Axiata to book non-cash loss on Idea Cellular-Vodafone Idea merger

Axiata Group said it is likely to book a RM1.5 billion to RM3 billion non-cash financial loss from the merger of 16.33% owned Idea Cellular and Vodafone Idea Ltd, which will make it the largest carrier in India by subscribers and revenue market share.

Together, Axiata Group said in a statement, Vodafone Idea will serve a customer base of 440 million, representing 39% of the total market share while its revenue market share is estimated to be at 37.5%. Its revenue is forecasted to be in excess of US$10 billion (RM40.6 billion).

The group said, the non-cash financial loss is due to applicable accounting standards from the dilution of Axiata Group’s shareholding in the merged enlarged Idea-Vodafone entity from 16.33% to 8.17%, upon completion of the merger which will result in the loss of certain shareholder’s rights as provided under the subscription agreement dated June 25, 2008 between, inter-alia, Axiata Group and Idea in relation to subscription by Axiata Group of shares in Idea.

The estimated loss above is expected to have a material impact on the financial quarter ended June 30, 2018. The actual impact on de-recognition from the reclassification of Idea will be provided upon completion of the merger. Being a non-cash item, the financial impact above will have no bearing to Axiata Group’s current or future cash position.

In a separate statement issued last Friday, the group said its cash balance is strong at RM5.7 billion as of end March 2018 with debts well within covenant and will not be a factor to impact Axiata’s dividend policy and payment for 2018.