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Axiata Welcomes Mitsui as Strategic Partner at Smart to Further Strengthen its Digital Leadership in Cambodia

2017-05-19

Kuala Lumpur, 19 May 2017 – Axiata Group Berhad (Axiata or the Group) today welcomed a new strategic partner with expertise in the digital and technology space at its Cambodian subsidiary, Smart Axiata Co., Ltd. (Smart), to leapfrog its digital leadership in the fast growing Cambodian telecommunications market.Axiata has entered into a definitive agreement with Mitsui Co., Ltd (Mitsui) and its affiliate which will see the parties collectively emerge as a 10% strategic partner in Smart. Post-transaction, Axiata will continue to hold controlling and majority interest in Smart with 82.5% stake.

The total transaction consideration of USD66 million is based on an equity value of USD724 million after factoring additional cash received from dividends as part of the transaction structure. Under the agreement, Axiata has also granted Mitsui 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 end-May 2017.

The deal meets 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.

There are significant opportunities in digital services in Cambodia with Smart currently at the forefront. Mitsui’s position as a “Global Strategic Investor” is an ideal partner given its established track record of investing and partnering with companies across the telecom and technology value chain. 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.

Commentary
Thomas Hundt, CEO of Smart Axiata, said, “Smart is extremely pleased to welcome Mitsui as a strategic partner. We see this as an affirmation of Smart’s position as leading mobile operator in Cambodia. 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.”

Commenting on the transaction, Tan Sri Jamaludin Ibrahim, President & Group Chief Executive Officer of Axiata, said, “Axiata’s interest and investment in Cambodia started in 1998, with Smart now being a phenomenal contributor to the Group. This strategic partnership with Mitsui will support the growth efforts of Smart, particularly in the areas of digital services and IoT and our vision of becoming a New Generation Digital Champion. With Mitsui in the fold, Smart will be in a position to offer enhanced digital services that would leapfrog Cambodia’s digital economy. We look forward to leveraging on synergies from this strategic partnership.

“As a long term investor with a diverse portfolio in the region, we continuously review various options to optimize our capital allocation, balance sheet and group structure which includes a potential adoption of strategic partners to support the growth efforts. We remain committed to maintaining our majority stake Smart. It is a company that has consistently outperformed its competitors with its clear customer proposition, innovative product solutions and effective cost controls.”

Committed to Development
Since 1998, Axiata has been a committed long-term investor in Cambodia and has contributed positively to the economy and national development of the country. From 2008 to 2016, Smart has spent USD967 million in capital and operating expenditure in Cambodia. A further USD80 million in capital expenditure 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 USD5 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. Smart’s goal is to transform Cambodia to a digital, knowledge and information based society.

Smart has received industry accolades from both international and Cambodian organisations for its superior services, performance and national contribution. In 2016, Smart won the Telecom Asia Award for the Best Community Project for its involvement in Cambodia’s National Literacy Campaign in collaboration with the Ministry of Education, Youth and Sport as well as UNESCO. It has also been lauded by Global Banking and Finance Review as both the Best Telco and the Best CSR Company for three consecutive years – 2015, 2016 and 2017. Frost & Sullivan recognised Smart as 2016 Cambodia’s Mobile Service Provider of the Year for its dedication in improving the mobile sector with advanced networks and innovative digital services. Smart also won the Best Performance in the Private Sector at the Cambodia ICT Awards. In 2015, Frost & Sullivan handed over Smart the Asia Pacific Emerging Market Telecom Service Provider of the Year award, marking the first time a Cambodian company had won an award. Smart’s data leadership position was certified by Ookla by being the winner of Ookla’s Speedtest Award 2016 | Cambodia’s Fastest Mobile Network

1 Axiata National Contribution Report, 2016

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About Axiata Group Berhad
As one of the largest Asian telecommunication companies, Axiata today operates in ten countries, servicing approximately 320 million subscribers. With a diverse portfolio in mobile network operations, communications infrastructure services and digital services, the Group pieces together the best in connectivity, technology and people in its vision of Advancing Asia.

Axiata has controlling stakes in market leading mobile operators in South East Asia and South Asia. Axiata Group of companies operate under the brand name of ‘Celcom’ in Malaysia, ‘XL’ in Indonesia, ‘Dialog’ in Sri Lanka, ‘Robi’ in Bangladesh, ‘Smart’ in Cambodia and 'Ncell' in Nepal. Further to this, the Group also holds strategic interests in ‘Idea’ in India and ‘M1’ in Singapore.

‘edotco’, the Group’s infrastructure company, operates in six countries to deliver telecommunications infrastructure services, amassing a portfolio of over 16,000 towers and 12,000 km of fibre. It aims to be one of the top regional tower companies and is committed to responsible and sustainable business operations.

Axiata Digital (AD), its digital services arm, captures the rapid growth in internet-based businesses through its portfolio of 29 digital brands, servicing growing demands in mobile money, mobile adverting, e-commerce, entertainment and education.

As a committed and long-term investor, Axiata provides employment to 25,000 people within its operations. In line with its sustainability goals, the Group actively supports and drives young talent development; disaster response and recovery; as well as green initiatives.