HONG KONG: China Mobile Ltd has held talks about purchasing a minority stake in Axiata Group Bhd , Malaysia’s largest wireless carrier by market value, people with knowledge of the matter said.
The Beijing-based company asked to buy about 20% of Axiata, a stake that would be valued at more than US$3.7bil (RM11.77bil) based on Tuesday’s closing price, said one of the people, asking not to be named as the information is private.
No agreement was reached, as Axiata and its largest shareholder Khazanah Nasional Bhd are unwilling to sell that much stock and consider the indicated offer price too low, they said.
China Mobile, the world’s biggest phone company by users, has been seeking overseas acquisitions after its cash rose to US$69bil by the end of March, according to data compiled by Bloomberg.
It agreed in June to buy 18% of True Corp, Thailand’s third-largest phone company, for US$881mil.
A US$3.7bil investment in Axiata would mark China Mobile’s biggest overseas acquisition and the biggest telecom deal in South-East Asia since 2007, the data show.
The Chinese carrier’s cash balance will rise an average 95 billion yuan (US$15bil) annually through 2020, Sanford C. Bernstein & Co analysts led by Chris Lane wrote in a July 23 report.
The swelling funds are a “constant source of controversy” for investors, who are concerned the company will overspend on overseas acquisitions, Lane wrote in the report.
“We generally preach against international M&As and prefer to see the cash returned to investors,” he wrote.
“However, in comparison to earning meager interest in a bank account, we believe M&A is the lesser evil.”
It wasn’t immediately clear exactly how much per share China Mobile was willing to pay for Axiata.
The Malaysian carrier’s shares have advanced 0.7% this year, giving it a market value of RM59.6bil (US$18.6bil).
They slipped 0.3% at 11:17am yesterday in Kuala Lumpur. Khazanah,owns 38.8% of Axiata, data compiled by Bloomberg show.
China Mobile shares slipped 1% in Hong Kong yesterday, trimming gains this year to 5.5% .
Rainie Lei, a spokeswoman for China Mobile, declined to comment on whether China Mobile had been in talks with Axiata, citing quiet period restrictions ahead of reporting earnings.
Axiata said in an e-mailed statement that it “does not comment on reports speculative in nature.” Asuki Abas, a spokesman for Khazanah, couldn’t immediately be reached. – Bloomberg