Any offer for Axis would be made by Axiata’s Indonesian unit, PT XL Axiata, the people said, asking not to be identified as the information is private. Purchasing the Indonesian carrier would give XL Axiata the mobile-phone frequencies it needs to expand in Southeast Asia’s most crowded wireless market, one person said.
Axis, majority owned by Saudi Telecom Co, is valued at about US$1 billion (RM3.02 billion) including debt, according to an estimate from Saudi Fransi Capital. Malaysia’s Maxis Communications Bhd also holds a stake in the company.
Ten operators compete for subscribers in Indonesia’s mobile market, the second-highest number in Asia after India, in what XL Axiata on May 1 called an “unsustainable situation.” Buying spectrum would allow XL Axiata to add services and coverage areas after the company this month reported first-quarter profit slumped by more than half to 315.5 billion rupiah (RM96.6 million) from a year earlier.
“There’s no information that I can share at this point in time,” XL Axiata president director Hasnul Suhaimi said in a text message response to questions from Bloomberg. A spokeswoman for Kuala Lumpur-based Axiata declined to comment, while representatives of Saudi Telecom, Axis and Maxis Communications weren’t immediately available.
Any purchase of Axis would require approval from the Indonesian government, which holds stakes in the two largest telecom operators — PT Telekomunikasi Indonesia and PT Indosat — one person said.
XL Axiata, with 46 million subscribers, would be “happy to play a role” in consolidation of Indonesia’s mobile telecom industry, Suhaimi said on a May 1 conference call with investors.
“Ultimately, it might become not even attractive to continue investing,” unless the industry structure improves, he said, according to a transcript of the call.
Indonesia’s three major operators, including XL Axiata, would benefit from acquisitions as eased competition would allow them to raise prices, Riaz Hyder, an analyst at Macquarie Group Ltd, wrote in a report last month.
XL Axiata fell 1% to 5,150 rupiahs as of 2:10pm in Jakarta today, taking this year’s decline in the shares to to 9.7%. The stock has underperformed the Jakarta Composite Index’s 21% gain this year, and trades at a lower price- to-earnings multiple than Telekomunikasi Indonesia and Indosat, data compiled by Bloomberg show.
Saudi Telecom owns 84% of Axis, while Maxis holds the remainder. Saudi Telecom’s stake in Axis is valued at US$880 million, Saudi Fransi Capital analyst Roy Cherry said in February. Saudi Telecom’s chief executive officer Khaled Al Ghuniem quit the parent company in March after less than a year in the post.