KUALA LUMPUR (Jan 27): Axiata Group Bhd will be acquiring a 66.03% stake in Indonesia’s PT Link Net Tbk for a total cash consideration of 8.72 trillion rupiah (about RM2.55 billion).

In a filing with the bourse, the group said its indirect wholly-owned subsidiary Axiata Investments (Indonesia) Sdn Bhd (AII) and PT XL Axiata Tbk, an indirect 61.48% subsidiary of the group, have entered into a conditional share purchase agreement with Asia Link Dewa Pte Ltd (ALD) and PT First Media Tbk (FM) to acquire the 1.82 billion shares in Link Net.

Upon completion of the acquisition, AII will be obligated to undertake a proposed mandatory tender offer (MTO) as per the regulations of the Indonesian Financial Services Authority.

AII and XL shall acquire 46.03% and 20% respectively from the combined stake of ALD and FM in Link Net.

Link Net and its subsidiaries are engaged in telecommunication activities, and are among the leading providers of high-speed broadband and cable TV in Indonesia, serving the residential and enterprise markets across Greater Jakarta, Greater Surabaya and Bandung, Bali, Serang, Cilegon, Semarang, Solo, Medan, Batam, Purwakarta, Cirebon, Tegal, Yogyakarta and Kediri.

Axiata said the group has a reach of 2.8 million homes across 23 cities, with a subscriber base of approximately 860,000.

"In addition to doubling down on a high-growth segment in one of our key markets, our investment into Link Net is aligned with Axiata’s aspiration to support digital inclusion as Asian societies and businesses accelerate digitally.

“Both XL Axiata and Link Net are well placed to generate synergies through their combined positions in wireless communication services, extensive relationships with customers in Indonesia and strong strategic alignment,” said Axiata president and group chief executive officer (CEO) Datuk Izzaddin Idris in a statement.

Post-acquisition, Axiata said it will benefit from Link Net’s strong cash flow profile and consistent dividend payouts, with increased exposure to high average revenue per user and faster growing fixed broadband market.

For the nine months ended Sept 30, 2021, Link Net posted net profit of RM198 million, down 3% from RM204 million in the previous year’s corresponding quarter, while its revenue increased 8% to RM934 million.

On a full-year basis, Link Net has been seeing growth in its net profit in previous years, from RM224 million in FY18 to RM272 million in FY20.

Barring unforeseen circumstances, the group expects to complete the proposal by the third quarter of 2022.

Axiata closed one sen or 0.3% lower at RM3.66, giving it a market capitalisation of RM33.58 billion.