Exclusive-Malaysias Edotco, backers plan stake sales in hot telco towers market -sources

By Anshuman Daga and Yantoultra Ngui

SINGAPORE (Reuters) -Asia-focussed telecoms tower firm Edotco Group, its Malaysian parent Axiata and a Japanese backer are in talks with investors for stake sales, in a deal that could raise about $1.2 billion, four sources familiar with the matter said.

The move comes as global infrastructure funds are pouring huge sums of money to acquire capital-intensive telecom infrastructure assets in Southeast Asia, seeing strong growth opportunities.

The sources said discussions are taking place for a minority stake to be sold in the decade-old Edotco, which is 63% owned by Axiata. However, three of the sources said there was a possibility that Axiata could consider giving majority control in order to secure a deal.

The sources declined to be identified as they were not authorised to speak to the media.

Axiata and Edotco declined to comment.

Two of the sources said cash-rich infrastructure funds such as U.S.-based Stonepeak and Global Infrastructure Partners, and a group led by Japanese trading firm Mitsui & Co, are among potential buyers for the stake sales.

Global Infrastructure Partners declined to comment. There was no response from Mitsui and Stonepeak to Reuters queries.

Reuters is first to report on the identity of the potential buyers in the total stake sales worth about $1.2 billion and also the possibility of Axiata ceding majority control of Edotco.

The sources said the bulk of the proceeds from the share sales will likely fund Edotcos business expansion.

Innovation Network Corp of Japan (INCJ), which became the tower companys second-biggest investor about six years ago with a $400 million investment or about a 20% holding, is also seeking to sell most of its stake.

INCJ on Monday said it declined to comment. The state-backed fund had tried to sell down its stake in the last few years.

Edotco also counts Malaysian sovereign wealth fund Khazanah Nasional and pension fund KWAP among its investors.

While broader dealmaking activity has fallen sharply over the past year due to weak equity markets and rising interest rates, telecom tower assets have been a bright spot.

Besides its core markets of Malaysia and Bangladesh, Edotco has built up a portfolio of towers in Myanmar and Cambodia, forayed into Indonesia last year and bought assets in the Philippines, among others.

It has expanded the number of towers it operates and manages to 55,000, making it the worlds sixth-largest tower company.

Axiata has been unsuccessful in its previous attempts to cut its stake in Edotco, partly due to sensitivities linked to Edotcos business in Myanmar, where top generals led a coup in 2021 after five years of tense power-sharing under a quasi-civilian political system that was created by the military.

The sources said complications surrounding any purchase of the Myanmar assets were a concern for some potential buyers, while there also muted interest for its tower businesses in Pakistan and Bangladesh.

(Reporting by Anshuman Daga and Yantoultra Ngui; Editing by Kane Wu, Susan Fenton and Sonali Paul)