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aws账号(www.2km.me)_edotco aiming for more market share

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The proposed purchase of 1,000 towers from Touch Mindscape Sdn Bhd (TMs) for RM1.7bil will push its market share to 25% from 21% now. The towers allow it to capitalise the growth in fiber infrastructure demand, especially in a 5G environment.

PETALING JAYA: edotco Group Sdn Bhd is paying a premium that could set a precedent for future tower deals to fetch higher multiples, though its move is to gain more market share.The proposed purchase of 1,000 towers from Touch Mindscape Sdn Bhd (TMs) for RM1.7bil will push its market share to 25% from 21% now. The towers allow it to capitalise the growth in fiber infrastructure demand, especially in a 5G environment.

edotco’s ambition is to become the top five globally and top three in Asia in terms of tower count by 2024 and the plan is to grow organically or inorganically. Hence, the willingness to pay a premium.

Axiata Group Bhd has a 63% stake in edotco, which owns and operates around 4,700 towers and manages 12,000 towers.

MIDF Research felt that despite the high premium, the acquisition is strategic and will solidify Axiata’s position within the tower infrastructure industry in Malaysia.

Kenanga Research said it suspects that edotco is paying a premium due to a scarcity in tower companies’ acquisition targets, and TMs’ attractive tenancy ratios.

While it is not fair to compare the valuation multiples of regional towerco deals, Kenanga notes that Indonesia’s towerco deals have ranged from 10 times to 15 times EV/Ebitda (enterprise value/earnings before interest tax depreciation and amortisation).

“Our bull, base and bear case estimate for TMs’ Ebitda margin are 80%/75%/70%. These scenarios imply EV/Ebitda of 12 times/13 times/14 times, respectively. These multiples are at a premium compared to the seven times we ascribed OCK Group Bhd and nine times we ascribed edotco,’’ it adds.

It assumes that the RM1.7b deal will be funded with RM1.45bil (85%) of debt, with the remainder RM250mil (15%) in cash.

edotco has cash and equivalents of RM1.4bil as of September 2021 and it allows it to comfortably fund the cash portion of the deal. Assuming an interest rate of 1.96%, as per its announcement, the debt brings an incremental annual interest cost of RM27.4mil.

It estimates TMs to achieve a net profit of RM23.3mil in the financial year (FY) 2022.

MIDF said it expects the proposed acquisition will contribute positively to the future earnings of Axiata and support its long-term strategies and objectives.

However, it did not make any changes to its earnings estimates pending completion of the acquisition. It maintains its “buy’’ call on Axiata with an unchanged target price (TP) of RM5.39 a share.

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