Axiata to exit struggling Nepal business

Malaysian telco Axiata has decided to exit its Nepal business Ncell, with writedowns from the troubled business taking it into the red for the first three quarters.

CEO Vivek Sood said the outlook was "increasingly challenging" in the Himalayan country, which is suffering from high inflation, low growth and a series of corruption scandals.

"[T]hus the Board has decided to exit Nepal and accordingly reclassify Ncell as an asset held for sale," he said.

Axiata wrote down 1.2 billion Malaysian ringgit (US$258 million) in an Ncell asset impairment and wrote off another MYR317 million ($68 million) in receivables, it revealed in its third-quarter filing Wednesday.

The company, which has telecom operations in several southeast Asian markets and Sri Lanka, reported a net loss of MYR1.3 billion ($279 million) on 9% higher revenue of MYR17.4 billion ($3.7 billion).

Excluding the Ncell writedowns and other one-off items, including a MYR311 million ($67 million) forex loss, net income was MYR252 million ($54 million), with EBITDA up 15% to MYR8.1 billion ($1.7 billion).

Axiata said Ncell's net profit slumped 48% for the three quarters, a result of higher finance costs and a 6% fall in revenue driven by lower interconnect rates and a decline in mobile voice.

Japanese group eyes Edotco

While it is seeking to unload one asset, Axiata is meanwhile fielding an offer for a controlling stake in one of its growth businesses, tower subsidiary Edotco.

A Japanese consortium, led by global trading firm Mitsui & Co and including NTT Docomo and Jtower, is seeking to buy a majority stake in Edotco, Bloomberg reports.

The group is reportedly offering to invest around $1.5 billion in newly issued shares and in acquiring stakes from Axiata and minority shareholders. That would give it group a controlling interest of more than 50%, sources close to the deal told Bloomberg.

The tower business, which is 63% owned by Axiata, was spun out of the parent in 2012.

CEO Sood said in an interview in July Edotco would have to take on more debt or add new investors if it needed to fund its expansion.

The company owns and operates 58,000 towers in nine countries in southeast Asia and south Asia.

It reported 10.8%% higher revenue of MYR693 million ($149 million) in the third quarter, aided by new tower acquisitions in the Philippines and higher revenue in Malaysia, Axiata said. EBITDA was flat at MYR444 million ($95 million), with a net loss of MYR8.1 million ($1.7 million).