Axiata and XL Axiata to acquire 66% of Link Net’s shares for RM2.6b

The proposals will be funded via a combination of internally generated funds and/or bank borrowings 

by TMR / pic by TMR FILE

AXIATA Group Bhd and PT XL Axiata Tbk signed a conditional share purchase agreement (SPA) to jointly acquire an aggregate 66.03% equity interest in PT Link Net Tbk from Asia Link Dewa Pte Ltd and PT First Media Tbk. 

The purchase consideration was agreed at 4,800 rupiah (RM1.40) per ordinary share in Link Net or 8.72 trillion rupiah. 

This translates to a value of about 13.21 trillion rupiah for 100% equity interest in Link Net, Axiata said in a statement yesterday. 

Under the terms of the SPA, Axiata Investments (Indonesia) Sdn Bhd, an indirect wholly-owned subsidiary of Axiata, and XL Axiata shall acquire 46.03% and 20% respectively from the combined equity interest of 66.03% in Link Net held by Asia Link Dewa and First Media. 

Axiata Investments (Indonesia) will then be obligated to undertake a mandatory tender offer to acquire the remaining 33.97% Link Net shares pursuant to regulatory requirements in Indonesia. 

The Proposed Acquisition and Proposed Mandatory Tender Offer are expected to be completed in the third quarter of 2022 and will be subjected to customary completion conditions, including regulatory and shareholder approvals. 

The proposals will be funded via a combination of internally generated funds and/or bank borrowings, the proportions of which will be determined at a later date.

Link Net commenced its commercial operations in 2000 and has since grown to be among the leading providers of high-speed broadband and cable TV in Indonesia, reaching 2.8 million homes across 23 cities with a subscriber base of 860,000.

“In addition to doubling down on a high-growth segment in one of our key markets, our investment into Link Net is aligned with Axiata’s aspiration to support digital inclusion as Asian societies and help businesses accelerate digitally,” said Axiata president and group CEO Datuk Izzaddin Idris. 

Based on independent market research, Indonesia is one of the most attractive fixed broadband markets globally, significantly underpenetrated at 13.4% in terms of household penetration. 

It is also one of the fastest growing broadband markets in the world with fixed connections poised for significant expansion at a compound annual growth rate of approximately 14.4%. Furthermore, household penetration is expected to increase to 27.5% by 2026, driven by a growing addressable market, escalating data use and the robust growth in Indonesia’s disposable income per capita. 

The proposed acquisition is expected to create significant synergies for Link Net and XL Axiata through their combined positions in wireless communication services, sharing of backbone and transmission networks and extensive relationships with customers in Indonesia. 

Coupled with XL Axiata’s enterprise offerings including mobile connections, Link Net will be well-positioned to capitalise on the growing enterprise market. 

Additionally, Axiata will benefit from Link Net’s strong cash flow profile and consistent dividend payouts, as well as entrench its position as one of the leading digital players in the region, with increased exposure to high average revenue per user customers and the higher potential and faster-growing fixed broadband market. 

For the financial period ended (FPE) Sept 30, 2021, compared to FPE Sept 30, 2020, Link Net’s revenue rose 9.8% to 3,242 billion rupiah while Ebitda grew by 14.4% to 1,872 billion rupiah and Patami dropped by 1.7% to 687 billion rupiah. 

With a staff strength of 882 permanent employees as of Sept 30, 2021, Link Net has secured numerous industry accolades in 2020 which include the Indonesia Customer Experience Award for Fixed Internet Broadband & Pay-TV, the Indonesia Content Marketing Awards, Service Quality Award, Indonesia WOW Brand Award and the Best Contact Centre Indonesia Award.

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