Axiata’s Asia dream fades as rivals eye its overseas units
KUALA LUMPUR: Axiata Group Bhd’s dream of building a carrier that spans southern Asia from Singapore to Pakistan, Indonesia and India is fading as it risks losing hold of overseas units to rivals.
Malaysia’s biggest wireless carrier received an offer from Singapore Press Holdings Ltd (SPH) and Keppel Corp to buy out its stake in M1 Ltd, the latest in a series of challenges to its regional presence.
The view was rosier for Axiata in 2016, when chief executive officer Tan Sri Jamaludin Ibrahim signalled interest in raising its stake in M1.
He also planned to double the number of telecommunication towers in South and Southeast Asia in three years and eventually offer the assets in a public offering.
Since then, its stake in Idea Cellular Ltd was diluted by half after the Indian carrier merged with Vodafone Group Plc, and its plan to buy Veon Ltd’s tower unit in Pakistan was called off.
M1 remained a “strategic asset” for Axiata, and the carrier would continue to review all available options, with the sole objective of upholding shareholders’ value, said the company’s spokesman.
It has presence in 11 countries now, compared to 10 a decade ago, and has expanded to tower infrastructure and the digital business.
“We are much more of a regional player today compared to when we first started, and we will continue to pursue our expansion in areas that enable us to grow and enhance shareholders’ value,” said the spokesman.
Higher competition and regulatory hurdles were the key reasons for its overseas troubles, said KAF-Seagroatt & Campbell Bhd analyst Shafiq Kadi.
“They will have to seek other acquisitions or expansion, and increase focus at home and in Indonesia, to make up for this.”
Axiata still has operations in Indonesia, Bangladesh, Sri Lanka, Nepal and Cambodia.
The carrier paid S$260.8 million (RM786.5 million) for an early 12.1 per cent stake in M1 in 2005 at S$2.20 per share.
It would gain S$547 million if it accepts SPH-Keppel’s offer of S$2.06 as M1’s dividends over the years have fully repaid the debt and equity used to buy its current 28.68 per cent stake, according to Bloomberg calculations.
Analysts at Daiwa Capital Markets Singapore Ltd and Citigroup Global Markets Inc said Axiata could counter SPH-Keppel’s buyout offer if it chose to.
“We think it is unlikely it would agree to the offer. On the strength of its balance sheet alone, it has adequate resources to engage in a bidding war up to S$2.50,” Daiwa Capital Markets analyst Ramakrishna Maruvada wrote in note.