Axiata to acquire 75% stake in Myanmar’s Digicel Asian for $125m

Myanmar Tower Company website

Axiata Group Berhad plans to acquire a 75 per cent stake in Digicel Asian Holdings Pte Ltd (DAH), a unit of Irish group Digicel Group Ltd (Digicel), to gain a controlling stake in Digicel Myanmar Tower Company Ltd.

The transaction will be settled via cash after adjusting for external borrowing and other working capital requirements, of which, based on the expected closing date of November 30, 2015, is expected to be approximately $125 million (MYR551.3 million),  the company said in a stock exchange filing.

For the acquisition, Axiata’s tower company edotco Group Sdn Bhd entered into a conditional share purchase agreement with Digicel on Friday. The deal, subject to the relevant regulatory approvals, will be financed by edotco’s and/or Axiata’s internally generated funds and/or external borrowings.

Ireland-based news site Independent.ie noted that media and telecoms group Digicel stands to gain $60 million on the sale of its Myanmar unit, according to papers filed with the US stock markets regulator.

The Myanmar tower market is expected to be one of Southeast Asia’s largest and fastest growing telecommunication infrastructure service markets and the transaction pegs Digicel Myanmar at an enterprise value of $221 million (approximately MYR974.7 million), in line with market benchmarks for similar assets, said Axiata.

The acquisition will give edotco strategic majority control providing a platform in the tower industry within its geographic area of focus, and further solidify edotco as a leading infrastructure provider to the greater Southeast Asian telecom industry. It will also expand edotco’s footprint beyond Axiata’s existing operations, the statement read.

“This acquisition is a unique and exciting opportunity for edotco to establish a leading platform in the largely untapped Myanmar market,” it said.

“The Myanmar telecommunications industry, with its low mobile penetration, favourable regulatory conditions and high reliance on tower and infrastructure sharing, presents significant potential for the edotco business as it expands into the new market,” said edotco chief executive officer Suresh Sidhu in a statement.

edotco believes Myanmar to be a critical part of its long-term strategy and expects to invest further into the country, said Axiata.

It plans to bring innovative products and end-to-end managed services that it offers in the Asian region, from towers and transmission to operations and maintenance and potentially energy, into Myanmar, the Malaysia-based telecommunications group added.

Axiata president and group chief executive officer Jamaludin Ibrahim said the deal was in line with its long-term strategy to create new revenue streams apart from the core mobile business.

The transaction does not have any material effect on the earnings and gearing of Axiata Group for the financial year ending December 31, 2015, except for the material effect to the net assets.

edotco was set up in 2012 to unlock the value of Axiata’s tower and infrastructure assets by driving new levels of operational efficiency in passive infrastructure management and diversifying its revenue streams. The subsidiary manages over 14,000 towers across its countries of operations including Malaysia, Bangladesh, Cambodia, Sri Lanka and Pakistan.

Also read:

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.