Thumbs up for Axiata acquisition of Pakistan tower firm

PETALING JAYA: Analysts welcome Axiata Bhd’s proposed acquisition of Pakistan’s Tanzanite Tower Private Limited (TTPL) for US$90 million (RM385.4 million) cash as it marks edotco’s first tower asset in Pakistan since inception in 2015.
HLIB Research said Pakistan is one of the few countries that is expected to see moderate growth leveraging on its huge population of 193 million as end of 2016; low mobile penetration rate of 71% in April 17; 3G/4G at infancy stage with only 37 million (26% of total) and five million subscribers (4% of total) respectively in May 17; and a low smartphone adoption of 9.2%.
“Post-acquisition, this would increase edotco’s tower portfolio by 4% to 18,100 towers. These 700 towers (owned by TTPL) command a slightly lower tenancy ratio of 1.4 times compared to the existing 1.6 times. Potential for improvement as the market is dominated by four major telcos namely Jazz (Mobilink and Warid), Telenor, Zong and Ufone,” HLIB said.
The exercise will strengthen Axiata’s position to accelerate tower build out and take advantage of further acquisition and consolidation opportunities towards achieving its ambition to be the largest independent tower company in Pakistan.
The deal is subject to multi-regulatory approvals and is expected to complete in the third quarter of 2017.
HLIB maintained a hold rating on Axiata with unchanged target price of RM4.65.