PETALING JAYA: Axiata Group Bhd will stay put in the Indian mobile market but is hoping to operate in a more stable regulatory environment.
The Indian Government's recent revocation of 122 of the 2G licences issued in 2008 had created uncertainty and angered some foreign investors, some of whom have threatened to withdraw from the market place and to even sue the government.
However, Axiata president and group chief executive officer Datuk Seri Jamaludin Ibrahim said “we want more of a stronger foothold there.”
“We are happy with the company we have invested in. We have a good partner and we believe India is strategic to invest in,” he told StarBiz in an interview.
Axiata is a regional telecoms player with a 19.7% stake is India's Idea Cellular. The investment was made some years ago when the Indian company was the country's fifth largest player.
Idea has since grown to become the third largest in terms of subscribers. It has 110 million mobile subscribers in a market comprising 656 million users as at end-February this year.
Up to now there is little clarity as to how the new 2G licences will be auctioned and whether the amounts paid for the spectrum that has been revoked will be taken into account when the new licences are given out. Idea is one of the seven companies affected.
“We would have to participate in the auction process (but) anything can happen to pricing. We have also paid for the spectrum (initially) and logically the amount that we have paid should be deducted because we cannot be paying twice for the same spectrum,” said Jamaludin.
He added that “it is very strategic and it is one of the biggest markets and fastest growing in the world.”
“But what it needs is also a more stable regulatory environment and consolidation. Therefore (we believe), within the next few years the regulatory environment will be stable and there will be a major consolidation, and that would mean the value of the company in which we have invested will increase after that.
“Idea, just like many of our matured companies, will move from a high-growth and low-profit base to some growth and pay dividends in the future. We have seen that happening and XL in Indonesia and Dialog in Sri Lanka are good examples,” he said.
And it is because of all these reasons that Axiata “we will continue to stay in the market” amid the current uncertainty.
In any case, the impact of the licence revocation is minimal on Idea because based on the ruling, nine 2G licences are affected, of which only seven were operational. The nine represents 40% of the 22 circles that Idea operates in, and it was reported that the affected circles accounted for about 5% of Idea's total subscriber base because the seven are new start-ups.
Asked if Idea would see any buying opportunity when the market consolidated, Jamaludin said: “Idea does not have to participate directly but it will get the benefits of the consolidation. It is already the number three player in the market. It is (considered) one of the)top performers.”
The impact on both Axiata and Idea of the revocation of the licences will be minimal. He explained that Idea represented less than 5% of Axiata's profit after tax and minority interests. For Idea, the cancelled licences were in Ebitda loss-making circles representing 4% of revenues for Axiata.
From: The Star Online
Thursday April 5, 2012
