Telekom Malaysia strikes RM560mil deal with Packet One

KUALA LUMPUR: Telekom Malaysia Bhd (TM) is spending a total of RM560mil in a deal that will see it gain control of mobile wireless operator Packet One Networks (M) Sdn Bhd (P1), signifying the incumbent’s seriousness in moving into this sector of the business.

TM is paying RM350mil for new shares in P1 for a 57% stake, while forking out RM210mil at the same time to buy exchangeable bonds from Green Packet Bhd, which presently owns 57% of P1.

The bonds carry a coupon rate of 8% and will give Green Packet a new lease of life.

The injection of the RM350mil into P1, on the other hand, will give it a boost to expand its wireless business and move into the 4G mobile space.

P1’s other existing shareholder – South Korea’s SK Telecom Co Ltd, a leading 4G long-term evolution (LTE) player in that country – was also part of the agreement inked yesterday.

SK Telecom said it would remain a key strategic shareholder in P1 following TM’s entry. All three parties said they would collaborate to develop “a next-generation LTE infrastructure to offer customers a full suite of converged communications services”.

TM group chief executive officer Tan Sri Zamzamzairani Mohd Isa said the partnership would enable the company to further expand itself into the wireless broadband space, thus opening up possibilities for TM.

“We are further expanding our capabilities into the adjacent wireless broadband space as a natural evolution of our suite of Internet and data services to better serve our customers’ needs.

“The partnership provides an LTE-ready platform for us to more efficiently roll out wireless broadband products and accelerate time-to-market for our customers,” Zamzamzairani said at the signing ceremony, witnessed by Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek.

“TM will anchor the growth and development of P1, while Green Packet will render its management expertise to ensure P1’s business continuity and development of LTE devices. SK Telecom, meanwhile, will contribute its technical know-how,” Zamzamzairani elaborated.

TM expects the investment agreement to be completed within the next few months.

Green Packet group CEO C.C. Puan, meanwhile, said: “This union of P1, the innovative and enterprising challenger, with big-name giants in the telecoms sector, is a positive on many levels.

“TM will bring significant synergies to our existing business capabilities, and SK Telecom’s enhanced commitment to the P1 business is not only affirming, but will strongly transition P1 into the LTE era.”

In addition, the three parties have jointly agreed to spend RM1.65bil based on their shareholding in the next three years to facilitate the implementation of the future plans of P1.

StarBiz had recently reported that PI owned valuable swathes of spectrum in the 2.3 gigahertz (GHz) and 2.6GHz bands, whereas TM had some spectrum in the much lower bands – 450 megahertz (MHz) and 850MHz.

AmResearch said the combination of P1’s 2.6GHz spectrum, which is suitable for high-capacity traffic, and TM’s 2x5MHz block in the 850MHz spectrum was a strong combination, giving it an advantage over incumbent celcos, which only have access to 1.8GHz and 2.6GHz spectrum for 4G rollout.

It added that P1’s half-a-million subscribers would give TM a “meaningful base to start with” if TM intended to get into the 4G game in a big way, as well as gaining access to P1’s base stations.

by leong hung yee, thestar.com.my