KUALA LUMPUR: Axiata Group Bhd is taking advantage of the current low-interest rate environment to raise US$1bil worth of sukuk.
It is expected to be one of the largest sukuk raised by corporates since 2015 when Petroliam Nasional Bhd raised US$1.25bil.
Axiata deputy group CEO Datuk Izzaddin Idris said the bulk of the sukuk would be used to retire some of the group’s debt and the remaining, as working capital for its subsidiaries.
“There’s always that idea that if our subsidiaries are going to raise their own funds it will cost them more. If the Axiata group is able to borrow at a much cheaper cost then it makes sense for us to raise the funds, and lend to the operating companies, ” he told reporters after Axiata’s AGM here yesterday.
He expected the exercise to be completed by next month. The sukuk will be in tranches with tenures of between 10 years, 20 years and 30 years.
“The indicative rates are quite attractive, ” Izzaddin said.
Axiata has appointed CIMB Bank, Standard Chartered, UBS and Citibank Bhd, to arrange the facilities.
In light of the current challenging environment due to the coronavirus crisis, Izzaddin said Axiata has reduced its capital expenditure (capex) for this year.
“We have decided to utilise 85% of our planned capex for 2020, ” he said.
Axiata has announced that it was allocating RM6.6bil capex for expansion plans mainly for its Indonesia operation.
Managing director and group CEO Tan Sri Jamaluddin Ibrahim said while the Covid-19 pandemic would be impacting Axiata’s top line for this year, the increasing number of online activity, as more people adopted contactless transactions, would benefit telecommunication companies including Axiata in the long run.
“During the movement control order, we gave out a lot of freebies and we estimated about RM300mil of opportunity cost per month, which could impact the revenue.
“But, we expect when the economy recovers in the next 18 months, the telecommunication sector will grow faster thanks to the acceleration of digitalisation by businesses and consumers, ” he said.
Earlier, Affin Hwang Investment Bank said it has reduced its earnings forecast for Axiata and its subsidiaries due to Covid-19 and lockdowns globally.
“The Covid-19 pandemic, lockdowns and weakened economies should affect all of Axiata’s operating companies.
“We expect Ncell to see the largest financial impact, followed by Dialog and Celcom. XL, on the other hand, may see a relatively smaller impact, ” it said in a report.
Notably, Jamaluddin said he would be retiring at the end of this year after more than 12 years at the helm of Axiata.
He will be replaced by Izzaddin from January.
Axiata is spinning off one of its subsidiaries in Bangladesh Robi Axiata.
Izzaddin said Robi would be the fourth-largest public offering in Bangladesh and the exercise is expected to be completed by the fourth quarter of this year.
Asked about the potential listing of Axiata’s other subsidiaries such as Celcom and tower company edotco, Izzaddin said the group is not in the rush to list them.
He said edotco has room to borrow more funds thanks to its balance sheet and that the valuation for the business has risen.
The company owns over 4,000 telecommunications towers in Malaysia and manages 5,000 more towers in the country. Across the region, it owns over 27,000 towers, including those in Malaysia.
Izzadin pointed out that based on an investor’s interest last year to acquire a stake in edotco, the business was valued at around RM8bil to RM9bil.
“We have parties indicating a valuation of much higher than that, easily RM12bil, ” he said.
Axiata has put plans to list edotco on the back burner since 2018.
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