PETALING JAYA: Malaysian telecommunications operators have received a thumbs up from BMI, a Fitch Solutions company, for their efforts to secure additional financing for their individual digital payments business.
It said that Malaysia is the most conducive market – compared to the Philippines and Indonesia – for the incubation and development of fintech providers, with limited risks for prospective investors.
BMI said this in its outlook on the three countries’ telecommunications sector published today.
According to the outlook, Axiata’s reported plan to raise between US$50 million (RM223.85 million) to US$100 million (RM447.7 million) through new funding for Boost Holdings could potentially raise the latter’s valuation to US$700 million (RM3.13 billion).
Axiata’s aim, according to BMI, is to expand and augment Boost’s digital banking activities following its success in bidding – along with RHB Bank – for one of the five digital bank licences in 2022.
In 2022, Boost recorded a gross transaction value of RM5.99 billion, a 19% year-on-year (y-o-y) increase, according to the outlook.
The fintech arm was valued at US$320 million (RM1.43 billion) in 2020 following the acquisition of 21.9% of its stake by Great Eastern Holdings.
“With that, Asian investors with significant financial reserves would be keen to disperse their holdings across multiple growth businesses to hedge against rising inflation,” BMI said.
“We expect that Boost would be able to drum up sufficient interest in any equity offerings opened by the parent company,” it added.
Furthermore, according to BMI, Malaysia attained the highest score on the Banking Industry Risk Indicator (Biri) platform for 2023 with a total score of 74.9 points out of a possible 100.
“Malaysia’s high living standards and banking sector regulatory profiles ensure that this country is set to see a high degree of investor confidence in digital banking ventures,” BMI said.
However, it warned that the country faces a major downside risk in exposure to global economic volatility, due to its high involvement in international supply chains.