Maxis Communication Berhad Merger With Airasia Finance Essay - Free Essay Example

The meaning of merger which is combination of two or more firms, in which the objectives are enhanced and increase shareholders wealth, increase company profit and allow the company move into a rapidly growing market place. Maxis Communication Berhad (MCB) leading the mobile provider and has mostly subscribers in Malaysia, The company provides mobile, fixed line telephony, data and network services and also a largest IPO ever in Malaysia and South East Asia. Although MCB having a strong financial background, but its competitor which are Celcom Berhad and Digi Telecommunication also considered as a very strong background and advantages competitor, how to prevent exceed by those company? Our suggestion for the MCB is merger with the Airsia (Malaysia low-cost airlines). Airasia operates scheduled domestic and international flights and is Asias largest low-fare, no-frills airline. These mergers are considering as conglomerate merger which means combination of company in unrelated business. We choose Airasia as a target, because Airasia has keep growing around the Asia and it been chooses become a Worlds Best Low-Cost Airline for 2009. According our research, Airasia are also finding more subsidiary and partnership to expand their business, which does will be an opportunity for MCB as well and the key benefit of that merger is ability reduce risk by MCB. Unfortunately, Airasia are still under a huge debt, but that become the main motive why we suggestion that MCB merger with it, because of tax consideration are a key motive for merging. Under that situation, will increase profit and increase shareholders wealth of MCB as well. Beside that, because of Airasia have a strong management team, which teams can keep minimize net loss of capital and maximi ze profit at a same time, operation their borrowing asset well and keep growing under the situation of debt. Strength From our suggestion, if MCB successfully merger with Airasia, it definitely bring much advantages than the disadvantages such as because of Airasia brands name, it will easily make advertising for the MCB. Regarding the MCB perspective, they are keeping advertising about their product which is broadband, 3G network, Iphone package, postpaid, prepaid and so on. Because of those advertising for the product, according for the MCB annual report mentioned that under the sales and marketing parts, it cost around 4.6% from their of revenue driven by year-end promotions, although it does not costly than other, but if MCB merger with airasia, they can saves those expenses for expands business or doing investment on the future. Because of Airasia brands name are well establishment in Asia pacific and advantages, strong brand name recognition of global market by organization, and Airasia are highly frequency linked with country such as Brunei, Cambonia, Hong Kong, China, Indonesia, India, Ira n, Singapore, South Korea, Taiwan and Australia and so on, it will bring the benefit and increase reputation, brand name recognition of MCB. It easily makes advertising through their aircraft. At a same time, it will increase MCBs recognition by other organization with under a very rapidly growing market situation than other strongest competitor. Furthermore, successfully merger between the both companies, MCB will continuously become the strong leading mobile phone service provider in Malaysia, and Airasia will become a leading airline industry in Asia. Those will have a strongly financial background, will attract more investor to do investment and attract more people using Maxis network. In addition, MCB will have good potential increase managerial skill and technology from Airasia, because of their stronger management team. From Airasia perspective, company merger will enhance their fund-raising ability, company may be unable to obtain funds for its own internal expansion beca use of highly debt background but to obtain funds for external from (MCB) combination, and because of MCB has high liquid asset and low level of liabilities, it considered benefit for Airasia as well, it immediately decreasing financial leverage and allow funds to be raised externally at lower cost and reduce their debt in the future. These reasons mentioned that Airasia must accept suggestion merger by MCB. Weakness Although if merger with Airasia will bring along of advantages and benefit, but also does to consideration about the disadvantages for the merger. MCB can control significantly larger amount of assets than could acquire through merger, but major disadvantages of MCB which will increase risk resulting of the leverage effect, and must be pay attention that Airasia are having the bigger amount of debt on the future in 12 years repayment period, MCB may help Airasia covers its debt on that moments which means