AmResearch continues to recommend a BUY on Axiata Group Bhd valuing it at RM6.05/share, derived from sum-of-parts valuation.
Etisalat, the UAE's biggest phone company, has said it is considering investing in Idea Cellular to tap the world's second-largest wireless market. Entry to India would enable a pan India presence, as well as availability of recently awarded 3G licences.
Idea needs a strong financial backing for the outlay of 3G infrastructures and Etisalat has the ability to tap Middle Eastern petro dollars for such purpose.
Etisalat already has a working partnership in XL Indonesia via Axiata, owing a 16% stake.
“Idea Cellular does not disclose the amount it needs to allocate for 3G capex, but our ballpark figure would be US$5 billio to US$7 billion in the next five years.
“Despite its share price outperformance, we believe valuation is attractive at prevailing price, which implies a trailing enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) of only 6.4 times (versus SingTel's 10.5 times and other regional (developing) peers 6.2 times),” it said.
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