KWAP joins investor roster for SE Asia telecom spin-out

KWAP – which is an existing investor in Axiata – will commit $100 million to the company’s Edotco subsidiary, extending a maiden private placement process that will support a regional expansion. In December, INCJ and Khazanah invested $400 million and $200 million, respectively. INCJ, Khazanah and KWAP will collectively hold a 37.6% interest, while Axiata will retain the remaining 62.4%.

"We have been very impressed by Edotco’s rapid growth in the past five years, and would like to be part of its growth journey towards becoming one of the leading tower players globally by 2020,” Dato’ Wan Kamaruzaman bin Wan Ahmad, CEO of KWAP said in a statement.

Founded as Asia's first regional tower company in 2012, Edotco currently operates across Malaysia, Myanmar, Cambodia, Sri Lanka, Bangladesh and Pakistan. It claims a portfolio of more than 25,000 towers. Operations include tower leasing, co-location, build-to-suit, energy, transmission and maintenance services.

Expansion efforts will include the construction of new towers and the introduction of advanced energy management technology. The plan is being pursued at a time when more telecom tower assets are expected to come up for sale, but Axiata is not in a position to leverage debt for the growth of its subsidiaries.

The market for telecom infrastructure sharing, in which multiple carriers rent towers, is growing in both developing and advanced economies as mobile data traffic surges and carriers try to improve efficiency. Potential for growth is seen as particularly high in South and Southeast Asia due to relatively fast adoption rates for communication services.

Recent PE investment in this space includes Brookfield Asset Management agreeing to acquire the Indian tower assets of Reliance Communications and Apollo Towers Myanmar, a joint venture between TPG Capital's growth unit, Tillman Global Holdings and Myanmar Investments International.

Last month, KKR and the Canada Pension Plan Investment Board (CPPIB) invested INR62 billion in Indian cell tower supplier Bharti Infratel. KKR had previously paid $250 million for a 2.6% stake in the company in 2008 and exited two years ago for $272 million.

KWAP was established in 2007 and assumed responsibility for the Pensions Trust Fund established by the government in 1991 to cover federal pension liability. As of year-end 2015, it had a total fund size of MYR118.4 billion ($26.9 billion), of which MYR1.66 billion – or 1.4% – was deployed in private equity. This allocation is planned to grow to 3% by 2020.

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• Topics
• Southeast Asia
• Expansion
• Technology
• Infrastructure
• Malaysia
• KWAP
• Growth capital