Axiata nears US$1b deal for Veon's Pakistan towers

Kuala Lumpur

VEON Ltd is in advanced talks to sell wireless towers in Pakistan to a unit of Axiata Group Bhd, the biggest Malaysian mobile operator.

Axiata's infrastructure arm, Edotco Group Sdn, plans to announce an agreement as soon as this week that could value the towers at about US$1 billion, people familiar with the matter said. The purchase of about 13,000 towers will make Edotco the biggest independent telecommunications tower operator in the South Asian nation, one of the people said, asking not to be identified because the information is private.

Veon confirmed the talks about the subsidiary, known as Deodar Ltd, in a statement Tuesday after Bloomberg reported on the plans. The discussions may not result in a transaction, according to the company's statement.

Axiata has been pursuing overseas deals as it seeks to reduce reliance on a home market where it's losing subscribers and average customer revenue is flattening. Any deal will add to the US$3.1 billion of acquisitions announced in Pakistan over the past 12 months, according to data compiled by Bloomberg.

"The deal implies a price of about US$70,000 per tower versus more than US$100,000 in Italy, but that's a great price for Pakistan where average revenue per user is substantially lower," said Alexander Vengranovich, analyst at Otkritie Capital in Moscow. The Pakistan unit may use the proceeds to buy wireless spectrum, reduce debt and pay a dividend to its parent company, he said.

Axiata wants to increase its phone towers in South-east Asia and South Asia to 26,000 from 16,000 within three years, chief executive officer Jamaludin Ibrahim said in an interview last year. The acquisition would help Kuala Lumpur-based Axiata meet a goal of expanding its overseas infrastructure operations ahead of an eventual listing of the business.

"The tower business is an important segment for the telecommunication industry and Edotco can do a lot of business from Pakistan to other neighboring countries," Danny Wong, chief executive officer of fund manager Areca Capital Sdn, said on Wednesday by phone. BLOOMBERG