Axiata said the decision to exit Myanmar was made due to deteriorating macroeconomics and operating environments in that country.
PETALING JAYA: Axiata Group Bhd
is selling its Myanmar telecommunication tower business below its original cost of investment as it scouts for ways to slash its massive borrowings of almost RM25bil.
Axiata, in which Khazanah Nasional Bhd and the Employees Provident Fund collectively hold over 50% in equity interest, announced that the tower business will be sold for US$150mil (RM713mil) cash to an undisclosed buyer.
Recall that in 2015, Axiata’s unit Edotco bought a 75% stake in Digicel Asia Holdings, which owned the Myanmar tower assets, for US$125mil.
About a year later, Axiata announced the acquisition of an additional 12.5% stake in the business for US$35mil.
Cumulatively, Axiata paid US$160mil for the 87.5% stake it has in the Myanmar telecom tower business.
It is also noteworthy that the selling price of US$150mil for the Myanmar asset is lower than the RM887.9mil (about US$187mil) impairment recorded in the financial year ended Dec 31, 2023, following Axiata’s decision to exit the conflict-stricken Myanmar.
Axiata told shareholders yesterday that edotco Investments (Labuan) Ltd, a wholly-owned subsidiary of Edotco Group Sdn Bhd which in turn is a 63% subsidiary of Axiata had entered into a agreement for the disposal of its entire 87.5% stake in Edotco Investments Singapore Pte Ltd, a special purpose investment holding company for Edotco’s investments in Myanmar and sole shareholder of Edotco Myanmar Ltd.
“The decision to exit Myanmar was made due to deteriorating macroeconomics and operating environments in Myanmar.
“Capital from the proposed divestment – Myanmar, aligned with Axiata’s commitment to maintaining a strong balance sheet and enhancing shareholder value, will be re-deployed to reduce debt,” stated Axiata in filing with Bursa Malaysia.
As at end-2023, Axiata’s total borrowings stood at RM24.84bil. The bulk of the borrowings were denominated in US dollar.
In comparison, Axiata’s total cash and cash equivalents amounted to RM3.45bil.
The proposed divestment of the Myanmar asset is subject to, among others, regulatory approvals and is expected to be completed within 12 months from the date of the share purchase agreement.
“(The divestment) is not expected to have any material effect on Axiata’s consolidated net assets, net asset per share, gearing and consolidated earnings for the financial year ending Dec 31, 2024.
“The board of directors of Axiata, after having considered all aspects, is of the opinion that the proposed divestment in Myanmar is in the best interests of Axiata,” it said.The Axiata stock closed at RM2.61 per share yesterday, down by 0.76%. About 10.44 million shares changed hands.
