MAXIS Communications Bhd will not stop making foreign forays although it will have a lot on its plate this year with its proposed acquisition of a 51% stake in Indonesia’s PT Natrindo Telepon Selular (NTS) plus a very competitive domestic market that it has to contend with.
The company intends to continue looking for opportunities to expand further into Asia, in particular South Asia. And it wants only to penetrate markets that offer good growth potential given that new cellular subscriber growth in the home market will slow down in the future.
“It would be silly to rule out other opportunities (after NTS) although our focus (for now) is on this (deal),” Maxis chief executive officer Datuk Jamaludin Ibrahim said at a media briefing in Kuala Lumpur yesterday.
“We have always said that our future long-term growth will be through involvement in under-penetrated markets regionally,” added chairman Datuk Megat Zaharuddin.
Notwithstanding market perception that it is paying too much for the smallish NTS, Maxis believes that the “windows of opportunity “ in growth markets are getting smaller and “it’s about grabbing what are available and growing them.
“We are not making a big investment for NTS,” Jamaludin said, adding that the Indonesian company’s assets were its 2G and 3G spectrums, which had become a commodity globally.
“We believe we are buying into a company that is in a market that provides long-term growth potential and profitability,” Jamaludin reiterated, adding that after the purchase, NTS would be “a clean company with an un-geared balance sheet.”
Maxis is committed to forking out US$400mil to US$500mil (RM1.5bil to RM1.9bil) for NTS – which is part of Indonesia’s Lippo Group – over a five-year period. This includes the US$100mil acquisition cost, a US$150mil loan facility that Maxis would extend to NTS over a five-year period, and NTS’ capital expenditure (capex) requirement.
NTS needs about US$1.3bil to US$1.8bil over five years in capex and operational expenses (opex) to roll out its services. Of that amount, US$700mil to US$800mil would be invested in the first two years. And half the capex and opex would be sourced from debt markets.
Asked if the Lippo Group would be able to fork out a portion of the opex and capex, Maxis officials said: “We hope they would deliver their part.”
Maxis will pay its portion with internal funds and US dollar debt instruments, though the quantum is not known. As at end-September last year, Maxis had a ready facility of US$200mil and RM700mil in cash at its disposal.
“There will be no equity call,” Jamaludin assured Maxis shareholders. He added that the NTS stake acquisition would have no impact on Maxis’ dividend policy and little or no impact on the dividend payout ratio, while the company’s capacity to generate cash remained strong.
On the question of timelines, Jamaludin said Maxis expected to complete the deal by April, by which time NTS should be ready to re-launch the services now available in Surabaya. The plan ahead is to expand the cellular service using 2G infrastructure into Jakarta, Bandung, Bali and cities in Sumatra. Maxis wants to be the first to offer 3G services to Indonesia by the end of 2006.
The NTS deal will see Maxis ending up with four out of eight board seats in the company, including the position of chairman, which comes with certain voting rights. It will also hold four key positions of either CEO or chief operating officer, chief financial officer, chief technical officer, and head of sales and marketing.
Jamaludin said Maxis aimed to list NTS on the Jakarta bourse in the future but not this year.
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