Axiata Group ratings not affected by company's acquisition of tower assets from Pakistan Mobile Com

FE Online Desk | Published: September 01, 2017 15:32:55 | Updated: October 19, 2017 13:02:23


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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