Malaysian communications giant Axiata yesterday said it did not exit the Singapore market to fund a reported 66 billion Nepalese rupee (S$783 million) tax bill - which surfaced just days before it announced the disposal of its 28.7 per cent holding in mobile network operator M1 on Feb 15.
Axiata sold its $546.7 million stake to a Singapore Press Holdings (SPH) and Keppel Corporation joint venture (JV) just shy of the deadline on Monday, having sat on the voluntary general offer since September last year.
This led to speculation that it needed to raise funds to pay the shock capital gains tax owing on its takeover of Nepalese telco Ncell, ordered by the South Asian nation's Supreme Court on Feb 6.
"Those are entirely separate (issues). It is coincidental (the sale announcement) is a few days later. The decision on M1 was much earlier," Axiata chief executive officer Jamaludin Ibrahim told a briefing.
"That dollar in Singapore, it's better that we use it somewhere else where there's growth that's even better for shareholders," he added, referring to Axiata's plans to expand operations in other markets across the region, including Indonesia, Sri Lanka and Bangladesh.
Axiata is planning about RM6.8 billion (S$2.3 billion) of capital expenditure this year, with the M1 disposal adding RM1.65 billion to its cash holdings of RM5.1 billion.
Mr Jamaludin also raised the point that while Axiata, which is controlled by the Malaysian government, "liked the investment" in M1, which had given average annual yields of 7 per cent, the conglomerate preferred not to be a minority holder in a privatised company.
But the SPH-Keppel JV, which made a cash offer of $2.06 an M1 share, has not indicated any intention to delist Singapore's smallest telco player from the bourse.
Nepalese media had reported a fortnight ago that Nepal's Supreme Court had declared that Ncell and Axiata were liable for the capital gains tax following the sale of the telco by Sweden-based Telia Sonera.
Those are entirely separate (issues). It is coincidental (the sale announcement) is a few days later. The decision on M1 was much earlier.
AXIATA CHIEF EXECUTIVE OFFICER JAMALUDIN IBRAHIM
The 2015 Ncell buyout was subject to capital gains tax of around 61 billion Nepalese rupees before late fees, although Ncell had already deposited 21 billion Nepalese rupees in what was widely seen as a settlement of the issue.
"We were extremely surprised" with the court decision, Mr Jamaludin said, as "we received full tax clearance in 2017, black and white; you can't ask for more".
He was referring to written clearance from the Large Taxpayers Office of Axiata's obligations to withhold any capital gains tax payment on behalf of Telia Sonera.
"This is following the full and final payment made by Ncell, albeit under protest on the basis that capital gains tax is not applicable on offshore transactions and even if applicable, any shortfall on payment is the responsibility of the seller," said Axiata in a statement earlier this month.