Malaysian Axiata’s Indonesia arm said to weigh US$500mil fundraising

PT XL Axiata, the most indebted of Indonesia’s listed wireless carriers, is considering raising as much as US$500mil next year, people with knowledge of the matter said.

The company, a unit of Malaysia’s Axiata Group Bhd., is weighing several fundraising options including selling stock to existing investors through a rights offering, according to the people. It could sell shares in the first half of next year depending on market conditions, the people said, asking not to be named as the information is private.

XL Axiata, led by chief executive officer Dian Siswarini, said earlier this year it’s seeking to strengthen its balance sheet and focus on more profitable subscribers. The company’s net debt has more than doubled in three years to 25.7 trillion rupiah (US$1.8bil) at the end of September, from 12.5 trillion rupiah the same time in 2012, according to data compiled by Bloomberg.

“The potential fundraising through stock issuance would be credit positive for XL Axiata,” Nitin Soni, a Singapore-based director at Fitch Ratings, said by phone. “It will strengthen the highly-indebted company’s balance sheet by increasing its equity base and repaying some existing debt.”

Fitch has a BBB rating on XL Axiata, or two grades above junk, while Moody’s Investors Service rates the company Ba1, the highest non-investment grade rating. XL Axiata shares rose 3.1% at the close in Jakarta yesterday, the most in a week.

Turina Farouk, a spokeswoman for XL Axiata, said in a mobile-phone text message that the company was “still open for any options” regarding raising funds.

XL Axiata has accumulated total debt equal to 216% of its total equity at the end of the latest quarter, the highest ratio among Indonesia’s eight listed wireless carriers, the Bloomberg-compiled data show. It said in October that it eliminated all of its unhedged US dollar borrowings, repaying part of the US$580mil of unhedged debt early and converting the rest to rupiah borrowings.

The company bought Saudi Telecom Co’s Indonesian unit in 2013 to increase its service coverage, paying a nominal fee to acquire the business and assuming US$865mil of the carrier’s debt. It sold 3,500 telecommunication towers last year to PT Solusi Tunas Pratama for 5.6 trillion rupiah.