KUALA LUMPUR: Axiata Group Bhd's proposed acquisition of PT Link Net Tbk's stakes could solidify its strategic move into fixed broadband and presence in Indonesia, MIDF Research said.
The firm said the acquisition was expected to create potential synergies for Link Net, Axiata and PT XL Axiata Tbk in wireless communication services, extensive relationships with customers in Indonesia and strong strategic alignment.
Coupled with XL Axiata's enterprise offerings including mobile connections, Link Net would be well-positioned to monetise on the growing enterprise market, MIDF Research said today.
Axiata will also benefit from Link Net's strong cash flow profile and consistent dividend payouts.
"Axiata could also establish its position as one of the leading digital players in the region, with increased exposure to high average revenue per user customers and the higher potential and faster growing fixed broadband market.
"We think the purchase consideration is in line with Axiata's long-term strategy whereby it could reinforce its strategic move into fixed broadband and strengthen the presence of Axiata Group in Indonesia. Additionally, the purchase consideration is supported by fundamental analysis of the Link Net Group's historical financial and operating performance and prospects," it said.
While expecting the proposals to contribute to Axiata's earnings given the prospects of the Link Net Group, MIDF Research does not change its earnings estimates at the juncture pending completion of the acquisition.
The firm has maintained its "Buy" call on Axiata, with an unchanged target price of RM5.39.