Malaysia's Axiata surges as carrier said to mull US$500m tower unit IPO

[KUALA LUMPUR] Axiata Group rose the most in more than two years after people with knowledge said Malaysia's biggest wireless carrier is considering an initial public offering of its tower unit that could raise at least US$500 million.

Shares of Axiata climbed as much as 6.6 per cent Friday, the most since August 2015. They were up 4.6 per cent to 5.71 ringgit at 12.24 pm in Kuala Lumpur, outperforming the 0.6 per cent increase in the country's benchmark index.

Axiata has been speaking to potential advisers to explore a domestic listing of Edotco Group that could take place as soon as this year, according to the people with knowledge of the matter. The Kuala Lumpur-based company may invite banks to formally pitch for a role on the deal this quarter, the people said, asking not to be identified because the information is private.

Malaysia hosted US$1.7 billion of first-time share sales last year, more than five times the amount raised in 2016, data compiled by Bloomberg show. Edotco would join Edra Power Holdings, the country's second-biggest independent power producer, and Brunei's largest bank in seeking to list on the Kuala Lumpur stock exchange this year.

"Listing Edotco is positive for Axiata as it would unlock value for the group," Ang Kok Heng, chief investment officer at Phillip Capital Management Sdn., said by phone Friday. "It would also help to ease Axiata's debt burden as Edotco will be able raise funds on its own to expand its operations."

Overseas Expansion

Deliberations are at an early stage, and Axiata could decide not to proceed with the offering, according to one of the people. Representatives for Axiata and Edotco declined to comment.

Edotco raised US$700 million in a private placement last year from investors including Axiata's top shareholder, sovereign fund Khazanah Nasional, and government-backed Innovation Network Corp of Japan, according to an April statement. Malaysia's second-biggest pension fund, Kumpulan Wang Persaraan (Diperbadankan), also invested in Edotco through the deal, which reduced Axiata's stake to 62.4 per cent.

Axiata chief executive officer Jamaludin Ibrahim said in a 2016 interview that the mobile operator plans to expand its overseas infrastructure operations ahead of an eventual listing of the business. Edotco and a partner bought about 13,000 towers in Pakistan from Veon for US$940 million last year. Earlier in the year, it completed the US$89 million purchase of Tanzanite Tower, which owns about 700 phone towers in the country.

Edotco was started in 2012. It owns more than 26,000 towers spread across Malaysia, Sri Lanka, Bangladesh, Cambodia, Pakistan and Myanmar, according to the company's website.

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