In an interview with The Edge Malaysia, new Axiata CEO Vivek Sood, talked about the future of the pan-Asian carriers tower infrastructure business, Edotco. Formed in 2012, Edotco has expanded its presence to 9 of the 10 markets that Axiata has exposure to, the lone exception being Nepal.
Over that time the towerco has built managed and bought towers from its parent company, while also working with other operators across the region.
The capital-intensive nature of the tower infrastructure business coupled with pressures on operators to reduce debt has led to MNOs relinquishing control of their infrastructure companies in more recent tower carve outs across Asia.
“Three years back, who would have thought we would give up a controlling stake in Celcom?” Sood said, referring to the recent merger between Axiata’s flagship brand and Telenor-backed Digi.
The same might soon be the case for Edotco, which following 2017 stake sales to fund its ventures, is now 63% owned by Axiata. Edotco raised $500 million dollars through Axiata selling 10.57% of the company to Mount Bintang Ventures at that time, with management keen to highlight that Axiata still had control.
This no longer appears to be the priority, as Sood emphasised that value for shareholders rather than control would be the determining factor in Edotco’s future. In fact, Axiata appear to be actively encouraging Edotco to seek new investors.
“We are not putting any new capital into Edotco, they need to get new investors or go to the bank to borrow money,” Sood said. In line with this, he confirmed Axiata is preparing for a dilution in Edotco if a new shareholder is to emerge.
Bloomberg previously reported that CVC Capital Partners, I Squared Capital, Stonepeak Partners and a consortium led by Mitsui, which includes Japanese MNO KDDI and towerco JTower, are interested in taking a stake in Edotco.
Sood confirmed that Edotco would not be listed, despite having reached an appropriate scale for an IPO to take place. “The timing is not right because of the high interest rate at this point of time,” he said. “Infrastructure has lost a little bit of its charm.”
Edotco had been touted to go public numerous times since 2018, but its latest plans were put on haold by Sood’s predecessor Datuk Izzaddin Idris earlier in this year. In addition to the macro-economic conditions that devalue an IPO, Edotco’s exposure to Myanmar has also been touted as a major barrier that would impact the success of the listing.
