Mitsui buys 10% stake in Smart Axiata for $66m as a digital partner

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Axiata Group has struck a deal with Mitsui Co, who will acquire a 10% stake in Axiata’s Cambodian subsidiary, Smart Axiata, to help strengthen its digital capabilities.

The $66 million transaction is based on an equity value of $724 million after factoring additional cash received from dividends as part of the transaction structure. Post-transaction, Axiata will continue to hold a controlling and majority interest in Smart with an 82.5% stake.

Under the agreement, Mitsui has a call option to acquire an additional 10% interest, exercisable within 12 months from the completion of the transaction. The transaction is expected to close by the end of this month.
Axiata said the deal complies with the group’s portfolio management strategy and brings financial value for Axiata and its shareholders, with the proceeds intended for general corporate purposes and repayment of existing debt in its balance sheet.

Axiata also said there are “significant opportunities” in digital services in Cambodia with Smart currently at the forefront. Mitsui and its investee companies with expertise in digital services and Internet of Things (IoT) offerings will enable Smart to further strengthen its digital leadership.
“Smart’s unique strength in data and digital leadership, network coverage and value-added offerings will be greatly enhanced by Mitsui’s involvement as Smart continues to evolve towards a digital lifestyle brand,” said Thomas Hundt, CEO of Smart Axiata.

Tan Sri Jamaludin Ibrahim, president and group CEO of Axiata, said the strategic partnership with Mitsui will support Smart Axiata’s growth efforts of, particularly in the areas of digital services and IoT. “With Mitsui in the fold, Smart will be in a position to offer enhanced digital services that would leapfrog Cambodia’s digital economy.”

From 2008 to 2016, Smart has spent $967 million in capex and opex in Cambodia. A further $80 million in capex has been committed for 2017, primarily for 4G network expansions. In 2016, Smart’s total Gross Value Added contribution to the economy was USD313 million amounting to 1.6% of the national GDP of Cambodia. Smart support over 40,600 jobs directly and indirectly through its operations and capital investments.1 In early 2017, it launched the Smart Axiata Digital Innovation Fund, a $5 million venture capital fund to invest in Cambodian-based digital service companies and start-ups with the aims to spur the digital ecosystem in the country.

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