PETALING JAYA: Conglomerate Cahya Mata Sarawak Bhd (CMS) is venturing into the telecommunications sector via a 50% stake in Sacofa Sdn Bhd for RM186.79mil cash, valuing the latter at RM373.6mil.
This confirms a StarBiz report in March last year that CMS was looking to buy into the state-controlled company that builds telecommunications towers and fibre-optic networks in Sarawak.
CMS will purchase 42.44 million shares in Sacofa from the State Financial Secretary of Sarawak, which currently owns 70.51% in the latter.
Sacofa’s other shareholders are Celcom Axiata Bhd with 15.12%, Sarawak Information Systems Sdn Bhd with 7.57% and Yayasan Sarawak with 6.8%.
The purchase took into consideration Sacofa’s net tangible assets worth RM344.17mil for the financial year ended Dec 31, 2013 (FY13), its earnings track record and prospects.
“Sacofa has strong earnings visibility due to its position as the sole provider of telecommunications towers to telco players in Sarawak which provides the company with high visibility on future revenues,” said CMS in a filing with Bursa Malaysia.
Sacofa was granted a 20-year concession to build, manage, lease and maintain telecommunications towers in the state in 2002.
It operates more than 600 telecommunications towers and leases them to telecommunications operators.
It expects the communication sub-sector to grow 9.6%, underpinned by strong demand for cellular and broadband services.
Sacofa recorded a revenue of RM153.42mil and a net profit of RM66.94mil for FY13.
Its profit margins from 2011 to 2013 ranged from 33.7% to 40.4%.
The proposed purchase is expected to increase CMS’ earnings for FY15, as the deal is slated for completion by the second half of the year.
CMS said the purchase would be funded through internally generated funds and/or bank borrowings and is subject to due diligence.
The acquisition is not expected to have an impact on CMS gearing, as it is sitting on a cash pile of RM829.6mil.
The proposed acquisition requires approval or consent from Sacofa’s bondholders, Sacofa’s other shareholders and other relevant parties or authorities.
Sacofa has outstanding RM50mil Islamic Commercial Papers and RM400mil Islamic Medium-Term Notes.
However, the acquisition does not require CMS shareholders’ approval.
Its group managing director Datuk Richard Curtis said: “While CMS understands that our major stakeholders will have many questions about this acquisition, we have no further comment to make until the sale and purchase is concluded, at which time we will make a further statement.’’
He also said it looked forward to working with Sacofa’s management.
Observers opined that the acquisition could be synergistic for CMS, which has positioned itself as the proxy to Sarawak’s economic growth.
For CMS’ fourth quarter ended Dec 31, 2014, topline came in at RM504.23mil, while bottom line recorded RM43.94mil.
For the full year, revenue rose 17.6% to RM1.67bil while net profit jumped 26.43% to RM221.34mil.
Before the announcement to invest in Sacofa, CMS had bought an additional 5% equity interest in the ferrosilicon and manganese alloys smelting project in Samalaju Industrial Park for US$18.45mil (RM67.72mil).
CMS’ core businesses include cement, construction materials, construction and maintenance and property development.
Besides its interest in the Sarawak Corridor of Renewable Energy, it owns 20% in steel fabricator KKB Engineering Bhd and 21% in stockbroker K&N Kenanga Holdings Bhd.
CMS ended the trading day unchanged at RM4.50, with 1.45 million shares changing hands.
