Exclusive: Malaysia's Axiata in talks to buy smaller Indonesia telecom rival - CEO

KUALA LUMPUR (Reuters) - Malaysian telecommunications company Axiata Group Bhd is in talks to buy a smaller rival in Indonesia in a share-swap deal to cut costs and competition in its biggest market, as COVID-19 hammers businesses, its CEO told Reuters.

FILE PHOTO: A woman walks past the Axiata headquarters building in Kuala Lumpur, Malaysia, October 1, 2019. REUTERS/Lim Huey Teng/File Photo

After PT Telekomunikasi Indonesia Tbk, Axiata unit PT XL Axiata Tbk is the second-biggest player by subscriber numbers in Southeast Asia’s most populous country. Axiata is followed by PT Indosat Tbk, PT Smartfren Telecom Tbk and the local telco unit of Hong Kong conglomerate CK Hutchison Holdings Ltd.

“Except for the biggest player, I can tell you right now we are talking to all for some kind of an arrangement,” Axiata Chief Executive Jamaludin Ibrahim told Reuters in an interview on Saturday over Microsoft Teams, declining to specify a target.

“I can’t imagine buying two, and you don’t need to anyway.”

PT Indosat, with a market capitalisation of 10.68 trillion rupiah ($727 million), PT Smartfren, valued at 21 trillion rupiah ($1.4 billion), and the local unlisted business of Hutchison, could not immediately be reached for comment.

Jamaludin said Axiata Group, with a market capitalisation of about $8 billion, had done some due diligence last year, and information from that could be “partially” useful if a deal were to materialise this year.

Jamaludin, who retires later this year, said Axiata was looking for deals in Malaysia and Sri Lanka too. The company also operates in Bangladesh, Cambodia, Nepal, Pakistan, Myanmar, Thailand, Laos and the Philippines.

“I hope before I retire, at least one country happens. Either Malaysia, Indonesia or Sri Lanka,” he said. “COVID-19 makes it more a necessity to consolidate, even more than before, and therefore to discuss with all parties becomes quite imperative.”

Axiata, majority-owned by Malaysian sovereign wealth fund Khazanah Nasional Bhd and other state-linked funds, in September called off talks with Norway’s Telenor ASA for a non-cash deal to create Southeast Asia’s largest telecoms operator. No reason was given for ending the talks.

“We are not ruling out” further talks with Telenor, Jamaludin said, “but at this point of time we are not discussing seriously with them.”

($1 = 14,680.0000 rupiah)

Reporting by Krishna N. Das; Editing by William Mallard