Axiata Group Berhad: Financial Report Analysis & AGM Circular (2026)

Axiata Group Berhad has released its 2026 circular to shareholders in relation to the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs). This document provides a detailed overview of the company’s corporate actions, ongoing related-party transactions, litigation, divestments, and outlook, but does not include conventional quarterly or annual financial metrics such as revenue, earnings, or EPS figures. Nonetheless, several insights relevant to investors can be drawn from the disclosures.

Key Corporate Actions and Related-Party Transactions

The main focus of the circular is the renewal of the shareholders’ mandate for RRPTs, which includes significant transactions between Axiata Group and related parties such as Telekom Malaysia Berhad (TM Group), EDOTCO Group Sdn. Bhd., and Khazanah Nasional Berhad. The estimated values of these mandates for FY 2026 are substantial, indicating ongoing and recurrent business relationships:

These RRPTs are essential for Axiata’s operations and are subject to internal controls and audit review to ensure fairness and compliance with Bursa Malaysia’s Listing Requirements.

Historical Performance Trends

While conventional financial figures are not disclosed, the RRPT values show a slight decrease in actual values compared to estimates in some cases (e.g., TM Group), but stability in others (e.g., Khazanah-related entities). These trends suggest generally stable but slightly conservative business volumes in 2026 relative to management’s forecasts.

Exceptional Corporate Actions and Asset Sales

• EDOTCO Myanmar Divestment: In June 2025, Axiata completed the divestment of its Myanmar tower business for USD90 million (RM381.4 million), following earlier amendments to a prior sale agreement. This reduces exposure to Myanmar and brings in significant cash proceeds.
• Dialog Axiata PLC – Acquisition and Amalgamation: Dialog acquired Airtel Lanka via share swap, resulting in Dialog owning 100% of Airtel Lanka and subsequently amalgamating the businesses, with Bharti Airtel holding a 10.355% stake in Dialog post-transaction.
• XL Axiata & Smartfren Merger (Indonesia): XL and Smartfren merged, forming PT XLSMART Telecom Sejahtera Tbk, with Axiata and Sinar Mas Shareholders each holding equal effective shareholdings (36.91%). XL ceased to be a subsidiary and became an associate, following a USD475 million share transfer and equalisation payment.

Legal Disputes and Material Litigation

Axiata’s subsidiary Robi Axiata PLC in Bangladesh is subject to multiple material litigation matters involving VAT, income tax, and regulatory disputes. The cumulative claims against Robi are significant but, according to legal counsel, Robi generally has a good prospect of success in these cases. A non-exhaustive summary includes:

• SIM replacement VAT disputes (2007–2015): BDT 4,145.5 million + BDT 2,852.0 million
• VAT audit claims: BDT 9,245.0 million, with revised notices totaling BDT 7,459.5 million
• Information system audit by BTRC: BDT 8,672.4 million
• VAT rebate cancellation: cumulative BDT 3,636.2 million
• Income tax disputes: total BDT 6,783.1 million + interest

Most cases are pending before the courts, with legal counsel generally optimistic about Robi’s defence.

Chairman’s Statement

“The RRPTs that have been entered into and that will be entered into by our Group are necessary for our business and are intended to meet our business needs on the best possible terms. We should be able to have access to all available markets, products and services provided by all vendors including Related Parties, and to provide products and services to all persons, including our Related Parties. This will enhance our ability to explore beneficial opportunities as well as to promote cross-selling which is beneficial to our Group. The RRPTs are likely to continue in the future on a frequent and recurrent basis from time to time. In addition, these transactions may be constrained by the time-sensitive nature and confidentiality of such transactions, and it may be impractical to seek your prior approval on a case-by-case basis before entering into such transactions. The Proposed Shareholders’ Mandate will, therefore, substantially reduce the expenses relating to the convening of general meetings on an ad hoc basis and improve administrative efficiency. The RRPTs are transactions in the ordinary course of our business, are made on an arm’s length basis, are on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of our minority shareholders.” (Tone: Positive, supportive of ongoing related-party transactions and operational efficiency)

Directors’ Remuneration

No explicit details of directors’ pay/remuneration are provided in the document.

Shareholder Mandate and Related-Party Controls

The RRPT mandate is subject to rigorous review by the Board Audit Committee and internal controls. Interested parties (such as Khazanah and its representatives) are required to abstain from voting, ensuring conflict-of-interest management. There is no indication of share buybacks, dilution, or placements in the document.

Forecasted Events and Outlook

Several corporate restructuring events (divestments, mergers, acquisitions) have taken place, with the impact likely to be reflected in Axiata’s consolidated net assets and earnings for the year ending December 2026. The group’s outlook appears to be stable, with a focus on operational efficiency, cross-selling, and maintaining access to all markets and partners. However, the substantial legal claims in Bangladesh present ongoing risks, albeit mitigated by positive legal opinions.

Conclusion and Investment Recommendations

Overall Assessment: Axiata Group Berhad’s financial outlook for 2026 is neutral to cautiously positive. The company is actively managing its portfolio, divesting non-core assets, and merging key subsidiaries to improve scale and efficiency. RRPTs are well-controlled and essential for operations, but the lack of detailed quarterly or annual financial metrics limits a thorough performance assessment. Ongoing litigation in Bangladesh is a risk factor, but legal counsel’s positive view mitigates some concerns.

If you are currently holding Axiata stock: Investors may consider holding their position, as the company demonstrates proactive portfolio management, stable recurrent business volumes, and robust internal controls for related-party transactions. The Chairman’s statement is positive, and ongoing legal risks are being addressed. However, monitor litigation outcomes and future financial disclosures for any material impact.

If you are not currently holding Axiata stock: Investors may consider waiting for more detailed financial disclosures (revenue, earnings, EPS) before initiating a position. While the corporate actions are encouraging and suggest operational strength, the absence of conventional financial metrics and the presence of material legal disputes warrant caution.

Disclaimer: This analysis is strictly based on content disclosed in the circular and does not constitute financial advice. Investors should consult professional advisors and review full financial statements before making investment decisions.

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