S&P Global Ratings said Thursday that its rating and outlook on Malaysia-based wireless services provider Axiata
Group Bhd. (BBB+/Stable/--) are not affected by the company's acquisition of
tower assets from Pakistan Mobile Communications Ltd. (Jazz) for US$940
"We expect the tower assets to be EBITDA-accretive and neutral to our leverage
expectations for Axiata in 2018 and beyond. We estimate the company's pro
forma ratio of debt to EBITDA to be 1.9x in 2018, slightly better than our
downgrade trigger of 2.0x. However, we believe the rating headroom remains
limited with no scope for significant debt-fueled acquisitions or material
shareholder distributions," said a statement.
Axiata's acquisition of 13,000 towers from Jazz establishes it as one of the
leading tower companies in Pakistan. Although the acquisition increases the
share of revenue from higher-risk economies for the company, we believe tower
assets are a passive infrastructure play and should provide a steady stream of
income. We also expect the prospects for tower companies in Pakistan to
improve because telecom incumbents are increasingly looking at tower-sharing
arrangements to optimize costs.
Axiata will control Tanzanite Tower Pvt. Ltd., a Pakistani tower company,
through its subsidiary edotco Pakistan Pvt. Ltd., while a significant minority
interest (45%) will remain with Dawood Hercules Corp. Ltd, a Pakistani-based
group with interests in several businesses.
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