Kuala Lumpur, Malaysia (BBN)-Axiata Group Bhd is taking another look at its proposed merger involving its unit in Bangladesh, Robi Axiata Ltd, with Airtel Bangladesh Ltd.
This has come about following a merger fee that the Bangladeshi government is imposing that may make the corporate exercise not viable, reports The Star Online.
Axiata president and group chief executive officer Datuk Seri Jamaludin Ibrahim said there were some discussions with the government on the merger fee and it was now going to court.
“We are working it out with the government. We will not proceed beyond a certain amount. We have a threshold,” he said after the company’s AGM yesterday.
Without disclosing the fee, Jamaludin said: “We will not proceed with the whole merger based on the earlier asked (amount). We will cancel the merger.”
In January, Axiata had signed a definitive agreement with Bharti Airtel Ltd to merge their respective telecom units in Bangladesh, Robi and Airtel Bangladesh.
Bharti Airtel is an Indian global telecommunication services company headquartered in New Delhi.
Upon completion, Axiata would hold 68.3 per cent controlling stake in the combined entity, while Bharti would hold 25 per cent.
The remaining 6.7 per cent would be held by the existing shareholder, NTT Docomo of Japan.
It has been reported in the local media in Bangladesh that the government was considering charging the company some additional US$90mil for the merger with Airtel to go ahead.
The proposed fee is to reflect the difference between the sum each operator paid for the 1,800MHz spectrum.
“The deal is still very good, but we are trying to eliminate the merger fee as much as possible because everybody would gain from this merger, so we shouldn’t be paying,” Jamaludin said, adding that it would be “business as usual” for Axiata should the deal fall apart.
In addition, he said the group had no immediate plan to list Robi as a new rule said that it was no longer mandatory to list the local unit.
Commenting on the advanced tax payment by its Nepal unit, Ncell Pte Ltd, Jamaludin said it had made a deposit on behalf of former owners.
He said the amount paid was small compared with the huge opportunity in the country.
Ncell had reportedly deposited the advance tax of 9.96 billion Nepalese rupees (RM378.75mil) to the government as required for the payment of a capital gains tax on Ncell’s acquisition.
Ncell said it had been directed by the Large Tax Payers Office to calculate and make a deposit of 15 per cent of the gains of TeliaSonera Norway Nepal Holdings AS, arising from the sale of shares of offshore company Reynolds Holdings Ltd by Telia Norway and its related company group.
Jamaludin agreed that there was no basis for Ncell to pay the advance tax.
“The last thing you want is to create ill feeling in a country that you operate in. So, in good faith, we paid a deposit on behalf of Telia and our job is to get it from Telia,” Jamaludin said.
“There is no reason for us to fight. We want a conducive environment to our end. It will be silly to fight the government and have all kinds of problems in the future,” he said, adding that it was working on recovering the monies paid.
“We are working on it. We have both legal and non-legal recourses.”
Meanwhile, Axiata’s earnings fell 37 per cent to RM368.25mil in the first quarter ended March 31, 2016 on the back of stiff competition for Celcom Axiata Bhd in the postpaid and overseas foreign worker segments.
Its performance was also impacted by higher depreciation and amortisation charges, higher net finance costs and a lower share of profit from associates, despite a higher earnings before interest, tax, depreciation and amortisation.
The group’s revenue, however, was up 5.43 per cent to RM5.01bil, mainly due to higher revenue in Indonesia, Sri Lanka, Bangladesh and Cambodia as well as a weaker ringgit.