Axiata, Malaysia’s largest wireless firm, is considering selling stakes in its fintech and AI units. The goal is to reduce the debt that has increased due to overseas expansion efforts. The company currently has a market capitalization of about $5 billion and carries $7.9 billion in debt.
In recent years, Axiata has been expanding its operations abroad. It has acquired telecoms assets in Indonesia, Sri Lanka, and Bangladesh. Axiata CEO Izzaddin Idris mentioned in an interview with Bloomberg that the company may list its fintech and AI units, Boost Holdings and Axiata Digital Advertising (ADA), respectively, in the next two to three years.
Boost Holdings operates as a mobile payments and financial services company in Malaysia, Indonesia, and Cambodia. ADA, on the other hand, is an artificial intelligence-powered advertising company operating in Malaysia, Indonesia, and India.
By listing these units, Axiata aims to reduce debt and refocus on its core telecoms business. The company is also open to selling stakes in other units, including its tower business.
Axiata’s debt levels have raised concerns among investors in recent years. The company’s debt-to-equity ratio was 1.5 times at the end of 2022, up from 1.2 times in 2021. The overseas expansion and acquisitions in 2021 and 2022 have contributed to the company’s high debt. Additionally, rising interest rates have increased the cost of servicing the debt.
Listing its fintech and AI units would provide Axiata with much-needed cash and enable a renewed focus on its growing core telecoms business. However, there are risks associated with listing these units. The fintech and AI sectors are still relatively new, and success in the long term is not guaranteed. Moreover, listing would require Axiata to relinquish some control over these units. Therefore, careful consideration is necessary before making a decision.
