London: Axiata Group Bhd’s wholly-owned unit Axiata Investments (UK) Ltd has inked an unconditional sale and purchase agreement with Spectrlite UK Ltd for the disposal of Reynolds Holding Ltd, which owns an approximately 80 per cent equity stake in Ncell Axiata Ltd.
In filings with Bursa Malaysia today, Axiata said the total consideration for the proposed transaction is payable in cash under two categories, namely fixed consideration and conditional consideration.
It said the fixed consideration would involve a total of US$50 million (RM234 million) payable in two tranches of US$5 million on or before the date that is six months after completion and another US$45 million on or before the date that is 48 months after completion.
As for the conditional consideration, the group said it would be subject to the future business performance and distributions declared by Ncell.
This would comprise 80 per cent of the net distributions declared and approved by Ncell for 2023, 40 per cent of net distributions due to Reynolds declared and approved by Ncell for 2024 and 2025, 30 per cent of net distributions due to Reynolds declared and approved by Ncell for the years 2026 and 2027, as well as 20 per cent of net distributions due to Reynolds declared and approved by Ncell for the years 2028 and 2029.
Axiata entered the Nepal market in 2016, following the acquisition of Reynolds for the purchase price of US$1.37 billion, effectively securing an 80 per cent equity interest and controlling stake in Ncell.
The group said its decision to withdraw from Nepal was based on a thorough evaluation of the prevailing business environment in Nepal, which led to the conclusion that continuing operations under the current conditions of unfair taxation and regulatory uncertainties was no longer sustainable for Axiata.
“Axiata has received dividends of RM2.2 billion from Ncell since the acquisition in 2016.
“The group may also receive additional proceeds from a share of future dividends due to Reynolds from Ncell as conditional consideration for this transaction,” it noted.
The group said that the cash received would be utilised to meet its working capital requirements.
Chairman Tan Sri Shahril Ridza Ridzuan said Axiata and Ncell had made significant contributions to the national development of Nepal.
He said that as the country’s largest taxpayer, Ncell contributed NPR283 billion (RM9.9 billion) in taxes and fees as of the last fiscal year of 2021/2022 since its inception.
Furthermore, group chief executive officer and managing director Vivek Sood said Axiata had been in Nepal for seven years, working alongside hard-working colleagues in Ncell.
However, he said the increasing challenges in the operating environment represented a fundamental shift.
He said the offer that the group received had enabled and accelerated a clean exit for Axiata.
“Ncell retains full responsibility for its business and any of its liabilities, while the purchaser will further indemnify Axiata against existing and future Nepalese tax claims in relation to Ncell.
“We believe this decision is in the best long-term interests of all our shareholders,” he added. — Bernama