Axiata plans to sell stake in edotco for RM2.7bil

Debt reduction: Jamaludin (left) and Suresh at the media briefing. Jamaludin says Axiata will still hold more than 50 in edotco.

KUALA LUMPUR: Axiata Group Bhd is proposing to privately place out and divest primary and secondary shares respectively in wholly-owned subsidiary, edotco Group Sdn Bhd, to Innovation Network Corp of Japan (INCJ) and Khazanah Nasional Bhd in a deal collectively worth US$600mil (RM2.7bil).

The corporate exercises are part of Axiata move to reduce its debt to below 2.5 times, as well as help to boost edotco’s corporate value, said Axiata president and group chief executive officer Tan Sri Jamaludin Ibrahim.

“Axiata will remain as a majority shareholder of edotco. We will still hold more than 50% in edotco and will maintain that going forward,” he told a media briefing here yesterday.

Jamaludin said details of the shareholding would be revealed after the deal has been finalised by the end of next month.

Axiata is proposing to privately place out US$400mil (RM1.8bil) worth of primary edotco shares to INCJ (a Japanese public-private investment company) and divest US$200mil (RM880mil) worth of secondary edotco shares to Khazanah (the Government’s strategic investment arm) via binding term sheet.

The definitive agreements will be signed in January. JP Morgan is the sole placement agent for edotco.

As at Sept 30, 2016, Axiata’s total borrowings and debt securities stood at RM6.07bil.

Edotco is an integrated telecommunications infrastructure services company that provides end-to-end solutions in the tower services sector from tower leasing, co-locations, build-to-suit, energy, transmission and operations and maintenance.

Jamaludin said edotco offered good growth and dividend-yielding prospects.

“Tower companies are generally dividend-yielding. However, we can’t reveal our dividend policy now as we are in expansion mode.”

Edotco chief executive officer Suresh Sidhu said a potential dividend payout policy could be announced within the next three to four years.

He said that edotco planned to expand within South-East Asia.

“We have no plans for Europe. The growth strategy is South-East Asia or South Asia. In terms of opportunities, we are looking at potentially buying towers owned by operators in Malaysia.

“Another expansion opportunity is to acquire tower companies overseas. A third opportunity is to build towers for operators.”

Separately, Suresh said edotco had no immediate plans to undertake an initial public offering (IPO).

“An IPO is something that we do hope to do, but there is no concrete plan. The basic principle is to build a company of value. If it (undertaking an IPO) makes sense, then we will do it.”

He added that an IPO, if it does materalise, may only happen in 2018.