GEORGE TOWN (Oct 2): Axiata Group Bhd plans to acquire a 75% stake in Digicel Asian Holdings Pte Ltd (DAH), a unit of Digicel Group Ltd (Digicel), to gain a controlling stake in Digicel Myanmar Tower Company Ltd.
Axiata's tower company edotco Group Sdn Bhd entered into a conditional share purchase agreement with Digicel today to effect the purchase of DAH, Digicel Myanmar's holding company, said Axiata in a filing this evening.
The transaction will be settled via cash after adjusting for external borrowing and other working capital requirements, of which, based on the expected closing date of Nov 30, 2015, is expected to be approximately US$125 million (RM551.3 million), it said.
The Myanmar tower market is expected to be one of Southeast Asia's largest and fastest growing telecommunication infrastructure service markets and the transaction values Digicel Myanmar at an enterprise value of US$221 million (approximately RM974.7 million), in line with market benchmarks for similar assets, said Axiata.
The deal, subject to the relevant regulatory approvals, will be financed by edotco's and/or Axiata's internally generated funds and/or external borrowings.
The transaction will deliver to edotco strategic majority control providing a platform in a highly attractive tower industry within its geographic area of focus, and further solidify edotco as a leading infrastructure provider to the greater Southeast Asian telecommunications industry.
The acquisition will also expand edotco's footprint beyond Axiata's existing operations, the statement read.
"This acquisition is a unique and exciting opportunity for edotco to establish a leading platform in the largely untapped Myanmar market.
"The Myanmar telecommunications industry, with its low mobile penetration, favourable regulatory conditions and high reliance on tower and infrastructure sharing, presents significant potential for the edotco business as it expands into the new market," said edotco chief executive officer Suresh Sidhu in a statement.
edotco believes Myanmar to be a critical part of its long-term strategy and expects to invest further into the country, said Axiata.
It plans to bring innovative products and end-to-end managed services that it offers in the Asian region, from towers and transmission to operations and maintenance and potentially energy, into Myanmar, it added.
Axiata president and group chief executive officer Datuk Seri Jamaludin Ibrahim said the deal was in line with its long-term strategy to create new revenue streams apart from the core mobile business.
"The acquisition will enhance Axiata's tower infrastructure business significantly in a market outside the group's existing footprint," he said.
Except for the material effect to the net assets, the transaction does not have any material effect on the earnings and gearing of Axiata Group for the financial year ending Dec 31, 2015.
edotco was set up in 2012 to unlock the value of Axiata's tower and infrastructure assets by driving new levels of operational efficiency in passive infrastructure management and diversifying its revenue streams.
It manages over 14,000 towers across its countries of operations including Malaysia, Bangladesh, Cambodia, Sri Lanka and Pakistan.
Axiata (fundamental: 0.85; valuation: 1.1) closed two sen or 0.35% higher at RM5.80 today for a market capitalisation of RM50.3 billion.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)