By Emmanuel Samarathisa
AXIATA Group Bhd is back in the news over chatter that it is again the subject of a possible merger with Telenor Group ASA.
As the business grapevine is always turned on, the market recently got served something juicy.
Newswire Bloomberg published an article on Jan 17 stating that Axiata’s major shareholder Khazanah Nasional Bhd and Telenor ASA, the parent company of Bursa-listed Digi.Com Bhd, have restarted talks on a “potential deal”.
Supposedly Khazanah and Telenor are in “the early stages” of exploring a number of possibilities including “Telenor buying part of the wealth fund’s (Khazanah) stake in Axiata,” said Bloomberg, citing sources or people “who asked not to be identified because deliberations are private.” (Note to self: use this line the next time I quote an unnamed source. Sounds sexy.)
Part of the deal, according to Bloomberg, would see a stake purchase that could open up avenues for either a merger of Axiata and Telenor’s phone tower assets or regional consolidation. Also, there could be a merger and listing of both carriers’ frontier-market operations.
Stories like this have an impact on a company’s share price and Axiata’s climbed 5.5% higher to close at RM4.60 on Jan 17. This is because punters crave such information even though this is nothing exactly new compared to the failed merger between Axiata and Telenor last year.
Some might disagree and cry, “Nuance! Nuance!” What can I say? I’m a killjoy: there is no nuance. Tower business (edotco) acquisition or listing and regional consolidation have always been major themes when it comes to Axiata. Ditto the future of its frontier-market operations, whether it is Robi Axiata (Bangladesh), XL Axiata (Indonesia) or Ncell (Nepal).
Fact is, Axiata needs to grow and Khazanah might likely pare its stake in the telecommunications giant. For Axiata, expansion is just a normal business move. For Khazanah, it needs to nurture and sell assets for a killing to pump fat dividends north of RM1 bil to the government.
To achieve its mandate, Khazanah needs to divest and in the fund’s books: Axiata is a commercial asset. So a sale is always on the table.
But the market has to chill out. Last year, Axiata sent out a confident message that the merger was happening right till Aug 29. A week later, on Sept 6, the group delivered “glad tidings” that the merger had been called off and then some.
The market reacted aggressively. Its share price dropped 15.7% from RM4.88 on the date of announcement to RM4.11 on Sept 10. The counter has been moving edgeways ever since, always struggling to break past the RM4.40 barrier until the recent Bloomberg piece.
Axiata chief Tan Sri Jamaludin Ibrahim was spot on when he said on Aug 29 the merger was not “about problems. It’s about complexity.” That should serve as guidance for hopefuls wanting to cash out from Axiata based any heady merger buzz.
Why? There are serious geopolitical and regulatory problems as well as national interests that need to be addressed when approaching a merger of Axiata’s scale.
So, for now, any future plans have to come from the horse’s mouth i.e. Jamaludin. Of course, there is this trust deficit because Jamaludin said two different things about Merger 1.0, from success to failure, in a span of seven days.
But he (and the company) is the starting point for anything remotely concrete on Axiata’s movements. Not hearsay peddled by vested interests. – Jan 17, 2020
