Yoma Strategic Holdings has decided to hold on to its 25 percent stake in Myanmar Tower Company (MTC) owner Digicel Asian Holdings, announcing a partnership with majority shareholder and Axiata subsidiary Edotco Group on December 4 that gives Yoma the right to sell if it changes its mind.
News of the agreement came in conjunction with the Malaysian telecoms giant’s announcement that Edotco had finished acquiring a three-quarters stake in MTC through its holding company, Digicel Asian Holdings – a joint venture between Digicel Group and YSH Finance under Yoma Strategic Holdings.
The acquisition deal, revealed in October, values MTC at US$221 million on a cash and debt free basis. The towers firm is nearly two years old and has built 1250 telco towers in Myanmar.
Meanwhile, under its new partnership agreement with Edotco, Yoma can sell its one-quarter stake to the Axiata subsidiary at the higher of two prices: either $40.25 million, based on MTC’s valuation at $221 million, or a future figure based on a multiple of earnings before interest, taxes, depreciation and amortisation, or EBITDA, between 9.80x and 12.40x and MTC’s trailing 12 month actual performance, said a press release.
The deal has a five-year life span.
Yoma anticipates showing “an estimated fair value gain of $19.5 million as a result of the agreement” to be included in the firm’s financial results for the three months ending December 31.
“The agreement lays the foundation for Yoma Strategic to secure a fair exit multiple for the business while being given the flexibility to participate in additional investments in the fast-growing telecom tower sector,” said Yoma Strategic CEO Melvyn Pun in a statement.
Myanmar’s telecommunications industry has exploded since the sector liberalised and two foreign telcos – Ooredoo and Telenor – were allowed to launch and compete with state-owned incumbent, Myanma Posts and Telecommunications.
As millions of people have gotten connected, infrastructure has had to scale up rapidly.
“The Myanmar tower market is expected to be one of the largest and fastest growing telecommunication infrastructure service markets in Southeast Asia,” said Edotco CEO Suresh Sidhu in a statement.
Myanmar’s operators must cover 70pc of the country by 2017, which means about 17,300 towers must go up, said a Yoma press release citing GSMA.
Ooredoo said in November it had over 3000 towers up and targeted more than 3400 for December 2015. Telenor said in a December 3 press release it had turned on more than 3800 sites.
“The towers industry remains attractive and we are confident the partnership will allow us to capture a meaningful share in this fast-growing industry in Myanmar,” Mr Pun said. “This deal also reinforces Yoma Strategic’s position as the partner of choice for multinational corporations looking to enter Myanmar.”
“We are also pleased that our entry into the Myanmar tower business is with Yoma Strategic which brings along its strong local experience and network expertise,” Mr Sidhu said.
Source: Myanmar Times
