Malaysian telecoms company Axiata Group has announced the strategic merger of its Cambodian wireless unit Hello Axiata Company Limited with larger rival Latelz Company Limited, which operates under the brand Smart Mobile and is owned by Cyprus-based Timeturns Holdings. The cash consideration for the deal will be approximately USD155 million, subject to adjustments for the actual net debt and working capital positions as of the date of completion. Axiata will hold a 90% stake in the combined entity, which will emerge as one of the largest operators by subscribers and revenue in Cambodia’s overcrowded and highly competitive mobile market.
Axiata said the merger will provide it with improved economies of scale, remove duplicative costs and enhance revenue potential, amongst other benefits. The merged entity will also facilitate synergies and the sharing of best practices between the two companies, including increased spectrum and significant synergies across network coverage and infrastructure. ‘This merger of the top performers in the market is an excellent opportunity to strengthen our presence in Cambodia. The time is right for Axiata to consolidate with Cambodia now offering more visibility on market structure,’ commented Dato’ Sri Jamal, president and Group chief executive officer of Axiata, adding: ‘Smart has clearly emerged as a strong and resilient operator through a tough period of industry competition and realignment. This consolidation also achieves the twin benefits of improving overall market fundamentals and achieving tangible synergy benefits. The transaction parameters meet our strict financial criteria and enable us to grow faster and with lower costs than if we had done it organically. As in all of our current investments, we remain committed to Cambodia over the long term period.’ The transaction is subject to approval from antitrust authorities, and is expected to complete in Q1 2013.