PHNOM PENH (The Cambodia Herald) - Malaysia's Axiata Group Bhd announced Wednesday plans to buy Latelz Co Ltd for $155 million and merge its Smart Mobile operations with Hello Axiata Co Ltd.
"Upon completion, Axiata will hold a 90 percent stake in the combined entity and emerge as one of the largest operators in Cambodia in terms of subscribers and revenue," a statement said.
"The Cambodian market is primed for consolidation," Axiata said, noting the "intense competition" with nine mobile players in a country of only 15 million.
The statement predicted the local mobile market would end up with three to five players.
"Unique subscriber penetration in Cambodia is currently below 40 percent with an expected double-digit growth of around 10 percent over the next three years.
"As such, the headroom for growth is now and with this merger, Axiata will have a head start with a significantly strengthened entity and clear market leadership," it said.
Axiata said the merger would provide improved economies of scale, remove duplicative costs and enhance revenue potential. "The merged entity will also facilitate synergies and the sharing of best practices between the two companies. This will include increased spectrum and significant synergies across network coverage and infrastructure," it said.
The company said that both Smart and Hello more than doubled their market shares over the past year with average quarterly income more than quadrupling.
"The new entity will, therefore, emerge as one of the largest players in the market, with a strong balance sheet, the highest number of retail outlets to serve customers and stronger network coverage with the largest 3G network in Phnom Penh," it said.
Group chief executive Jamaludin Ibrahim said the merger was "an excellent opportunity to strengthen our presence in Cambodia.
"The time is right for Axiata to consolidate with Cambodia now offering more visibility on market structure.
"Smart has clearly emerged as a strong and resilient operator through a tough period of industry competition and realignment.
"This consolidation also achieves the twin benefits of improving overall market fundamentals and achieving tangible synergy benefits," he said.
Axiata said Merrill Lynch (Singapore) Pte Ltd was acting as its sole financial adviser in the transaction.
With $5.4 billion in group revenue last year, Axiata is one of Asia's largest telecommunication companies. It controls mobile operators in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia and also has significant strategic stakes in India and Singapore as well as a stake in mobile operations in Thailand.
The statement noted that Latelz is owned by Cyprus-based Timeturns Holdings Ltd which owns several operators and licenses in Asia and Africa. The company currently employs more than 450 people in Cambodia, it said.