Idea-Vodafone India merger by third quarter
> Process is down to its last two required approvals, says Axiata president and CEO
PETALING JAYA: After much delay, Axiata Group Bhd is positive that the merger between its Indian associate company Idea Cellular Ltd and Vodafone India will materialise by the beginning of the third quarter of this year, as just two more approvals are required.
Speaking to reporters after the group’s AGM yesterday, Axiata president and group CEO Tan Sri Jamaludin Ibrahim ( pix) said that a foreign direct investment approval and a nod from the department of telecommunication are required before India’s second and third largest telco player can merge to become a single entity.
The huge Indian telco market has seen quite a shake-up since the entry of Mukesh Ambani-controlled Reliance Jio, resulting in mergers as well as exits by telco players.
While the merged entity is expected to face challenges in the first year of operation in the hyper-competitive Indian market, Jamaludin is optimistic that Idea could see a turnaround in two to three years’ time, negating a need to exit the market.
Axiata, which currently holds a 16.3% interest in Idea, will see its stake diluted to around 8% after the merger.
Axiata fell into the red in the first quarter ended March 31, after registering a net loss of RM147.41 million against a net profit of RM239.02 million a year ago due to the share of losses reported by Idea.
Excluding Idea and foreign exchange impacts, Axiata is cautiously optimistic on its financial performance for this year.
Meanwhile, as for its infrastructure and services company edotco Group Sdn Bhd, Axiata is looking at two or three major acquisitions in Asean and South Asia, in a bid to become the fifth largest independent tower company in the world by 2021 from eighth.
On May 16, Axiata announced that edotco Pakistan Private Limited has successfully obtained approval from the State Bank of Pakistan, allowing local lenders to fund the acquisition of 13,000 tower assets currently under Deodar Private Limited.
On funding to support its goal of becoming the fifth largest in the world, Axiata is currently engaging with bankers and financial advisers to weigh several funding options, including an initial public offering exercise.
Axiata will also be focusing on its digital-centric five-year plan known as Triple Core Growth Engine – with key focus on digital telco, digital business and infrastructure, which started last year and is expected to go on until 2021.
The group is also looking at keeping four of its 30 digital businesses and selling the rest as part of the plan.
On the abolition of the Goods and Services Tax (GST) and the reinstatement of the Sales and Services Tax, Jamaludin said that more details are required before the impact of the change can be determined.
“We have to find out what is the higher ruling. The question is who will bear the cost. In the case of GST, the Malaysian Communications and Multimedia Commission decided that they will bear half we will bear half,” he added.