Axiata Group Bhd has completed the sale of its entire stake of 18.9 per cent in Samart Corporation Public Company Limited to existing shareholders Charoenrath Vilailuck and Watchai Vilailuck for US$34.8 million.
Axiata still holds its 24.4 per cent stake in Samart i-Mobile, focusing on mobile, multimedia and international business, the company said in a statement today.
"This divestment reinforces our commitment to focus on our primary business of mobile communications," Axiata President and Group Chief Executive Officer Datuk Seri Jamaludin Ibrahim said.....
My view:
1. The sale is in line with Axiata Group strategy to focus on mobile communications. To recall, Axiata has also sold its 89% stake in Multinet Pakistan (Pte) Ltd for US$15 million on 19 July 2010. I view this positively as more focused management should be able to operate more efficiently by leveraging the technical know how and telco expertise across different countries.
2. The cash proceeds of the US$34.8m is likely to be used as working capital or to support the dividend payment which will start in FY2011. To recall, Axiata has announced its dividend policy of minimum 30% of its net income on 25-Aug-2010. Once the Company starts its payment in FY2011, Axiata is poised to gain more recognition from investors. Assuming the Company choose to pay dividend quarterly (same as MAXIS and DIGI practice), then the 1st dividend will be paid around May-2011 when the 1Q2011 result is announced.
3. Lastly, to recap, the average Target Price for Axiata is RM5.28, representing 12.3% upside.
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