By Sangeetha Amarthalingam / theedgemarkets.com | August 4, 2016 : 6:19 PM MYT
KUALA LUMPUR (Aug 4): OCK Group Bhd's 60%-indirectly owned unit OCK Vietnam Towers Pte Ltd plans to acquire Southeast Asia Telecommunications Holdings Pte Ltd (SEATH) for US$50 million (RM203.8 million).
OCK said the acquisition, from Vietnam Infrastructure Ltd, is aimed at expanding into the construction and leasing of telecommunication towers and infrastructure to mobile network operators that are project driven and backed by long-term lease rentals ranging from five to 10 years.
SEATH is involved in the development, installation, ownership, operation and leasing out of base transceiver station (BTS) towers and in-building solutions (IBS) infrastructure.
The BTS business encompasses the site acquisition, construction, hosting services, property management and infrastructure and operations management to Vietnam's mobile network operators.
In a bourse filing today, OCK said the long-term contracts secured by SEATH for the lease of its BTS towers are expected to provide a steady stream of income to the group.
OCK Vietnam, which is 40% owned by CapAsia Telecommunications Ltd, will own SEATH as a 60% indirect unit, allowing parent company OCK to consolidate the financial results of SEATH and its subsidiaries.
OCK said its telecommunication network services segment was its largest revenue contributor to the group with RM258.33 million recorded for the year ended Dec 31, 2015 (FY15), representing 81.8% of its total revenue.
"OCK owns approximately 133 telecommunication towers in Malaysia, of which the revenue contribution is negligible as compared to the total revenue of OCK group.
"It is the board's intention to grow the telecommunication network services segment further by expanding the construction and/or leasing of telecommunication towers business," it said.
SEATH has 1,938 towers throughout Vietnam, OCK said, adding that the acquisition will enable it to tap into the Vietnamese telecommunication industry.
OCK is only acquiring the SEATH subsidiaries involved in the BTS business while those involved in the IBS segment would be fully divested prior to completion of the share sale and purchase agreement.
For FY15, SEATH's net profit totalled US$1.82 million while revenue rose 0.92% to US$12 million from FY14 as a result of the addition of secondary tenants on its BTS towers.
In a separate filing, OCK said its wholly-owned unit OCK SEA Towers Pte Ltd (OST) entered into a shareholders' agreement or joint venture with CapAsia to regulate the affairs of OCK Vietnam.
The agreement would also regulate the respective rights of OST and CapAsia as shareholders of OST Vietnam, OCK said.
"The agreement would facilitate the cooperation between OCK and CapAsia to undertake the business involving the acquisition of telecommunications tower portfolio in Vietnam, and to fund any capital expenditure in connection with new towers portfolio development and acquisitions in Vietnam.
"The said business is in line with OCK and its subsidiary companies' strategy in growing recurring income and to expand its existing business in the provision of various telecommunication network services, particularly expanding in Indochina," it said.
OCK's securities were suspended pending this announcement. Trading resumes tomorrow morning.
The counter was last traded at 82.5 sen, giving the company a market capitalisation of RM657.56 million.
OCK (0172) - OCK's unit to buy Vietnam telecom tower company