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Axiata Bhd : Malaysia's Axiata flags other deals, tower unit IPO after Telenor letdown

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09/06/2019 | 12:40pm EDT
FILE PHOTO: The Axiata headquarters building is seen in Kuala Lumpur

KUALA LUMPUR (Reuters) - Malaysia's Axiata Group is discussing deals with other parties and considering an initial public offering of its tower business, executives said after announcing the collapse of a planned Asian telecoms deal with Norway's Telenor.

The Telenor deal fell through four months after the firms said they planned to create a joint venture with nearly 300 million customers across South Asia and Southeast Asia, and a potential valuation of about $40 billion including debt.

Axiata, one of Southeast Asia's biggest telecom companies with a market valuation of more than $10 billion, said on Friday it was surprised the deal did not work out, while Telenor blamed the collapse on complexities.

Nevertheless, Axiata said it was looking ahead to generate more profit and cash for the company in the short and medium term.

That plan would entail monetising its tower business Edotco through an IPO or other means, looking for consolidation in countries such as Indonesia and Bangladesh, and sealing network-sharing agreements.

"While the Telenor discussion has come to an end at this point of time, we are continuing to have ongoing discussions of industry consolidation in specific markets," Axiata Chief Financial Officer Vivek Sood said on a conference call with analysts.

Axiata, whose main shareholders are Malaysian sovereign wealth fund Khazanah Nasional Berhad and state investment company Permodalan Nasional Berhad, operates in countries including Indonesia, Sri Lanka, Bangladesh, Cambodia and Nepal.

Sood said consolidation was possible in countries such as Indonesia and Bangladesh.

Some potential deals that may have been side-lined due to the Telenor talks would be reactivated, Axiata President and Chief Executive Jamaludin Ibrahim said, adding that he was surprised by the failure of talks with the Norwegian company.

"We don't have to rush but must actively look at all possibilities and options," Jamaludin said. "We should always be on the lookout. In any case, any transaction will take nine months or a year even if we start tomorrow."

On Edotco that operates in six countries, Axiata said efforts were on to raise funds and expand.

"We've said that we are potentially ready for an IPO and that's something which still remains on the anvil," Sood said.

"We do see a strong opportunity of growth in this business and we do look at expanding beyond the existing footprint. And for that there would be some strategic financing opportunities, and an IPO would be one of those which we...(will be) looking (at) again."

(Reporting by Krishna N. Das; Additional reporting by Liz Lee; Editing by Susan Fenton and Emelia Sithole-Matarise)

By Krishna N. Das

Stocks mentioned in the article
ChangeLast1st jan.
AXIATA GROUP BHD End-of-day quote.
TELENOR 1.42% 182.15 Delayed Quote.7.22%
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Financials (MYR)
Sales 2019 24 913 M
EBIT 2019 3 118 M
Net income 2019 1 173 M
Debt 2019 14 489 M
Yield 2019 2,38%
P/E ratio 2019 32,9x
P/E ratio 2020 28,9x
EV / Sales2019 2,15x
EV / Sales2020 2,03x
Capitalization 38 979 M
Duration : Period :
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Income Statement Evolution
Mean consensus HOLD
Number of Analysts 27
Average target price 4,78  MYR
Last Close Price 4,27  MYR
Spread / Highest target 40,5%
Spread / Average Target 11,9%
Spread / Lowest Target -7,49%
EPS Revisions
Jamaludin bin Ibrahim President, Group CEO, Director & Managing Director
Ghazzali Abdul Khalid Chairman
Shridhir Sariputta Hansa Wijayasuriya Corporate EVP, Regional CEO, South Asia
Vivek Sood Group Chief Financial Officer
Amandeep Singh Group Chief Technology Officer
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