Millicom to dispose of Asian telecom assets : Hutchinson to sell Israeli stake

by Ek Heng, Asia-Pacific Correspondent


A number of suitors including Malaysia’s Axiata Group and Russia’s Vimpelcom are reportedly interested in the Asian telecom assets being put up for sale by Luxembourg-based Millicom International Cellular SA.

Millicom announced early July it had received a number of ‘expression of interest’ and Goldman Sachs has been appointed as advisor. In Asia, Millicom is considering selling separately or together its interests in Sri Lanka, Cambodia and Laos.

For the quarter ended 31 March 2009, its Asian assets yielded US$68 million in revenue and US$4 million in net profit. Millicom has operations and licences in 16 countries in Asia, Latin America and Africa.

Axiata denies buying Millicom Asian assets
While expressing interest to expand its business, Axiata, Telekom Malaysia’s international unit, has denied it is buying Millicom’s Asian assets in Cambodia and Sri Lanks for US$500 million and US$200 million, respectively, as attributed in an earlier Bloomberg report.

The follow-up article late last week by The Star, Penang, Malaysia, quoted Axiata’s chief financial officer, Datuk Yusof Annual Yaacob as saying that the telco looks "at all sorts of transactions but there is nothing going on." He was further quoted as saying "it does make sense for two parties to combine in a very competitive marketplace."

A pan-Asian player with 100 million subscribers, Axiata is the second largest mobile operator in South East Asia. It has 85 percent stake in Dailog Telekom, the market leader in Sri Lanka, which recorded 5.8 million subscribers, and a 58 percent share of TMI Cambodia, the third largest cellular player in that county with 600,000 subscribers.

With Celltel Lanka in Sri Lanka being fully owned by Millicom which also has 58 percent share of MobiTel, a dominant telco, in Cambodia, perhaps, the business case for Axiata to merge its existing interests with these companies being offered by Millicom can only serve to fuel market talk and media reports. Also springing to mind is an earlier media report attributing the remarks to Axiata’s CEO, Datuk Seri Jamaludin Ibrahim that the telco is consolidating, and as he often says "that at the right price, we will never say no."

VimpelCom eyeing more stakes in Asia
Also in the running for Millicom’s assets in Cambodia and Laos is Russia’s Vimpelcom. According to a Reuters report, VimpelCom confirmed its interest in Asia but didn’t want to comment on the talks.

Vimpelcom’s head of corporate relations, Yelena Prokorava said: “We don’t comment on talks. But potentially Asian assets of Millicom could be interesting for us because they are located in the region which the company views as strategic in its international expansion.” The Reuters report added that a source close to the firm’s shareholders indicated the company would be interested in the telcos assets in Laos and Cambodia in the market.

In July 2008, Vimpelcom acquired Sotelco paying US$20 million for a 90 percent stake in the telco. It subsequently signed a contract with China’s Huawei Technology to build a GSM network in the country over five years and pledged to invest up to US$200 million.

Hutchinson: Sale of Israeli telco on the cards
In another development, Hong Kong-based Hutchinson Telecom is looking to sell its stake of 51 percent in Partner Communication Company, an Israeli telco with wired and wireless services.

Hutchinson said "it has been approached by various interested parties" but "no agreement has been entered into" up to the announcement of its statement to the stock exchange. Operating under the Orange brand, Partner registered an 11 percent reduction in revenue at US$337 million but an increase of 5,000 in subscribers for the quarter ended 31 March 2009.