Nepal has witnessed the biggest ever takeover deal in its history, with Axiata, the Malaysia-based telecom giant, acquiring a 60.4 percent stake in Ncell, the country’s largest private cell phone service provider, for $1.03 billion (approximately Rs 109.86 billion).
Axiata buys Ncell
Axiata had acquired Ncell shares from TeliaSonera, a telecommunications service provider in the Nordic and Baltic countries, Eurasia and Spain, as per the ‘conditional sale and purchase agreement’ signed between the two companies in December 21, states a press release issued today by TeliaSonera.
“I am very pleased to announce the completion of our divestment of Ncell to Axiata according to our announcement in December and in line with our ambition to reduce our presence in Eurasia over time.
Axiata is a suitable new owner of Ncell and it gives me comfort that our dedicated employees are in good hands,” the statement quotes Johan Dennelind, TeliaSonera’s President and CEO, as saying.
The deal was wrapped up upon obtaining approval from all relevant authorities, according to TeliaSonera.
Ncell Deal Impact
This means the Department of Industries in Nepal, Nepal Telecommunications Authority, the telecom sector regulator, Malaysian central bank, and Axiata’s shareholders had given a go-ahead signal to complete the Ncell acquisition process.
In December, Axiata had announced its plan to acquire an 80 percent stake in Ncell for $1.365 billion. This included a 19.6 percent stake in SEA Telecom Investments BV, a company owned by Kazakhstan-based Visor, in Ncell. SEA Telecom had agreed to dispose of its stake in Ncell for $335 million.
Unclear as it is, whether Axiata has acquired SEA Telecom’s shares in Ncell. It is because the Malaysian company has not issued any statement in this regard. Axiata is one of the largest Asian telecommunications groups. It has approximately 275 million customers and 25,000 employees in Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia, India, Singapore, and Pakistan.
Ncell acquisition process
Ncell, on the other hand, is a leading GSM operator in Nepal, with over 12.8 million subscribers. It recorded sales of over Rs 57.73 billion in 2015 and is the largest taxpayer in Nepal. Earlier, the Ncell acquisition process landed in controversy. As per the one school of thought, authorities said to impose a 25% capital gains tax rate on the deal.
There is also another school of thought. That says the deal took place abroad, and the Income Tax Act of Nepal does not have clear provisions on offshore deals.
Despite the completion of the acquisition process, Ncell has not seen any change in the management structure so far.
“We will probably start seeing changes in the coming days because that’s inevitable. But everything has remained the same so far,” a reliable source told The Himalayan Times.
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