Green Packet shares jump

Green Packet shares jump
Business & Markets 2013
Written by Isabelle Francis of theedgemalaysia.com
Tuesday, 10 September 2013 10:07

KUALA LUMPUR: GREEN PACKET BHD []’s share price jumped 21% or seven sen amid market talk that the company is close to sealing a deal to hive off its 55% owned 4G unit, Packet One Networks (M) Sdn BHd (P1).

The stock closed at 40 sen yesterday and the warrant, Gpacket-WA, was up 61% at 5.5 sen.

Green Packet managing director and controlling shareholder Puan Chan Cheong would only tell The Edge Financial Daily that the company does “not comment on speculation”.

The group’s move to dispose of its assets is known to be part of an ongoing exercise to raise the funds it needs for working capital and capital expenditure (capex).

Puan, who has a 32.71% stake in Green Packet, has said in the past that the group would continue to dispose of some of its non-core assets after it sold a piece of leasehold land together with a 12½-storey office building for RM49 million.

In the case of P1, he said, an IPO, merger and acquisition or collaboration remain as options. Nonetheless, the 4G spectrum in P1 is certainly not a non-core asset in Green Packet but an asset that has burnt plenty of cash in the past few years or so.

It is believed that the group has pumped in about RM200 million a year in capex for P1’s 4G services rollout, taking a toll on Green Packet’s financials and cash flow.

So far, its turnaround plans are taking shape as P1’s earnings before interest, tax, depreciation and amortisation (Ebitda) have remained in the black for six consecutive quarters now.

Given the heavy investments in the past, reports suggest that P1 is worth as much as RM2 billion.

And, given the limited 4G spectrum available in the industry, it is understandable why big telecommunications providers will be interested in P1, one of the nine providers sharing the 2.3GHz spectrum licence in Malaysia.

The other spectrum owners are Tan Sri Syed Mokhtar Al-Bukhary’s Puncak Semangat Sdn Bhd (30MHz), Celcom Axiata Bhd (20MHz), Maxis Broadband Sdn Bhd (20MHz), DiGi Telecommunications Sdn Bhd (20MHz), U Mobile (20MHz), REDtone Marketing Sdn Bhd (20MHz), YTL Communications Sdn Bhd (20MHz) and Asiaspace Sdn Bhd (10MHz).

Apart from disposing of its assets, Green Packet aims to reduce costs by 15% to 20% this year on the back of stringent cost management and controls. It also laid off a part of its workforce early this year.



This article first appeared in The Edge Financial Daily, on September 10, 2013.