Axiata Group Bhd, Malaysia’s largest mobile-phone operator by market value, plans to undertake an initial public offering (IPO) of its telecom towers within two years, its group chief financial officer said.
The IPO would include its assets in Asian markets such as Bangladesh and Sri Lanka, James Maclaurin said in an interview in Kuala Lumpur yesterday. Maclaurin will vacate his current post at the end of December to become chief executive officer of a new business unit called e.co that will oversee its tower interests, Axiata said separately in a statement.
With an US$18.6 billion market capitalization, the group is emerging Asia’s third-largest mobile-phone operator by value, according to data compiled by Bloomberg, trailing Thailand’s Advanced Indo Service Pcl and India’s Bharti Airtel Ltd. It has more than 215 million mobile-phone subscribers and owns Malaysia’s Celcom Axiata Bhd and stakes in companies including Indonesia’s PT XL Axiata, India’s Idea Cellular Ltd and Singapore’s M1 Ltd, its latest annual report shows.
"This IPO would encompass Axiata’s tower assets across all our footprint companies," Maclaurin said yesterday. "It’s more a question of improving our operational performance."
Axiata is planning a US$500 million share sale, two people with knowledge of the matter said in August. Maclaurin declined to say how much might be raised.
The restructuring would "unlock its shareholders’ value and enhance its operating efficiency," Cheow Ming Liang, an analyst at K&N Kenanga Holdings Bhd, wrote in a report today, adding that the group currently has a portfolio of more than 19,000 telecoms towers.
Kenanga maintained its market perform rating on the stock and price target of RM6.70. That means the stock is expected to show a total return of between three per cent and 10 per cent, the brokerage said, without providing a timeframe.
The stock was unchanged at RM6.91 as at 9.58am in Kuala Lumpur today. It has underperformed in the past 12 months, rising 3.8 per cent compared with a 8.5 per cent gain in the benchmark FTSE Bursa Malaysia KLCI Index, data compiled by Bloomberg show.
Capital spending is forecast to drop to RM4.4 billion this year from RM5.1 billion in 2012, according to the mean estimate of 13 analysts surveyed by Bloomberg. Net income may rise by 6.7 per cent to RM2.7 billion this year, a Bloomberg poll of 24 analysts shows.
Axiata may tap the Islamic bond market to refinance US$158 million of yuan-denominated debt when it’s due in September 2014, Maclaurin said. The company set up a US$1.5 billion multi- currency sukuk programme in July last year.
The yield on Axiata’s Islamic securities fell by 12 basis points, or 0.12 percentage point, to 3.36 per cent yesterday, according to data compiled by Bloomberg. The benchmark non- Islamic three-year government bond offered 3.15 per cent, data compiled by Bloomberg show.
"We chose to do an Islamic bond program because it gave us a broader base of investors as we are able to also tap Middle Eastern funds," Maclaurin said. "We will probably refinance that and not pay out cash but it completely depends on market conditions."
Maclaurin will be replaced as group CFO by Chari TVT, currently finance chief at Axiata’s Celcom unit, according to the statement.-- Bloomberg