Monday, 12 September 2016

Malaysia's Axiata’s not in talks with Singapore's M1 to raise stake

Axiata Group Bhd is not in any negotiation to raise the regional telecommunication firm’s stake in Singapore’s M1 Ltd.

This was confirmed to StarBiz by Axiata president and group chief executive officer Tan Sri Jamaludin Ibrahim (pic). Axiata has a 28.57% stake in M1 which provides both fixed and mobile telecommunication services in the island republic.

“I wish to be clear that Axiata is not currently in any negotiations with M1 to increase our stake further from the existing 28.57% held.

“However, being one of the leading regional operators and a long-term investor in Asean and South Asia, we are always looking to consider any worthwhile opportunities in the region.

“This is subject to the right timing and pricing, among other important criteria and whether they meet our strategic merger and acquisition (M&A) objectives,” Jamaludin said.

Earlier reports had indicated that Axiata was keen on increasing its stake in M1 as part of expansion plans in the region.

According to AmInvestment Bank, the M1 development followed as Keppel Corp was considering selling its 19.2% equity stake in M1 as part of a strategy to dispose of non-core operations.

Axiata has held a stake since 2005, with M1 having delivered consistently good returns.

Apart from Singapore, Axiata has controlling stakes in local telecommunication firms in Indonesia, Sri Lanka, Bangladesh and Cambodia.

Meanwhile, Jamaludin reiterated the company’s plans in expanding its telecommunication tower infrastructure business through edotco Group Sdn Bhd via M&As.

“We are keen to consider inorganic expansions outside our existing footprint.

“The target market of Asean and South Asia region remains, which is in line with our continuous effort to further drive long-term growth in these areas,” he said.

edotco, the world’s 12th largest independent tower company, manages 16,800 towers with a portfolio spanning across Malaysia, Bangladesh, Cambodia, Sri Lanka and Myanmar.

As for its mobile business, Axiata’s focus has been on in-country mobile consolidation by taking controlling stakes in network operators across Asean and South Asia.

In-country consolidations allow Axiata to solidify its position, unlock market profitability and synergy opportunities as well as ensure sustainable long-term growth.

The company began strengthening existing operations and market position through consolidation exercises in 2013, in Sri Lanka between Dialog and Suntel, followed by Sky Television and Radio, and later in Cambodia with Smart and Hello. In 2014, XL and Axis in Indonesia were also consolidated.

Axiata has also since ventured into the highly competitive Bangladesh market with Robi and Airtel.

The company had received approval for the proposed merger of Robi Axiata Ltd and Airtel Bangladesh Ltd from the Bangladesh High Court on Aug 31.

“The proposed merger is expected to be completed by fourth quarter of 2016.

“Both parties are currently working towards this,” said Jamaludin.

The completion of the proposed merger will be subject to the fulfilment of specific conditions mandated by the High Court and completion of conditions precedent in the merger agreement.

Some of the conditions entail payments of a proposed merger fee amounting to BDT100 crore (US$12.8mil), as well as the difference between spectrum price of BDT507 crore (US$65mil).

Besides that, in the event that Robi returns any spectrum, the value of the returned spectrum has been fixed at Taka 10 crore (US$1.3mil) per MHz per year.

The combined entity post-merger will operate as Robi, serving approximately 40 million customers from the current estimated 27 million.

“The proposed merger combines the strength of both operations and will deliver the widest mobile network coverage across Bangladesh, strengthening its position in the mobile internet segment as well as consolidating its position as the second largest operator in the country,” said Jamaludin.

Axiata completed the acquisition of Nepal’s Ncell Pte Ltd in April this year, marking the company’s entry into Nepal.

Ncell was acquired for US$1.37bil (RM5.6bil) from Swedish telco giant TeliaSonera (now known as Telia Company).

However, Ncell had been directed by the Large Tax Payers Office of Nepal to calculate and make a 15% deposit of the gains of TeliaSonera from the share sale of offshore company Reynolds Holdings Ltd by Telia Norway, a subsidiary of Telia Company of Sweden.

The advance tax of 9.96 billion Nepalese rupees (RM378.75mil) deposited by Ncell was in relation to the capital gains tax which was supposed to be paid to the seller Telia Norway.

Jamaludin said Axiata and Telia Company were in the midst of discussing the matter with Nepal for an amicable solution for all parties involved.

For the second quarter of financial year 2016, Ncell’s contribution to Axiata’s revenue, earnings before interest, taxes, depreciation and amortisation and normalised profit after tax and minority interests were 9.1%, 15% and 32.1% respectively.

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