Malaysian tower specialist announces record US$600M deal

The maiden equity raising exercise for Axiata Group's subsidiary edotco sets a new benchmark as the largest global tower sector private placement in 2016.

By AvantiKumar
Dec. 15, 2016

Telecommunication towers (IDG) 

Photo (IDG) - Telecommunications toiwers


A maiden equity raising exercise for Malaysia's telecom tower specialist edotco, a wholly owned subsidiary of the Axiata Group, has set a new benchmark as the largest global tower sector private placement in 2016.

Axiata Group  (Axiata) and its wholly-owned subsidiary, edotco Group (edotco) said "a record US$600 million Primary and Secondary Equity private placement deal has been entered into a binding term sheet with Innovation Network Corporation of Japan (INCJ, US$400 million committed) and Khazanah Nasional (Khazanah,  US$200 million committed) for primary and secondary edotco Shares respectively.

Definitive agreements are expected to be finalised and signed in January 2017 with Axiata remaining as majority shareholder of edotco post transaction.
Suresh Sidhu (pic below), chief executive officer of edotco said: "We are extremely pleased to receive such strong support and interests from an impressive pool of investors. We see a perfect fit with our new shareholders, INCJ and Khazanah. The additional capital injection will provide edotco the capacity to execute its growth strategies including expansion within Asia via key acquisitions and further in-country organic opportunities. Furthermore, the fact that our first fundraising exercise is a landmark deal within the global tower industry is also an important milestone in edotco's strategic development as an independent company."

edotco Group CEO Suresh Sidhu

edotco operates and manages a regional portfolio of more than 25,000 towers across core markets of Malaysia, Myanmar, Bangladesh, Cambodia and Sri Lanka with 17,100 towers directly operated by edotco and a further 8,100 towers managed through a range of services provided.
Commenting on the announcement, edotco chairman, Datuk Azzat Kamaludin, said, "We are very encouraged by the outcome of this deal as it represents valuable external endorsement of edotco's performance to date and future growth potential of the company."
INCJ is a Japanese public-private investment company whilst Khazanah is the strategic investment fund of the Government of Malaysia. For INCJ, this investment is a recognition of the long term opportunity presented in edotco. Key interests to INCJ are edotco's unique portfolio in Asia's high growth frontier markets, its solid customer contracts, strong management team and the Company's independent operating model. 

Further comments on the deal came from Tan Sri Jamaludin Ibrahim, president & group chief executive officer of Axiata, said, "edotco, as a carve out of Axiata, has positioned itself as an independent infrastructure and tower company. Set up in 2012 as a key pillar of Axiata's long-term growth strategy, our prime focus was to drive operational excellence and cost efficiencies, as well as to grow the business through expanding the quality of its portfolio and increasing its tenancy ratios. We did this by assembling an outstanding management team of highly skilled technical, financial and operational talents from within Axiata, complemented by international experts from the tower industry.
"For Axiata, edotco has become an important source of growth and a potential dividend yielding company for the Group in the medium term. The secondary shares of USD200 million will help Axiata reduce its debt," he said.
J.P. Morgan is the sole placement agent for edotco in this transaction.

This article first appeared on Computerworld Malaysia 15 December 2016.