KUALA LUMPUR CAHYA MATA SARAWAK BHD (CMS) is buying a 50% stake in Sarawak-state controlled telecommunications infrastructure arm, Sacofa Sdn Bhd, for RM186.8mil in cash.
Sacofa currently enjoys a monopoly in the state in providing telecommunication towers to telcos players, which include Celcom, DiGi and Maxis.
CMS told Bursa Malaysia on Thursday that it had signed a conditional agreement to acquire 42.4 million RM1 shares at RM4.40 apiece from the State Financial Secretary (SFS), which currently owns a 70.51% interest in Sacofa.
In March 2002, Sacofa was granted a 20-year exclusive right to build, manage, lease and maintain telecommunication towers in Sarawak. It was also given the “deemed native status” allowing it to acquire native lands in the state for construction of telecommunication facilities.
CMS said that although the concession agreement had a finite timeframe, Sacofa operated more than 600 telecommunications towers and this served as a strong deterrent to any potential new market entrants.
It also said Sacofa had strong earnings visibility due to it being the state’s only provider of telecommunication towers.
For the financial year (FY) ended Dec 31, 2013, Sacofa posted an after-tax profit of RM51.6mil on revenue of RM153.4mil. Total borrowings were RM225mil.
However, CMS did not provide any financial figures for Sacofa in FY14.
CMS said the proposed acquisition was subject to a due diligence and other conditions that were precedent and typical in such cases, and would be funded by CMS using its own internally generated funds and/or borrowings.
“While CMS understands that our major stakeholders will have many questions about this acquisition, we have no further comment to make until the sale and purchase is concluded, at which time we will make a further statement,” said CMS group managing director Datuk Richard Curtis in a press statement.
The announcement comes five weeks after CMS announced record profits, with a year-on-year pre-tax profit up 16% to RM341mil for the financial year ended Dec 31, 2014. The group reported an 18% higher total revenue of RM1.67bil for the year.
A year ago, sources told StarBiz that CMS was eyeing to take over Sacofa.
Apart from SFS, shareholders of Sacofa include Celcom Axiata Bhd (15.12%), Sarawak Information Systems Sdn Bhd (7.57%) and Yayasan Sarawak (6.8%).
CMS said that subject to all required approvals being obtained, the proposed acquisition was expected to be completed by the second half of this year.
According to Sacofa’s portal, it has 485 telecommunication infrastructures, mainly consisting of heavy duty towers and mono-poles of various heights.
CMS closed unchanged at RM4.50 on Thursday.
The conglomerate’s portfolio spans over 35 companies involved in cement manufacturing, construction materials, trading, construction, property development and financial services, among others.