Axiata eyes unit stake sales as debt swells after overseas push

AXIATA Group, Malaysia’s biggest wireless carrier by revenue, plans to sell stakes in some of its businesses and list its technology units to reduce debt taken to fund the acquisition of telecom assets overseas.

“We will start with monetisation,” chief executive officer Vivek Sood said in an interview at his office in Kuala Lumpur.

Axiata’s balance sheet has been bogged down by debt, which ballooned to 36.7 billion ringgit (S$10.7 billion) at the end of March from 25.7 billion ringgit at the end of 2019, data compiled by Bloomberg show. The debt load shot up after its overseas expansion last year, including buying telecom towers in the Philippines and a broadband and cable TV provider in Indonesia.

The planned stake sale in its wireless tower unit Edotco Group is among options Axiata is weighing to slash debt, Sood said. Edotco was exploring selling new shares to raise as much as US$750 million and has shortlisted candidates for the transaction, Bloomberg News reported in March.

“We’re are still evaluating the offers and haven’t made a decision,” Sood said, adding the company may explore a listing if it decides against the stake sale.

Axiata is revamping PT Link Net in Indonesia into a fixed broadband infrastructure company and positioning PT XL Axiata as a converged mobile, fixed and content service provider, Sood said. There could be a stake sale in Link Net afterwards, he added.

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Founded in 2008, Axiata has 150 million subscribers for its services across South-east Asia and Pakistan. The company is exploring a strategic review of its businesses with total assets of about 81.6 billion ringgit, Bloomberg News reported in March.

While some of Axiata’s global peers such as Norway’s Telenor have exited high-risk countries such as Myanmar and Pakistan, the Malaysian carrier is staying put, citing long-term growth potential. But these operations must fund themselves and Axiata may sell stakes in these units to strategic investors, Sood said.

Axiata has recently expanded into digital financial services and artificial intelligence (AI). Its fintech arm Boost has a valuation of US$400 million. Axiata Digital & Analytics (ADA), an AI firm backed by SoftBank and Sumitomo, is worth US$500 million, Sood said. ADA has set sights on becoming a unicorn, a term that describes startups worth US$1 billion or more, by 2026, Sood said. Axiata plans to bring in new investors in Boost and ADA and list them in two to three years, he added. BLOOMBERG