Axiata's Edotco to sell out of Myanmar with $150 million deal

Axiata Group is selling its towers operations in Myanmar via a US$150 million deal with an unnamed party, it announced on Thursday.

Mary Lennighan

April 5, 2024

3 Min Read

In doing so, the Malaysian telco group becomes the latest major player in the international telecoms market to pull out of Myanmar amidst an increasingly difficult economic and operating environment in a country still engaged in civil war.

Axiata's Edotco subsidiary brokered the deal to sell its entire 87.5% stake in Edotco Myanmar; there are a number of special purpose vehicles involved, but those are the main players. The $150 million cash deal means, unsurprisingly, that Axiata is taking a financial hit on an asset it acquired just over eight years ago.

Axiata bought into Myanmar via Edotco when it purchased a 75% stake in what was then known as Digicel Myanmar Tower Company in December 2015. The deal afforded the towers unit an enterprise value of $221 million. A back of the envelope calculation based on this latest sale puts the unit at just over $170 million.

Axiata confirmed plans to sell out of Myanmar at its full-year results presentation earlier this year, its numbers having been impacted by, amongst other things, an impairment charge against the asset.

"Decision to exit Myanmar was made due to deteriorating macroeconomics and operating environments in Myanmar," the operator said in a statement to the Malaysian stock exchange on Thursday.

"Capital from the Proposed Divestment – Myanmar, aligned with Axiata's commitment to maintaining a strong balance sheet and enhancing shareholder value, will be re-deployed to reduce debt," it added.

Axiata is by no means the only telecoms operator keen to reduce its debt burden. Neither is it without peers when it comes to withdrawing from Myanmar, once hailed as one of the world's last major greenfield telecoms markets.

Telenor and Oooredoo beat off strong competition to secure mobile operating licences in Myanmar in 2013, launching services the following year amidst masses of publicity. The promised growth opportunity was certainly there, with both companies signing up significant numbers of customers, alongside homegrown operators. When Axiata joined in with its towers business the following year, it must have seemed like the perfect time to buy into a passive infrastructure business in a fast-growing but still relatively new market.

But the promise was fairly short-lived. The military coup in 2021 brought civil war to the country and made life difficult for the telcos, to put it mildly. Telenor completed its exit in March 2022, offloading its operations there to Lebanon-based investor M1 Group. Ooredoo quickly followed suit, announcing a deal to sell out to Nine Communications later that year, but has yet to close the transaction, in part due to an ongoing regulatory process in Myanmar.

That will also be something Axiata also has to deal with, although much will also depend on the identity of the buyer, which it has chosen not to disclose at this stage.

It expects to close the deal within 12 months, it said, subject to regulatory approvals, but didn't give any further information. In fact, it has chosen not to say much at all about the transaction.

"The Board of Directors of Axiata, after having considered all aspects is of the opinion that the Proposed Divestment – Myanmar is in the best interests of Axiata," it said.Given the ongoing unrest, it’s hard to argue with that.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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