This article first appeared in The Edge Financial Daily on September 24, 2018

KUALA LUMPUR: Malaysian telecommunications company (telco) Axiata Group Bhd’s tower unit, edotco Group Sdn Bhd, is working on acquisition deals that it aims to complete in the next 12 months to boost its infrastructure portfolio.

Its chief executive officer (CEO), Suresh Sidhu, told Reuters last Friday he was optimistic that two to three deals could materialise in the company’s existing markets where the sector has developed.

edotco, 62.4% owned by Axiata, currently operates and manages a regional portfolio of over 28,000 towers in Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka and Pakistan.

“The priority is to look at the current footprint we are in and look for opportunities to bulk up and add more towers there. Again, Malaysia, Myanmar, Bangladesh are countries of higher interest to us,” Sidhu said.

Last Tuesday, the telco’s infrastructure company cancelled a US$940 million (RM3.82 billion) deal to acquire 13,000 towers from a unit of Pakistan Mobile Communications Ltd as the regulators failed to provide all approvals for the transaction to go through.

The deal, in the works for over a year, was expected to propel the company to the eighth spot among the largest independent tower firms globally.

Sidhu was unfazed by the Pakistani deal being scrapped, noting that the other deals combined, if sealed, could provide similar growth.

The deals under discussion could add around the same number of towers to its portfolio as the scrapped Pakistani deal would have, the company said. It did not give a value for the acquisitions under discussions.

Sidhu said there was no urgency to raise funds to fuel acquisitions as the company still has US$200 million in cash reserves from the US$700 million it raised in 2016 and last year from shareholders.

He said had the Pakistani deal gone through, it would have depleted edotco’s cash and sped up fundraising needs for future growth, whether through equity or debt.

However, any fundraising exercise would probably be put off until mid-2019, he said.

“The deal pipeline is healthy and we have the luxury of making sure we do deals that we want to ... not for the purpose of pleasing the capital markets,” Sidhu said, noting that edotco has sufficient organic growth to sustain itself.

Sources had said edotco’s plan to raise at least US$500 million in an initial public offering targeted for year end or early 2019 could be scaled back or delayed after the Pakistani deal was called off.

edotco was also looking at Thailand, Laos, Vietnam and the Philippines as potential markets to enter, Sidhu said. — Reuters