Axiata welcomes Mitsui as strategic partner at Smart Cambodia
By Digital News Asia May 22, 2017
- Post-transaction, Axiata will hold 82.5% stake in Smart
- The deal meets Axiata Group's portfolio management strategy, proceeds intended for general corporate purposes and repayment of existing debt
AXIATA Group Bhd now has a new strategic partner in its Cambodian business, after it signed a definitive agreement with Mitsui Co Ltd and its affiliates that will see the parties collectively emerge as a 10% strategy partner in Smart Axiata Co Ltd.
With Mitsui emerging as a strategic partner, it will put Smart Axiata in a better position to leapfrog its digital leadership in the country.
The total transaction consideration of US$66 million is based on an equity value of US$724 million after factoring additional cash received from dividends as part of the transaction structure. Under the agreement, Axiata has also granted Mitsui a call option to acquire an additional 10% interest, exercisable within 12 months from the completion of the transaction. The transaction is expected to close by end-May 2017.
Post-transaction, Axiata will continue to hold controlling and majority interest in Smart with 82.5% stake.
The deal meets the Group’s portfolio management strategy and brings financial value for Axiata and its shareholders, with the proceeds intended for general corporate purposes and repayment of existing debt in its balance sheet.
There are significant opportunities in digital services in Cambodia with Smart currently at the forefront. Mitsui’s position as a “Global Strategic Investor” is an ideal partner given its established track record of investing and partnering with companies across the telecom and technology value chain. Mitsui and its investee companies with expertise in digital services and Internet of Things (IoT) offerings will enable Smart to further strengthen its digital leadership.
“Axiata’s interest and investment in Cambodia started in 1998, with Smart now being a phenomenal contributor to the Group. This strategic partnership with Mitsui will support the growth efforts of Smart, particularly in the areas of digital services and IoT and our vision of becoming a New Generation Digital Champion. With Mitsui in the fold, Smart will be in a position to offer enhanced digital services that would leapfrog Cambodia’s digital economy. We look forward to leveraging on synergies from this strategic partnership," said Axiata Group president and chief executive officer Jamaludin Ibrahim (pic above) in a statement.
“As a long term investor with a diverse portfolio in the region, we continuously review various options to optimize our capital allocation, balance sheet and group structure which includes a potential adoption of strategic partners to support the growth efforts. We remain committed to maintaining our majority stake Smart. It is a company that has consistently outperformed its competitors with its clear customer proposition, innovative product solutions and effective cost controls.”
Since 1998, Axiata has been a committed long-term investor in Cambodia and has contributed positively to the economy and national development of the country.
From 2008 to 2016, Smart has spent USD967 million in capital and operating expenditure in Cambodia. A further USD80 million in capital expenditure has been committed for 2017, primarily for 4G network expansions.
In 2016, Smart’s total Gross Value Added contribution to the economy was USD313 million amounting to 1.6% of the national GDP of Cambodia. Smart support over 40,600 jobs directly and indirectly through its operations and capital investments. In early 2017, it launched the Smart Axiata Digital Innovation Fund, a USD5 million venture capital fund to invest in Cambodian-based digital service companies and start-ups with the aims to spur the digital ecosystem in the country. Smart’s goal is to transform Cambodia to a digital, knowledge and information based society.
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