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Axiata Group Berhad (6888:KL) denies selling Malaysian interests to Telenor in merger move

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Axiata Group Berhad (6888:KL) denies selling Malaysian interests to Telenor in merger move

Telecommunications firm Axiata Group Bhd dismissed claims that its merger with Norway-based Telenor ASA’s Asian operations is akin to selling Malaysian interests to a foreign company.

One of Malaysia’s largest telecommunications companies, Axiata described its plan with Telenor as a “merger of equals”, saying the process is based on the relative valuation of both their assets, local business paper The Edge reported on its website today.

However, under the plan ownership ratio of the merged entity which is known as MergeCo, Telenor will have a 56.6 per cent stake while Axiata will have 43.5 per cent.

“Despite Telenor having a majority stake, on matters of governance of the new MergedCo, the concept of merger of equals is fundamental to this proposed merger. Although Axiata does not own a majority stake in the MergedCo, we would own a significant share of a much larger group and value, as the value of our assets would increase due to the synergy benefits of the merger between RM15 billion to RM20 billion, of which our portion [works out to] RM7 billion to RM9 billion. Capex savings would be approximately two-thirds of that, of which close to 40% would be the savings in Malaysia alone or RM4 to RM5 billion,” Axiata was quoted saying.

Axiata said the valuations are based on operating profits, analyst estimates, forecast and market valuations however it does not include the companies revenue and the number of subscribers each service has.

The merger will also see Axiata’s Celcom and Telenor’s Digi.com owned by MergedCo, which will have roughly 67 per cent stake.

Axiata said the Celcom and Digi merger would be known as MalaysiaCo, adding that the national interest will hold the bigger stake of 46 per cent through direct and indirect shares with potential market capitalisation exceeding RM41 billion.

In comparison, it said Telenor’s indirect ownership will only be around 38 per cent.

Axiata also said the majority of MalaysiaCo board members and its chief executive officer will be Malaysians.

MergedCo is also expected to see proforma revenue of RM50 billion and a net profit fo RM4 billion, with operating subsidiaries in nine countries with a total 300 million customers, making it the largest telecommunications companies in the South Asian and South-east Asian regions.

“Given the scale that the merger brings, consumers are expected to benefit from affordable prices, better network quality and coverage, and more innovative products, due to a much stronger Malaysian entity and the regional innovation centre. With a stronger balance sheet and the enhanced profitability of MalaysiaCo, we will have the ability to offer affordable 5G and broadband services while increasing network coverage and quality, much better and earlier than Celcom or Digi could do (in their individual capacities), to support the Malaysian Digital Agenda,” said Axiata.

The group also assures that the merger will not see any job losses instead assure new jobs will be created due to the scale of the union of the two companies.

“Whatever we do will be from the position of strength and therefore, we would have the luxury to manage any reduction of workforce, if required, through voluntary means. Our people plan includes the retraining or reskilling of employees to new areas,” said Axiata.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 4.20.

The projected upper bound is: 4.85.

The projected lower bound is: 4.24.

The projected closing price is: 4.55.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 29 white candles and 18 black candles for a net of 11 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 78.6885. This is not an overbought or oversold reading. The last signal was a sell 11 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.24. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 11 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 99. This is not a topping or bottoming area. The last signal was a sell 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.

Rex Takasugi – TD Profile

AXIATA GROUP BHD closed unchanged at 4.540. Volume was 160% above average (trending) and Bollinger Bands were 106% wider than normal.

Open High Low Close Volume___
4.590 4.600 4.540 4.540 12,622,500

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 4.42 4.20 4.10
Volatility: 26 45 47
Volume: 5,564,300 4,903,168 4,963,741

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

AXIATA GROUP BHD is currently 10.8% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AXIA.KL at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AXIA.KL and have had this outlook for the last 13 periods.

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