Axiata mulls offer for Millicom assets

Axiata Group Bhd, Southeast Asia’s second-largest mobile-phone operator, is considering an offer for Millicom International Cellular SA’s assets in Cambodia and Sri Lanka, according to two people with knowledge of the matter.

The Kuala Lumpur-based company may bid as much as US$500 million for Millicom’s stake in its Cambodian unit and US$200 million for the Sri Lankan operations, one of two people with knowledge of the plan said yesterday, asking to not be identified because the discussions are private.

“This is a good move” and the acquisition “comes at the right time,” Izz Al-Din Maslan, an analyst at AmResearch Sdn Bhd in Kuala Lumpur, said today. “In Cambodia, if they can hold the lion’s share in the number one player, they can control the market.”

Expanding in Cambodia and Sri Lanka may help Axiata boost earnings as the government-controlled phone operator faces slowing growth at home, where wireless subscriptions are estimated to have exceeded the country’s population.

Luxembourg- based Millicom said last week potential suitors had submitted “expressions of interest” for its Asian assets and that the company hired Goldman Sachs Group Inc as an adviser.

“The indicative price tag” seems “fair, based on recent telecoms M&As in emerging markets, where penetration is still low,” Jeffrey Tan, an analyst at OSK Research Sdn Bhd wrote in a report today.

Tan kept his “trading buy,” recommendation on the stock. Axiata shares fell 0.8 per cent to RM2.40 as of 9:21am on the Malaysian stock exchange, while the benchmark stock index lost 0.5 per cent. -- Bloomberg