TM, Green Packet, SK Telecom to further invest RM1.65b in P1

by **Cals** Fri 28 Mar 2014, 11:54

Business & Markets 2014

Written by Charlotte Chong of theedgemalaysia.com

Friday, 28 March 2014 09:08

KUALA LUMPUR: Telekom Malaysia Bhd (TM), together with Green Packet Bhd and SK Telecom Co Ltd will further invest RM1.65 billion in Packet One Networks (M) Sdn Bhd (P1) in the next three to five years to fund the latter’s business expansion.

In an email reply yesterday, Green Packet group managing director and chief executive officer (CEO) Puan Chan Cheong told The Edge Financial Daily that the additional amount the trio planned to invest in P1 would be proportionate to their shareholdings.

Following the subscription of shares by TM yesterday, P1’s shareholders are TM with the largest stake of 57%, Green Packet (30%) and SK Telecom (13%). Prior to that, Green Packet and South Korea’s SK Telecom owned 55% and 35% respectively in the high-speed Internet network infrastructure provider.

The RM1.65 billion excludes the RM350 million that TM paid for the 57% stake, as well as its additional investment of RM210 million to subscribe to P1’s redeemable exchangeable bonds.

After signing the investment agreement with Green Packet and SK Telecom yesterday, TM group CEO Tan Sri Zamzamzairani Mohd Isa said the principle of the collaboration is about jointly creating value in the future.

He said the RM350 million would not go to P1 shareholders but to P1 itself, adding that the investment in P1 is for long-term strategic purposes.

According to TM’s announcement to Bursa Malaysia yesterday, P1 will use the RM350 million proceeds to settle certain debts and trade payables, for working capital purposes and other operational or capital expenditure.

“The whole idea of investing in P1 is to build the business,” said Zamzamzairani, adding that the sharing of spectrum among the three parties would be subject to regulatory approvals.

“It’s still too early to talk about the business plans [among the trio].”

The investment agreement puts an end to a long drawn out speculation on who will emerge as the anchor shareholder of P1, which has been loss-making for the last five years. Before TM came into the picture, it was reported that DiGi.Com Bhd and YTL Power International Bhd were keen on P1.

The trading of TM and Green Packet shares was suspended yesterday. Prior to the suspension, TM’s share price was last RM6.20 and Green Packet was traded at 52 sen.

Puan told reporters that P1 would use 2.6 GHz long-term evolution (LTE) for WiMAX while maintaining and operating the WiMAX’s network on 2.3 GHz spectrum. He said the company is slowly migrating its network from P1 WiMAX to 4G LTE services in two to three years.

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CREATING VALUE... From left: SK Telecom Co Ltd executive vice-president and chief growth officer Jung Ho Park, Telekom Malaysia Bhd (TM) group chief executive officer (CEO) Tan Sri Zamzamzairani Mohd Isa, Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek, TM chairman Datuk Seri Dr Halim Shafie, Green Packet Bhd group managing director and CEO Puan Chan Cheong and Packet One Networks (M) Sdn Bhd chairman A Shukor Karim after the signing ceremony between TM and industry partners yesterday

The signing ceremony was witnessed by Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek.

On whether the parties developing the broadband services are government-linked or not, Ahmad Shabery said, “Anything that will facilitate growth and expansion of broadband facilities, I think they are very much welcomed.

“Especially when you talk about our urgent needs today on bandwidth and speed ... we are looking at 20MB/s and we are still very much far behind.”

This article first appeared in The Edge Financial Daily, on March 28, 2014.