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KUALA LUMPUR (May 2): Axiata Group Bhd has entered into a binding term sheet to combine the operations of its 82.27%-owned subsidiary, Dialog Axiata Plc, with Indian telco Bharti Airtel Ltd’s operations in Sri Lanka, Bharti Airtel Lanka (Private) Ltd (Airtel Lanka).
“The proposed transaction envisages Airtel being granted a stake in Dialog Axiata, representing the fair value of Airtel Lanka. Airtel would accordingly be issued new shares in Dialog Axiata upon completion of the transaction,” Axiata, Bharti Airtel and Dialog Axiata said in a joint statement.
Discussions of the proposed transaction are ongoing between the three parties and also with the relevant regulatory authorities as per applicable laws and regulations, they said.
“The proposed transaction is subject to signing of definitive agreements and necessary closing conditions including applicable regulatory and shareholder approvals,” the statement read, adding further announcements would be issued in due course should there be material developments.
According to Axiata’s financial report for the year ended Dec 31, 2022 (FY2022), the Sri Lanka mobile operations represented about 4% of the group’s net assets. In FY2022, the Sri Lanka operations posted a net loss of RM524.44 million against a net profit of RM354.19 million in FY2021, while revenue fell 14.83% to RM2.52 billion from RM2.95 billion. This was mainly due to the economic and political crisis in Sri Lanka, resulting from the impacts of large sovereign debt repayments, significant tax cuts and Covid-19.
Axiata just completed in November the merger of its mobile unit in Malaysia under Celcom Axiata Bhd with Telenor Asia Pte Ltd’s Digi Telecommunications Sdn Bhd.
Besides Malaysia and Sri Lanka, Axiata has interest in mobile operators in Indonesia under PT XL Axiata and PT Link Net, Robi Axiata Ltd in Bangladesh, Smart Axiata Co in Cambodia, and Ncell Axiata Ltd in Nepal.
It also holds a controlling stake in wireless tower business edotco Group Sdn Bhd, which has reportedly shortlisted bidders for a stake sale that could raise as much as US$750 million.
Bloomberg reported in March, citing sources, that Axiata, Malaysia’s biggest wireless company by revenue, was exploring a strategic review of its businesses — with total assets of RM81.6 billion — to streamline its operations and raise funds to pare debts. Options included the spinning off or selling of its assets outside Malaysia.
Axiata’s share price closed one sen or 0.33% higher at RM3 on Tuesday (May 2), valuing the group at RM27.54 billion.
Read also:
Axiata set for strategic review to revamp RM81.6b portfolio, sources say
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