Axiata (HOLD)

Bigger Footprint in India

'''' Bloomberg reported that Axiata is in talks to buy a stake in India's Tikona Digital Networks Ltd.

'' A deal may involve Tikona selling new shares to Axiata.

'' Tikona hold licenses to offer wireless broadband Internet services in regions including Gujarat, Himachal Pradesh and Rajasthan.

'''' Tikona spent more than RM610.54m for 4G spectrum.

'' Comments: We are taking a neutral stand on this news.'' Positively, this acquisition will allow Axiata to expand its market share and sustain growth riding on the data boom in India. On the downside, Tikona will be competing head-to-head with Idea Cellular (which Axiata also owns a stake) as there are overlaps of their 4G and 3G service areas.

'' Currently, Tikona has about 1m subscribers across the country.

'' Analysys Mason predicts that 3G and 4G technologies will account for a respective 57.1% and 10.75% of the nation's mobile subscribers by 2020.

'' Axiata may adopt network sharing strategy in India to rollout broadband coverage at a faster pace and cost effectively. It was reported that Reliance Industries, who has acquired pan-India spectrum to operate Broadband Wireless Access (BWA) across India, is seeking for partnerships for high-speed data services it plans to start this year.

'' We reiterate our HOLD call with unchanged target price of RM4.92.