Etisalat Plans to Sell All of its Shares in XL Axiata?

We learned that operators from the United Arab Emirates, Etisalat, plans to sell all of its shares in XL Axiata (EXCL). As quoted from Reuters, Etisalat which owns 13.29% stake in XL will sell its stake this year to raise $600-$700 million in fresh funds. His incompatibility with Axiata Group as the main controller was allegedly the reason for this sale. If this really happens, then this is the second time that Etisalat has done something similar in the Asian region after selling all of its shares in jher in India.

Based on a source who did not want to be named, Etisalat felt they were not being treated properly by the new management of the Axiata Group from Malaysia. Over the past few years it seems that the best way to work together has not been found. Etisalat bought the shares in 2007 for $440 million. This means that within five years of investing in XL, Etisalat will reap a profit of around 40-60%.

I quite agree with the opinion of the analyst quoted by Reuters, that the Indonesian market has begun to enter a saturation period and its growth is decreasing along with the increasing penetration of cellular phones in this country. It is predicted that in 2012 the growth of the telecommunications industry in Indonesia will not reach double digits (below 10%). This could be a contributing factor for Etisalat to exit the Indonesian market and invest in other countries.

It stated that Etisalat had appointed JP Morgan and Morgan Stanley to take care of this sale, although both JP Morgan and Morgan Stanley still declined to comment. XL Axiata itself currently has a market capitalization of $4.3 billion and recorded a net profit throughout 2011 worth IDR 2.8 Trillion. In 2012, XL will focus on adding data service subscribers, which has been steadily increasing in recent years.