January 24, 2018 / 10:00 AM / a year ago

Malaysia's edotco targets expansion in region, possible capital raising

KUALA LUMPUR, Jan 24 (Reuters) - Malaysia’s edotco Group is eyeing an entry into markets such as Thailand, Laos and Vietnam, and will tap funds to set itself up for more deals in the region, the telecommunications tower services unit of Axiata , the country’s largest mobile operator, said on Wednesday.

The eighth largest integrated telecommunications infrastructure services provider globally, edotco owns 16,500 towers and manages another 10,800 across Malaysia, Bangladesh, Pakistan, Cambodia, Myanmar and Sri Lanka.

Initially, the group will look to expand organically in the next two years, as operators in markets where the tower sector is still developing are usually not ready for mergers and acquisitions, said edotco Chief Executive Suresh Sidhu.

“In some of those markets we may need to fund an initial organic entry while waiting for deals, (as) the operators may not be ready to do a full sale and lease back (of their towers),” he said.

If deal flow is good, the company would look to raise funds towards end-2018, or early next year, Sidhu said.

“We are as open to a private round as we are to equity capital like an initial public offering (IPO) as we are to looking at the debt market,” he said.

Recent media reports said Axiata, which owns 62.4 percent in the tower unit, was in talks with potential advisers for a possible $500 million IPO of edotco, which offers tower leasing, energy and transmission as well as operations and maintenance work.

“I don’t feel under any pressure (from our shareholders) whatsoever to pick any or to accelerate any one capital option. If it’s about a knee-jerk reaction to illustrate value, I think they are more patient than that,” Sidhu said.

The company still has funds to deploy from the $700 million raised through a private placement by Axiata to Malaysian sovereign wealth fund Khazanah Nasional Bhd, local pension fund Retirement Fund Inc and Innovation Network Corporation of Japan.

Of that, $270 million and $160 million were used for acquisitions in Pakistan and Myanmar. (Editing by Biju Dwarakanath)

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