal licence date are commitments and scheduled dates, not results.