The write-off comes after an arbitration tribunal dismissed its claims over taxes imposed by the Nepalese government on Axiata’s Nepal-based telecommunications operator Ncell Pte Ltd, the largest mobile operator in the country.
The tribunal, under the International Centre for Settlement of Investment Disputes (ICSID), had dismissed the claims made by Axiata Investments Ltd (UK) and Ncell on June 9.
Nepal has also been ordered to pay approximately US$1.4 million (RM6.5 million as of June 9) to Axiata UK and Ncell. However, no sums are payable by Axiata UK or Ncell under the award.
The ICSID arbitration is in relation to capital gains tax paid by the group to the Nepalese government.
The payment was made following Axiata UK’s acquisition of an indirect 80% shareholding in Ncell in 2016 for US$1.365 billion (RM5.91 billion at the time) from Reynolds Holdings Ltd.
The tribunal also indicated Nepal should refrain from demanding any further tax, fees, penalties or interest in relation to the acquisition.
“Axiata respects the decision of the tribunal and is consulting its legal advisors in relation to the award,” it said in a statement today.
The Nepalese government had previously obtained a Supreme Court order to have Ncell pay the capital gains tax following the acquisition.
However, Axiata secured provisional orders from the arbitration tribunal to prevent the Nepalese authorities from demanding the tax payment.
“In view of the outcome of the case being unfavourable to Axiata, the group’s statement of comprehensive income would be adjusted by approximately RM376.6 million arising from the write-off of related receivable assets,” it said in a bourse filing today.
It added the award may have material impact on Axiata’s consolidated net assets per share and the earnings per share for the financial year ending Dec 31, 2023.
One of the country’s largest taxpayers, Ncell contributed NPR283 billion (US$2.1 billion or RM9.9 billion) in taxes and fees as of last fiscal year (FY2022) since its inception.
Ncell, directly and indirectly, supports more than 25,000 jobs and connects over 17 million customers in Nepal.
At the close today, Axiata’s share price slipped to 3.96% or 11 sen to RM2.67, a six-month low, giving it a market capitalisation of RM24.51 billion.