MCB immediately having debt at a same time. In addition, if MCB successfully merger with Airasia, it will become difficult to analyze by the MCB, and investor of MCB have difficulty understanding because of these complexity. In addition, effect of a merger on the earning per share of the MCB initial decrease in the per-share earnings of stock is expected. MCB will sell at low earning per share, its shareholders value may suffer of that merger at a short-term period. So, we define this merger as a long-term investment by MCB. From financial perspective, higher risks are higher return, thats why we suggest that MCB merger with Airasia, although these have few disadvantages. Opportunities According the annual report by the Airasia, we know that Airasia are still under the huge amount of debt. The tax loss can be applied against a limited amount of future income of the MCB, that is a consideration by the purpose of merger, if successfully merger with Airasia, it will bring a lot of benefit and after-tax earning by reducing the taxable income of the MCB. Although Airasia having a huge debt, but they have a strong management team which are control their debt as well. As the information, we know that borrowings of AirAsia are all in USD, it will benefit from the depreciation of USD because of this recent years economics crisis, USD are getting depreciation day by day, Airasia may having the foreign exchange gain from the repayment of debt. However, the foreign exchange gains just an accounting gain, which wont generate any real cash flow or economic value. Furthermore, fast expansion of AirAsia, leveraging on financing facilities, is one of the factors that enable AirAs ia to maintain its profitability in the highly competitive airlines industry. Regarding the economics of the world this few years, only the lowest cost player through effectively cost reduction, economic scale, and growing market place will survive. Those reasons are become the main purpose why MCB needs merger with them and we feel that Airasia are getting growing with rapidly, and way of expansion which are through borrowings instead of issuing new shares is the best way to benefit the shareholders as well. From MCB perspectives, maybe can follow their way and management to increase asset by borrowing from others although include the interest, but MCB will have more cash flow in hand, it can be use for expand business by highly return area or diversification investment. Beside that, Although the earnings per share of Airasia is quite low, RM 20.6, compare to the MCB earnings per share, RM 27.25, it allow investors believe that this merger will increase the wealth of the shareholde rs due to the high value of both companies in the market now on the future. Those reasons are becomes the way to keep growing and expands the businesses of MCB. Threat From Airasia perspectives, increasing competition because of increasing number of low cost airline competitors, and aggressive competition against the large or traditional airline companies under airlines industry such as Malaysian Airlines (MAS). Those threats will directly affect Airasia performances, profit, advantages, and indirectly affect to the holding company which is MCB as well. These are the problem that MCB must consideration after merger with Airasia. In addition, monitoring the foreign currency and adjust the profit against non-operating income are the important, because of exchange currency may cause company having the debt or gain. After MCB merger with Airasia, if MCB unable to pay Airasias liabilities, will cause both of them faced the challenge and seriously problem to become merger failure. Conclusion As a conclusion, we strongly suggest that MCB merger with Airasia. Because of those benefit are highly exceed the disadvantages of the merger. If successfully merger, MCB will have advantages of competitive between Celcom and Digi and other telecommunication network. As our information, because recent months, Celcom and Digi are plans to explore long-term network and infrastructure collaboration in Malaysia which are sign the Memorandum of Understanding (MOU). They plan to corporation; it will threaten to MCB position in Malaysia. Thats why MCB must prepare himself and merging the target which are Airasia. Mainly reason that merger is about the tax loss carryforward for the MCB. The tax loss can be applied against a limited amount of future income of the MCB over 12years (Airasia debt period) or until the total tax loss has been fully recovered. MCB using those tax loss carryforward to expand its business at a same time. Beside that, increasing managerial skill or technology, and a dvertising through airline, those reason become the situation why MCB needs merger with Airasia. Furthermore, increasing profit on the long-term perspectives as well and because of its more pros than cons.

