KUALA LUMPUR: Axiata Group Bhd announced plans to acquire Suntel Ltd, a fixed telecommunications provider in Sri Lanka, for a maximum price of US$34.9 million (RM111.68 million) in a bid to expand its footprint there.
Axiata said Dialog Broadband Networks (Private) Ltd (DBN), a wholly-owned unit of Axiata’s 84.9%-subsidiary Dialog Axiata PLC (Dialog), had entered into a share purchase agreement to acquire all the ordinary shares of Suntel.
“Suntel [commands] a premium position in Sri Lanka’s fixed telecommunications sector and is ranked second in terms of business and revenue market share [behind Sri Lanka Telecom],” said Axiata in an announcement to Bursa Malaysia yesterday.
After the acquisition of Suntel, DBN and Suntel will be consolidated into a merged entity to provide advanced fixed line and broadband services.
The inclusion of Suntel will more than triple DBN’s market share to 16% from the current 5%, and improve the latter’s revenue by 12% based on its FY10 financials, according to a statement released by Dialog.
Additionally, there will be a projected cost saving of up to 600 million rupees (RM16.78 million) annually.
“The acquisition will elevate the position of Dialog within the fixed and converged services segments to a strong No 2, on a platform of product strength, cost leadership and converged brand strength,” said Dialog’s group chief executive Dr Hans Wijayasuriya.
The statement noted that Suntel’s “best in class” fixed line operations network is completely digital and caters for voice, broadband and data communication services using CDMA, WiMAX as well as other fixed wireless technologies.
Axiata said the purchase price would be at an enterprise value in the range of US$33.9 million and US$34.9 million, corresponding to a valuation multiple of between three and 3.1 times Suntel’s FY10 earnings before interest, tax, depreciation and amortisation (Ebitda).
The acquisition will be paid entirely in cash from internally generated funds.
Axiata said the exercise is not subject to shareholders approval.
Axiata’s Sri Lankan operations — Dialog — contributed 7.6% or RM927.05 million to its overall revenue for its nine months ended Sept 30, as it displayed improved margins and profitability due to aggressive de-scaling of its operating cost structure.
“Revenue (for Dialog) was up 10% on a year-to-date basis, mainly from improvements in the mobile business and in particular, increased consumption of voice and mobile broadband,” said Axiata in a recent media release.
Despite its higher performance, Dialog is still the smallest contributor to Axiata’s revenues behind the company’s operations in Malaysia, Indonesia and Bangladesh.
Axiata saw net profit for its third quarter ended Sept 30, drop 7.74% to RM589.6 million from RM639.1 million a year ago as revenue improved 6.5% to RM4.19 billion from RM3.94 billion.
It said operating costs increased 9.4% year-on-year (y-o-y) to RM6.87 million mainly due to Celcom, Dialog and Indonesia’s XL Axiata.
However, capital expenditure is expected to slow down after next year.
OSK Research noted that Axiata’s chief financial officer James Maclaurin, in a briefing with analysts on Wednesday, guided that capital expenditure would peak in 2012 after which there may be scope to distribute more returns to its shareholders.
OSK maintained its “buy” call and fair value of RM5.60 for Axiata.
Maclaurin also said the recent agreement signed between Celcom Axiata Bhd and Broadcast Australia in a bid for the country’s RM2 billion digital terrestrial television broadcast network (DTTB) is not a move into TV broadcasting.
The move is to further monetise Celcom’s mobile infrastructure, which the latter earlier said comprised 98% of the infrastructure required for the DTTB network.
In addition, Maclaurin said Axiata’s revenue growth next year will be sustained at the 2011 level as Ebitda margins undergo pressure from XL Axiata, which will be ramping up its capital expenditure and infrastructure deployment to grow its data segment.
Axiata said the data segment presents a “tremendous opportunity” as data usage has grown 278% and y-o-y revenue from this segment grew 50% in the recent quarter.
This article appeared in The Edge Financial Daily, December 16, 2011.
Axiata said Dialog Broadband Networks (Private) Ltd (DBN), a wholly-owned unit of Axiata’s 84.9%-subsidiary Dialog Axiata PLC (Dialog), had entered into a share purchase agreement to acquire all the ordinary shares of Suntel.
“Suntel [commands] a premium position in Sri Lanka’s fixed telecommunications sector and is ranked second in terms of business and revenue market share [behind Sri Lanka Telecom],” said Axiata in an announcement to Bursa Malaysia yesterday.
After the acquisition of Suntel, DBN and Suntel will be consolidated into a merged entity to provide advanced fixed line and broadband services.
The inclusion of Suntel will more than triple DBN’s market share to 16% from the current 5%, and improve the latter’s revenue by 12% based on its FY10 financials, according to a statement released by Dialog.
Additionally, there will be a projected cost saving of up to 600 million rupees (RM16.78 million) annually.
“The acquisition will elevate the position of Dialog within the fixed and converged services segments to a strong No 2, on a platform of product strength, cost leadership and converged brand strength,” said Dialog’s group chief executive Dr Hans Wijayasuriya.
The statement noted that Suntel’s “best in class” fixed line operations network is completely digital and caters for voice, broadband and data communication services using CDMA, WiMAX as well as other fixed wireless technologies.
Axiata said the purchase price would be at an enterprise value in the range of US$33.9 million and US$34.9 million, corresponding to a valuation multiple of between three and 3.1 times Suntel’s FY10 earnings before interest, tax, depreciation and amortisation (Ebitda).
The acquisition will be paid entirely in cash from internally generated funds.
Axiata said the exercise is not subject to shareholders approval.
Axiata’s Sri Lankan operations — Dialog — contributed 7.6% or RM927.05 million to its overall revenue for its nine months ended Sept 30, as it displayed improved margins and profitability due to aggressive de-scaling of its operating cost structure.
“Revenue (for Dialog) was up 10% on a year-to-date basis, mainly from improvements in the mobile business and in particular, increased consumption of voice and mobile broadband,” said Axiata in a recent media release.
Despite its higher performance, Dialog is still the smallest contributor to Axiata’s revenues behind the company’s operations in Malaysia, Indonesia and Bangladesh.
Axiata saw net profit for its third quarter ended Sept 30, drop 7.74% to RM589.6 million from RM639.1 million a year ago as revenue improved 6.5% to RM4.19 billion from RM3.94 billion.
It said operating costs increased 9.4% year-on-year (y-o-y) to RM6.87 million mainly due to Celcom, Dialog and Indonesia’s XL Axiata.
However, capital expenditure is expected to slow down after next year.
OSK Research noted that Axiata’s chief financial officer James Maclaurin, in a briefing with analysts on Wednesday, guided that capital expenditure would peak in 2012 after which there may be scope to distribute more returns to its shareholders.
OSK maintained its “buy” call and fair value of RM5.60 for Axiata.
Maclaurin also said the recent agreement signed between Celcom Axiata Bhd and Broadcast Australia in a bid for the country’s RM2 billion digital terrestrial television broadcast network (DTTB) is not a move into TV broadcasting.
The move is to further monetise Celcom’s mobile infrastructure, which the latter earlier said comprised 98% of the infrastructure required for the DTTB network.
In addition, Maclaurin said Axiata’s revenue growth next year will be sustained at the 2011 level as Ebitda margins undergo pressure from XL Axiata, which will be ramping up its capital expenditure and infrastructure deployment to grow its data segment.
Axiata said the data segment presents a “tremendous opportunity” as data usage has grown 278% and y-o-y revenue from this segment grew 50% in the recent quarter.
This article appeared in The Edge Financial Daily, December 16, 2011.
