Axiata Establishes Market Leadership Position in Cambodia with the Merger of "Hello" and "Smart"

Posted: 21st May 2013 08:47

Axiata Group Berhad (“Axiata”) has announced the strategic merger of Hello Axiata Company Limited (“Hello”) and Latelz Company Limited (“Latelz”) which operates under its main Smart Mobile (“Smart”) brand name.  The cash consideration for the merger was approximately US $155 million, subject to adjustments for the actual net debt and working capital positions as of the date of completion.  Upon completion, Axiata will hold a 90% stake in the combined entity and emerge as one of the largest operators in Cambodia in terms of subscribers and revenue.
Axiata is one of the largest Asian telecommunication companies with controlling interests in mobile operators in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia as well as significant strategic stakes in India and Singapore.  The merger will provide Axiata with improved economies of scale, remove duplicative costs and enhance revenue potential, amongst other benefits.  The merged entity will also facilitate synergies and the sharing of best practices between the two companies.  This will include increased spectrum and significant synergies across network coverage and infrastructure.
Smart operates on a cost efficient model with its strong “Smart” brand, nationwide reach and customer service focus.  Smart and Hello were amongst the top performers in the market over the last year, with both players more than doubling their respective subscriber market shares and the average quarterly EBITDA in 2012 more than quadrupling for each company as compared to that in 2011.  The new entity will, therefore, emerge as one of the largest players in the market, with a strong balance sheet, the highest number of retail outlets to serve customers and stronger network coverage with the largest 3G network in Phnom Penh.  The latter augurs well for the company as Cambodia moves into the next technology wave.
VDB Loi acted as tax partners on the transaction.  Widely recognised as a leading tax advisory firm, VDB Loi offer a full range of professional tax services, from corporate tax structuring to due diligence.  With tax advisors working in close conjunction with transactional lawyers, VDB Loi is in a unique position to structure transactions in a tax efficient manner.  Their advisors adopt a dynamic and assertive approach to improve their clients’ tax situation and avoid unnecessary adverse tax consequences.  The Axiata deal is just one of many glowing examples of their credentials on international taxation and extensive experience with corporate, regional tax structuring and other international tax issues.
Tax Advisor:
Tax Partners Clint O’Connell & Edwin Vanderbruggenn commented:
“The tax issues associated with doing a merger in Cambodia, which has hardly been done before, were a central challenge in the structure.  The interpretation and application of the tax laws is at times unclear.  We assisted the client in working with the authorities to reduce the uncertainties within the existing legal framework, while integrating the implications into the legal structure in an efficient manner”.  
Clint O’Connel can be contacted on +855 95 666 807 or by email at

Edwin Vanderbruggen I can be contacted on +95 9421156077 or by email at

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