Axiata’s acquisition of 80 per cent stake in Tanjung Digital ‘expensive’

KUALA LUMPUR: Axiata Group Bhd’s (Axiata) 63 per centowned subsidiary edocto Group Sdh Bhd’s (edotco Group) 80 per cent stake acquisition in Tanjung Digital Sdn Bhd (Tanjung Digital) has been viewed as expensive by analysts while others are fairly neutral-to-negative on the proposed acquisition.

In a filing on Bursa Malaysia, Axiata said edotco Malaysia Sdn Bhd (edotco Malaysia), a wholly owned subsidiary of edotco Group had on May 4, 2018 entered into a sale and purchase of shares agreement (SPA) with Utara Jernih Sdn Bhd (UJSB) and Mohd Azam bin Saad (MAS).

This SPA was for the acquisition of 80,002 ordinary shares, representing 80 per cent of the issued share capital of Tanjung Digital for a total cash consideration of RM140 million.

According to AmInvestment Bank Bhd (AmInvestment Bank), the transaction allows edotco Malaysia to expand its presence in Kedah by 225 towers, which is six per cent of edotco Group’s current portfolio of 4,004 towers in Malaysia and one per cent of the group’s total 16,533 towers.

“We view the purchase price as expensive, translating to US$199,430 per tower, 2.7-fold compared to US$75,109 per tower, which was the acquisition price for 13,700 towers in Pakistan in August last year,” the research firm commented.

AmInvestment Bank noted that the announcement did not provide any financial guidance on Tanjung Digital except that management indicated that the acquisition will be earnings accretive.