• Axiata confirms Ncell has concluded its tax matters in relation to the indirect sale by the previous owner.

• LTPO confirms Ncell is fully cleared of Capital Gains Tax with the payment of NPR13.6bn (RM563.8m)

• We made no changes into our forecasts.

• Our target price is unchanged at RM4.35.

• Maintain HOLD. Ncell 'fully cleared' of capital gains tax.

Nepal's Large Taxpayer Office (LTPO) confirms Ncell is fully cleared of Capital Gains Tax with the payment of NPR13.6bn (RM563.8m) in relation to the indirect sale by previous owner, TeliaSonera Norway Nepal Holdings AS. Despite Ncell not being a party to the transaction and neither Ncell having received nor made any payments in relation to the transaction, the deposit and closure of this matter is part of its commitment to continue serving Nepal. Based on the total advance deposit placement by Ncell to date, the LTPO conclusively certified and acknowledged that Ncell has fully complied with the direction of depositing advance tax pursuant to Section 95A of the Income Tax.

One of the largest tax payers in Nepal

To date, Ncell remains one of the largest tax payers in Nepal with over NPR160bn (RM6.6bn) paid over the last 13 years. Ncell expresses its commitment to continue to invest aggressively in Nepal's telecommunications infrastructure and ensure delivery of high quality services.

No change in our forecasts. We made no changes in our FY17 and FY18 earnings forecasts. Ncell’s Management noted it has consistently complied with the laws of the country, and have on all occasions exercised the highest standards of governance and compliance pertaining to the fulfilment of its tax obligations.

Maintain HOLD. Our target price is unchanged at RM4.35 using SOP valuation. Maintain HOLD.

Source: BIMB Securities Research - 6 Jun 2017