KUALA LUMPUR, Sept 10 -- Bursa Malaysia has suspended short selling under proprietary day trading (PDT) and intraday short selling (IDSSS) of Axiata Group Bhd stock, following the drop in its share price after the company and Norway’s Telenor ASA, Digi.com Bhd’s parent company, decides to call off their mega-merger talks.
“Please be informed that short selling under PDT and IDSS for stock Axiata has been suspended for the rest of the day as the Last Done Price of the Approved Securities dropped more than 15 per cent from the Reference Price.
“The short-selling under PDT and IDSS will only be activated the following trading day, Wednesday, Sept 11 at 8.30 am,” Bursa Malaysia said in a filing today.
At 11.45 am, Axiata shares were at RM4.16, 14.75 per cent or 72 sen lower as compared to Friday’s closing of RM4.88 with 24 million shares exchanging hands.
Meanwhile, shares of Digi.com stood at RM4.58, lower by 31 sen or 6.3 per cent.
According to AllianceDBS Research, Axiata and Digi’s shares have risen 18 per cent and eight per cent since the mega-merger was announced four months ago.
“At the current level, we believe the market has priced in some of the potential synergies from the merger.
“As such, we believe share prices for both companies will react negatively to this new development,” it said in a note today.
AllianceDBS said it is maintaining its “hold” stands on both counters with current target prices of RM4.60 (Axiata) and RM4.80 (Digi) as it yet to input any merger synergies into its estimation.
Meanwhile, AmBank Research has downgraded its calls on both stocks to “hold” following its lower fair valuation for Axiata and Digi.
It also downgraded outlook on the telecommunication sector to “neutral” from “overweight” given the cessation of earlier expectations of synergies from sector consolidation and alleviation of price competition that has been eroding the sector’s margins over the past three years.
“As we were earlier positive on this deal, its termination consequently means the reversion to the previous state of intense mobile domestic competition between the five string players -- Maxis, Celcom, Digi, U Mobile and Unifi Mobile, excluding mobile virtual network operators (MVNOs) such as REDtone, which are currently offering highly attractive postpaid plans,” AmBank Research said.
The proposed merger, the largest in ASEAN, will have pro-forma revenue of over US$12bil (RM50 billion) and EBITDA of over US$4.8bil (RM20 billion) with operations in nine countries servicing 300 million customers.
The merged entity would become the largest cellular operator in Malaysia, Nepal, Cambodia, Myanmar, Sri Lanka and Bangladesh, the second biggest in Indonesia and Pakistan and the third-largest player in Thailand.