Malaysia-based Axiata Group has agreed to buy Nepalese mobile operator Ncell from TeliaSonera. Axiata thus expands its regional footprint, entering the Nepalese market. Through its subsidiary Axiata Investments (UK), Axiata has entered into a conditional agreement with TeliaSonera and SEA Telecom Investments for the 100 percent acquisition of Reynolds Holdings for USD 1.365 billion. This provides Axiata with an 80 percent equity interest and controlling stake in Ncell.
TeliaSonera has agreed to sell its 60.4 percent stake in Nepalese operator Ncell to Axiata for USD 1.030 billion on a cash- and debt-free basis. TeliaSonera will also dissolve its economic interests in the 20 percent local ownership and receive about USD 48 million. The transactions are conditional on each other.
The 20 percent stake is held by Niraj Shrestha, who will sell his interest to Axiata partner Bhavan Singh Shrestha. According to current Nepalese regulation, 20 percent of the ownership in a company is required to be held locally by a Nepalese citizen.
Axiata said Nepal offers good room for expansion, with a mobile penetration of only 51 percent and mobile subscriber growth of 18 percent in the 2012-2014 period. Ncell claims a 57.5 percent revenue market share and 48.8 percent subscriber market share in Nepal. The operator holds paired spectrum of 8MHz in the 900MHz band, 11MHz in the 1800MHz band and 10MHz in the 2100MHz band.
From the Ncell acquisition, Axiata expects synergies in several areas. In particular, the overseas foreign workers segment, where there are approximately one million Nepalese in Malaysia alone, represents opportunities for intra-ASEAN international calling and mobile remittances, Axiata said. Axiata expects to also apply its emerging market expertise in network and technology rollout, marketing, product development, human capital building and procurement.
Based on Axiata’s FY14 pro forma revenue, EBITDA and profit after taxation and minority interests, Ncell will boost Axiata's results by approximately 9 percent, 14 percent and 11 percent, respectively. The acquisition will not affect Axiata’s dividend policy, the company said. Ncell’s strong cash flow, with an operating free cash flow of over NPR 22 billion (approximately USD 217 million) per annum, would further support Axiata’s dividends.
TeliaSonera CEO Johan Dennelind said the move was in line with its strategy to create a new TeliaSonera by reducing its presence in its seven Eurasian markets and focus on operations in the Nordics and Baltics. The divestment results in a positive net cash effect for TeliaSonera of SEK 7.5 billion after provisions, primarily related to tax. The effect on net income is expected to be minor and still dependent on fluctuations of currencies until closing. The expected divestment proceeds will go mainly to debt reduction, in line with TeliaSonera’s ambition to keep a solid investment grade credit rating of A- to BBB+.
The deal is subject to approval from Department of Industries in Nepal, Nepalese Telecom Authority, Malaysian Central Bank and Axiata’s shareholders, respectively. Closing of the transaction is expected to take place in the first half of 2016.
Source: http://www.telecompaper.com/news/axiata-to-acquire-80-stake-in-ncell-for-usd-13-bln-2--1119889