Cambodia’s Smart Axiata, Sabay in strategic partnership

By Digital News Asia October 10, 2017

Envisions becoming Cambodia’s digital champion by investing in technopreneurs
Will partner in news and video content, payment platforms, digital advertising

Cambodia’s Smart Axiata, Sabay in strategic partnership

SMART Axiata, a Cambodian mobile operator, announced that it will acquire a 30% equity stake in digital content and entertainment provider Sabay Digital Plus Co, Ltd, in a deal that both companies expect will strengthen their digital leadership position in the country.

Smart Axiata, which is 82.5%-owned by Axiata Group Bhd, has entered into an agreement with regards to a proposed investment which will see Smart provide a loan facility of US$1.5 million (RM6.35 million) to Sabay. The loan is convertible to ordinary shares in Sabay. (US$1 = RM4.24)

According to a Bursa filing, the agreement includes a call option agreement (COA) with Sabay and Sabay Digital Group Pte Ltd (SDG) for the acquisition of additional Sabay shares from SDG. The additional shares will result in the aggregate number of Sabay’s shares held by Smart being equivalent to 30% of the issued and paid-up capital of Sabay.

All or part of the remaining issued and paid-up capital of Sabay from SDG will be set at a price to be agreed on.

The proposed investment will be funded through internally generated funds.

SDG is a private limited company incorporated in Singapore and Sabay is a private limited company incorporated in Cambodia.

Sabay, which means “Happiness” or “fun” in Khmer, is a digital content company. With its news website, video content, games and other digital assets, Sabay is an easily recognisable homegrown company in Cambodia and works with over 200 brands to cater to their digital and content needs, through their various platforms.

Under the terms, Sabay will fence off its gaming operations to maintain 100% control, while taking on Smart as a partner in news and video content, payment platforms, digital advertising and other future digital initiatives.

“This investment in Sabay is aligned with our strategy for meeting the growing demands of our data hungry subscribers. Combining Smart’s data leadership with Sabay’s compelling content will allow us to offer more lifestyle value propositions.

“This partnership brings together two of Cambodia’s most innovative companies in a natural fit that will help both grow exponentially,” said Smart Axiata CEO Thomas Hundt.

Areas where the companies could see an opportunity for collaboration and create great value add include local news and entertainment, video on demand, specialised paid content, digital advertising and payments.

“We see many synergies across both businesses – in our customer bases, platforms, products and also digital talents. Investing in a company like Sabay is not just a ‘marriage made in heaven’ for both our companies but could serve as a model to other investors and entrepreneurs on what opportunities are out there in this young Cambodian market with incredible potential,” Hundt added.

Sabay was founded in 2007 and has grown to employ nearly 200 people. Co-founder Chy Sila, who started his business career in the late 90s, has become one of Cambodia's most respected businessmen - building Sabay from scratch as well as heading up the CBM company which operates several food and beverage franchises in the country, as well as being an investment partner to major cineplexes in Cambodia.

“We have worked very hard to build Sabay into a national digital market leader. This new opportunity that allows us to have a stake in content production as well as content distribution is a perfect fit for both our companies and it’s fair to say that some of the longer-term results of this partnership haven’t even been dreamt of yet. We are really energised by this new partnership and we can’t wait to get started,” said Chy Sila.

Smart envisions becoming Cambodia’s digital champion by investing heavily in the country’s technopreneurs and infrastructure, leveraging its networks and customer base to support the growth of digital businesses.

In May, Smart welcomed Mitsui & Co, Ltd. as their new strategic partner with an established track record of investment and partnerships in the ICT sector, especially in advanced digital offerings and Internet of Things.

The US$5 million Smart Axiata Digital Innovation Fund was also launched to support promising digital companies in Cambodia - the first batch of investments is expected to be announced in the coming weeks.