KUALA LUMPUR (Feb 22): edotco Group Sdn Bhd, a subsidiary primarily owned by Axiata Group Bhd, is actively seeking a buyer for its telecommunication tower business in Myanmar.
Following its departure from Nepal, Myanmar emerges as the next market on Axiata's exit agenda, prompted by the region's increasingly challenging macroeconomic conditions and business landscape, as announced in Axiata's quarterly results release on Thursday.
Axiata revealed that the group has initiated a proactive campaign to identify potential buyers for its Myanmar operations.
However, specific details regarding the divestment strategy remain undisclosed, leaving questions regarding whether Axiata is selling its effective stake in edotco's Myanmar branch or if edotco is divesting its operations in the country.
"Axiata took decisive measures to exit the deteriorating business environments of Nepal and Myanmar during the financial year 2023 (FY2023). These actions enable management to concentrate on assets that hold the potential to generate future value for our shareholders," stated Tan Sri Shahril Ridza Ridzuan, Chairman of Axiata, in a statement accompanying the latest financial results.
As of last year, edotco boasts ownership and management of a tower portfolio comprising 54,000 structures spread across nine markets, including Malaysia, Indonesia, Bangladesh, Pakistan, Sri Lanka, Myanmar, Laos, Cambodia, and the Philippines, as indicated in its 2022 annual report.
"Despite recording robust revenue growth, edotco experienced profitability challenges due to impairments of assets and goodwill in Myanmar and Pakistan," Axiata explained.
Axiata, which recently finalised the merger of its Malaysian mobile operators Celcom Bhd and Digi dotCom Bhd, maintains a presence in several emerging markets, including Indonesia, India, Sri Lanka, Bangladesh, Cambodia, Pakistan, Laos, and the Philippines.
However, the anticipated returns from its regional investments have yet to materialise after more than a decade, coupled with significant capital requirements, placing strain on Axiata's working capital and cash flow.
Last December, Axiata exited Nepal at a loss after seven years, citing prolonged regulatory challenges and uncertainties surrounding outstanding capital gains tax (CGT) issues related to its Nepal-based mobile service unit, Ncell Axiata Bhd.