The Most Important College Admissions Factors

Originally published on LinkedInby Laura J. Blanche, M.Ed., President of Blanche Consulting, LLC.Reposted here with permission. Did you know the #1 criteria that college admissions officers are looking for in the admissions process is a rigorous high school curriculum? That’s right your high school transcript is â€Å"numero uno† in the evaluation process. Admissions officers need to be assured that you can do the work! They look for students who have challenged themselves in say, AP or Honors courses, or someone who took a risk on a course that wasn’t supposed to be an â€Å"easy A." Colleges would much rather see a â€Å"B† knowing youtook a risk and learned something about yourself. Upward trends are also looked upon favorably by admissions, so don’t get down on yourself if you may have been a slow starter. The second most important of the college admissions factors to consider is still standardized testing- your SAT or ACT scores. Test scores are used in so many different ways that it is a good practice to read the college’s testing policy on their website before you apply. Some colleges will superscore SAT or ACT scores-or take a student’s highest subscores from different test dates to form a new, higher score. There are even colleges out there that do not require test scores- a good option for students whose testing may not be consistent with their high school performance (refer to Test Optional in last month’s article â€Å"Standardized Testing- The Old and The New†). As college admissions evolves and colleges find new and better ways of forecasting success beyond the transcript, I do expect more and more colleges to jump on board with Test Optional or Test Flexible plans, but right now, it is still one of the most important factors for admission, placeme nt and scholarship consideration. An applicant’s personal statement is a very important piece to the evaluation process. This personalized, thoughtful essay first and foremost must answer the question, but also offer the committee more insight into who you are, your goals and what you value. Maybe even give them a glimpse into your personality, sense of humor, and what excites you. In addition to the personal statement, applicants will have writing supplements (additional essay questions or short answer questions) to complete in the application. These are usually more specific to the college, your desired program and your â€Å"fit.† Expect to do some research on the college website- I also recommend keeping notes from your college visits. Did you meet a professor? Sit in on a class? Meet an inspiring student? Maybe you were lucky enough to meet the President at the college? Note their name and context of your interaction and you may be able to work them into your college-specific essays. Leadership, involvement (extracurricular activities/community service), and passion would be next in my chronological list of important factors in the admissions process. I believe the three go hand in hand and what colleges look for arecommitment and depth. If you get involved in something, whether it’s a school club such as Student Council or volunteering at a local Kids Camp, and have a meaningful experience helping others or bettering your school- I bet you will become passionate about it and continue doing great things! Colleges are looking for leaders- students who arrive on campus ready to get involved and make a difference! Colleges want to know what you will bring to campus and how you will contribute. Another important factor is diversity- geographic, ethnic, cultural, political and economical. Colleges are seeking freshmen classes that round out their campus and represent all walks of life from all corners of the world. They also are looking for students who are eager to learn and want to be on their campus- as in, it’s your first choice! Another way to stand out in admissions is if you are flagged for a special talentsuch as a recruited athlete, musician, artist, innovator, or even a legacy (one of your parents, or perhaps a grandparent attended that school). These â€Å"hooks† may be just what they are looking for and your way in! You may not ever exactly know what area a college is trying to diversify, so this, unfortunately, is a factor that is truly out of your control, but worth noting. Letters of recommendation from teachers and your guidance counselor are also important college admissions factors. Teachers are asked to comment on your abilities, intellect and potential in the context of their specific course (and level) while noting your success in the context of your classmates and school. They know you best because they are the ones experiencing your growth as you persevere through challenges and triumphs on a daily basis. Choose teachers that you feel know you and your abilities best. Guidance Counselors can give anecdotal evidence that speaks to your integrity, character, service, personality, contributions to your school, interest in learning and academic promise. Many schools use â€Å"Brag Sheets† which give you (and your parents) an opportunity to give input (highlight your best attributes and accomplishments) into your letter of recommendation. My tips for the admissions process: Challenge yourself! Choose the right courses, as rigorous as you can handle, that align to your goals. Take the SAT/ACT Comparison Test in the spring of your sophomore year to determine which test you will focus on and prep for. Distinguish yourself through your extracurricular activities. Depth over breadth. Strive for leadership positions. Keep track of your activities and involvement starting in 9th This will help tremendously with your resume and the â€Å"Activities† section of the Common Application! Demonstrate interest in colleges by visiting campus, attending fairs and college rep meetings, as well as local information sessions. Get to know your teachers and counselor! Explore majors and careers through summer programs, internships and shadowing opportunities by the end of junior year. Get a head start on the college application process the summer before senior year! (that’s where I can help!) Photo credit: LinkedIn