KUALA LUMPUR: Axiata Group Bhd's planned RM713 million (US$150 million) exit of Edotco's Myanmar operations was done at 30 per cent below its valuation, RHB research said.
In a report today, the research firm said the US$150 million consideration translates into a valuation/tower of US$70,000, which is about 30 per cent lower than the indicative US$100,000 a tower forked out in 2016 (75 per cent stake), which valued Edotco Myanmar Limited (EMM) then at US$167 million.
The buyer is Pun Tower Investments Ltd, which is linked to the founder of Yoma Group, a Myanmar conglomerate with exposure to real estate, financial services, consumer, automotive, and heavy equipment, amongst others. Yoma was Edotco's original strategic partner in the tower business in Myanmar.
"We view the carve out of EMM positively, as it has been a stumbling block for edotCo's equity raising exercise, where a process is currently ongoing," the report said.
It said EMM contributed about 14 per cent of Edotco's earnings before interest, tax and depreciation with 2,128 sites owned as at fourth quarter of 2023, and 945 sites under management with a tenancy ratio of two times.
"Management expects the void in earnings to be buffered by stronger growth in Malaysia (5G rollout), Philippines (renewed site orders), and Bangladesh, Overall, Edotco expects the disposal of EMM to be ebitda neutral, based on the continuing double-digit growth in ebitda," RHB research said.
Assuming the sales proceeds are used to pare debt, Axiata's net debt/ebitda would decline marginally to 2.9 times from 3.0 times (4Q23).
The group is targeting 2.5 times net debt/ebitda by financial year 2026 forecast from equity fund raising and delayering of assets.
RHB research has kept its "Buy" call on Axiata with a target price of RM3.40 a share.
It last traded at RM2.61 a share, giving it a market capitsalisation of almost RM24 billion.