EXCL - Sets rights issue price of IDR2080

XL Axiata (EXCL) is ready to carry out additional capital with pre-emptive rights (HMETD) or rights issue by issuing 2,403,755,889 new shares which equivalent to 18.31% of the company’s issued and fully paid-up capital after PMHMETD III. The exercise price is IDR2080 with 25000 : 5633 ratio, every 25,000 old shares whose names are registered in the company’s register of shareholders on 16 December 2022 has 5,633 HMETD, so that the amount of funds that EXCL will receive reaches IDR4.99 tn. Axiata Investment Indonesia (AII) as the primary shareholders is committed to be a standby buyer, should rights issue not be fully absorbed and ready to exercise its rights, equivalent to IDR3.07tn in share purchase. The rights issue will be underway between 20 and 26 December 2022. (Source : Investor.id) Comment: This is positive for EXCL, and in fact, is profoundly needed in the midst of high interest rate environment. Especially for EXCL, its higher-than-peers leverage ratio has been the risk number one for the company. With rights-issue proceeds, the company has committed to moderate its gearing ratio to at least below 3.0x for next year, while repaying Rp7tn worth of debt. In our view, debt level moderation is imperative to maintain its rating, which is primary for cheaper borrowing cost access and eventually improve its bottom line. In addition, the commencement of 5G auctions slated for next year might further push up capex spending for mobile operators.