KUALA LUMPUR (July 24): Axiata Group Bhd plans to invest US$2.6 million (RM9.9 million) for a 70% stake in WSO2 Telco Inc, which will offer mobile Internet and fulfilment-exchange services to mobile telecommunication network operators.

In a filing with Bursa Malaysia today, Axiata (fundamental: 0.85; valuation: 1.1) said its wholly-owned subsidiary Axiata Digital Services Sdn Bhd had bought five million common shares and 4.62 million preferred shares in WSO2 Telco.

"Further to the initial subscriptions and subject to WSO2 Telco achieving all its determined key performance indicators on or before the first anniversary of the completion of the initial subscriptions, ADS (Axiata Digital) shall further subscribe in cash an additional 2,051,282 WSO2 Telco-preferred stocks at USD0.39 per share.

"The holder of WSO2 Telco-preferred stock is entitled to, from time-to-time, to convert each of WSO2 Telco–preferred stocks into one fully paid-up share of WSO2 Telco-common stock. At full conversion of its WSO2 Telco-preferred stocks, ADS will hold 70% of the paid-up capital of WSO2 Telco," Axiata said.

Axiata said WSO2 Telco would be a joint venture between Axiata and WSO2 Inc, an open-source software firm. "The joint venture will leverage WSO2’s class leading open-source middleware technology allowing telecommunication companies for faster engagement and partnerships and opening up a new way of doing business in the digital space," Axiata said.

At 5pm, Axiata shares closed down one sen or 0.2% at RM6.36, giving the company a market capitalisation of RM55.35 billion.

Some eight million shares changed hands.

(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.)