Axiata to raise RM4.2b via bond issuance

The telecommunications group has appointed 4 banks — CIMB, StanChart, UBS and Citigroup — for the offer

by SHAHEERA AZNAM SHAH / pic by MUHD AMIN NAHARUL

AXIATA Group Bhd is planning to raise up to US$1 billion (RM4.24 billion) via a combination of sukuk and conventional bonds, whereby half of the proceeds will be utilised to refinance its borrowings.

Axiata deputy group CEO Datuk Mohd Izzaddin Idris said the offering, which is expected to be completed in August, will have tenure of between 10 and 30 years.

“The board has approved our proposal to raise about US$1 billion from the market. We believe this is the best way to manage our assets and liabilities, because the way our business is built, we appreciate capital-intensive (exercises) which require longer-period paybacks.

“The issuance is a combination of sukuk and conventional bonds because the sukuk market could not give us a depth of 30 years,” he told reporters at a press conference in Kuala Lumpur yesterday.

The telecommunications group has appointed four banks — CIMB Group Holdings Bhd, Standard Chartered plc (StanChart), UBS Group AG and Citigroup Inc — for the bond offer.

“There is always the idea that if our subsidiary companies are going to raise their own funds in US dollar, it will cost them much more.

“So, if Axiata is able to borrow at a much cheaper rate, it will make more sense to raise the funds and lend to (our) operating companies,” Mohd Izzaddin said.

Bloomberg recently reported that Axiata was considering a global bond offer of up to US$1 billion, potentially in the form of sukuk.

The telecommunications conglomerate’s last sukuk issuance was in 2016, when it sold a 10-year US$500 million Islamic bond, the third in its US$1.5 billion multi-currency sukuk issuance programme established in 2012.

Separately, Mohd Izzaddin said Axiata’s 62.4%-owned tower company, edotco Group Sdn Bhd, is well-positioned for an IPO.

“edotco is in a sweet spot to raise fresh capital as its balance sheet is “lazy”, which allows them to borrow a lot more funds for growth. We also have many parties expressing interest to co-invest with us in the business.

“However, we are in no rush to do the IPO and the other shareholders in edotco are also pretty relaxed about it. Besides, the market is currently not conducive for listing,” Mohd Izzaddin said.

Axiata president and group CEO Tan Sri Jamaludin Ibrahim (picture) added that the group will continue to reduce cost in its network and information technology (IT) segment.

The firm had previously targeted to achieve RM5 billion in cost savings by 2021. As of last year, it had recorded cost savings of RM4.1 billion.