PETALING JAYA: Axiata Group Bhd and PT XL Axiata Tbk today announced the signing of a conditional share purchase agreement (SPA) to jointly acquire an aggregate 66.03% equity interest in Indonesia’s PT Link Net Tbk from Asia Link Dewa Pte Ltd (ALD) and PT First Media Tbk (FM) for 4,800 rupiah per share in Link Net or 8.72 trillion rupiah (RM2.55 billion).
This translates to a value of about 13.21 trillion rupiah (RM3.86 billion) for 100% equity interest in Link Net.
Under the terms of the SPA, Axiata Investments (Indonesia) Sdn Bhd (AII), an indirect wholly owned unit of Axiata, and XL Axiata will acquire 46.03% and 20% respectively from the combined equity interest of 66.03% in Link Net held by ALD and FM.
AII will then be obligated to undertake a mandatory tender offer (MTO) to acquire the remaining 33.97% Link Net Shares pursuant to regulatory requirements in Indonesia.
The proposed acquisition and proposed MTO 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. 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 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.
In terms of the reported financials for the financial period ended (FPE) Sept 30, 2021 compared to FPE Sept 30, 2020, Link Net’s revenue rose 9.8% to 3.24 trillion rupiah while ebitda grew by 14.4% to 1.87 trillion rupiah and patami dropped by 1.7% to 687 billion rupiah.
Axiata president & group CEO Datuk Izzaddin Idris said in addition to doubling down on a high-growth segment in one of its key markets, its investment into Link Net is aligned with Axiata’s aspiration to support digital inclusion as Asian societies and businesses accelerate digitally.
“Both XL Axiata and Link Net are well placed to generate synergies through their combined positions in wireless communication services, extensive relationships with customers in Indonesia and strong strategic alignment. We also recognise the wealth of management and operational experience within Link Net’s employee base and welcome them to be a part of this growth journey. By leveraging the strengths of our telco business from XL Axiata and Link Net’s broadband and connectivity solutions, we look forward to delivering compelling customer-focused converged solutions for the home and enterprise segments as Indonesia continues to advance its digital economy,” he added.
