Axiata holds a 20 stake in Idea. The merger of equals between Vodafone India and Idea as announced in March 2017, dilutes Axiata Group’s stake at completion to below 10 percent. At the completion of the merger, accounting standards require Axiata to de-recognise and reclassify its investment in Idea from associate to simple investment, as the Group’s shareholding in the combined entity is diluted to 8.17 percent from 16.33 percent.
According to Malaysian Financial Reporting Standards (MFRS), there will be a technical non-cash accounting adjustment estimated at MYR 1.5 billion to MYR 3.0 billion. This accounting treatment will be captured in the Group’s second quarter 2018 unaudited accounts. The reclassification date, and therefore the exact technical impairment, will be known on the final completion of the merger, which is scheduled for August 2018.
According to Axiata, Idea’s revenue grew at a CAGR of 21 percent to USD 5.1 billion and its profit after tax CAGR stood at 19.5 percent to reach USD 473 million. Idea grew from the fifth largest to the third largest mobile operator in India during this period and contributed MYR 1 billion in operational profits to the Group during this period.
Related to future plans on the Indian market, Axiata Group CEO Tan Sri Jamaludin Ibrahim says that, “as a pure financial investor in the largest player in the Indian market, the Group is better positioned to review and assess the value of this investment”. “At this point, we have a very strong cash position and therefore, have no immediate plans to divest or exit, as long as there are no better alternative use of funds that would provide better returns to our shareholders. We will obviously review our position from time to time”, Jamaludin also said.
