KUALA LUMPUR (May 26): Permodalan Nasional Bhd is among a group of shareholders — which is believed to also include the Employees Provident Fund — has voted against Axiata Group Bhd's proposed acquisition of a 66.03% stake in Indonesia's PT Link Net Tbk (LinkNet) for 8.72 trillion rupiah (about RM2.55 billion).
Nevertheless, the resolution for the investment passed as the telco managed to garner 57.83% of the votes of those present and voting at the extraordinary general meeting on Thursday, while 42.17% were against it. The approving majority represented 4.837 billion shares, while the dissenting had 3.527 billion shares.
Axiata group chairman Tan Sri Shahril Ridza Ridzuan told reporters after the EGM that the dissenting voters were mostly concerned about the impact on the company's balance sheet. “But I think we do have the time to explain, basically, to the shareholders, that the balance sheet is manageable,” he said.
He was, however, tight-lipped about who had voted for or against the resolution. “We do have the total number of votes, but I don't have the specific identity of the shareholders [who] voted [for] yes or no”.
On conclusion of the EGM, PNB — who is Axiata's third largest shareholder with a 14.67% stake — said it had voted against the deal.
“PNB Group has concerns over the proposal having an adverse impact on the financial performance of the company in the immediate term due to the potential increase in debt levels weighing on its cash flow and earnings, coupled with lack of visibility on the impact of geopolitical developments on some of Axiata's international operations,” it wrote on its website.
This confirms a report by The Edge earlier that PNB would be blocking the deal on concerns about its impact on the funding needs and gearing of Axiata, which is also in the midst of merging its mobile operator Celcom Axiata Bhd and Digi.com Bhd.
The EPF is Axiata's second largest shareholder with a 16.95% stake, Khazanah Nasional Bhd tops the major shareholders list with a 36.74% stake, according to Bloomberg data.
Axiata proposed the Link Net acquisition in late January this year, when it announced that its indirect wholly owned unit Axiata Investments (Indonesia) Sdn Bhd (AII) and its 61.48% indirectly-owned PT XL Axiata Tbk had entered into a conditional share purchase agreement with Asia Link Dewa Pte Ltd (ALD) and PT First Media Tbk (FM) to acquire Link Net's 1.82 billion shares.
Link Net is among the leading providers of high-speed broadband and cable TV in Indonesia, reaching 2.9 million homes across 23 cities with a revenue-generating unit for broadband internet of approximately 855,000 and cable TV of approximately 837,000.
On completion of the acquisition — which still requires regulatory approvals — which will see AII and XL taking over the 46.03% and 20% respectively owned by ALD and FM in Link Net, AII will be obligated to undertake a proposed mandatory tender offer for the rest of the shares it doesn't own in Link Net, as per regulations of the Indonesian Financial Services Authority.
Through the proposed acquisition, Axiata seeks to capitalise on the fast-growing fixed broadband market and enterprise market segments in Indonesia, as well as creating significant synergies for Link Net and XL Axiata through sharing of networks and extensive relationships with customers in Indonesia.