Why DiGi Should Be Granted WIMAX License?

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Feb 11 2007
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Malaysia Government seems (on the surface) to have started some sort of liberalization, at least at the financial sector level, looking at the corporate landscape changes recently. Australia and New Zealand Banking Group Ltd (ASX: ANZ) gained entry into AMMB Holdings Berhad (KLSE: AMMB : stock-code 1015). Kuwait Finance House ( KFH ) is in the process of controlling Hussain Bhd (KLSE: RHB, stock-code 1309). Volkswagen Aktiengessellschaft (FRA: VOW) is said to be the potential to finally control the pet project Proton Holdings Bhd (KLSE : PROTON, stock-code : 5304).

You might argue that only when the government is out of money for further bail-out was the hard-decision to let go the controlling stakes in these ailing companies to foreigners is made. But the fact remains that in order to attract foreign investors, some liberalizations are needed to at least show the seriousness from the government side.

After the financial sector, it’s time for the telecommunication (Telco) to follow next. DIGI.com Berhad (DIGI : stock-code 6947), the only foreign-owned Telco player in Malaysia, denied the 3G license, it’s time DIGI be awarded the WIMAX license. It was a shame decision to award 3G license to loss-making Time DotCom Berhad (TIMECOM : stock-code 5031) and unlisted pay-TV operator MITV Corp earlier. And what do you see since then? Nothing is happening despite owning the 3G licenses. The other 3G player Telekom Malaysia (TM : stock-code 4863) and Maxis Communications (MAXIS : stock-code 5051) is not moving as well. Here are some justifications:

  • Despite being the smallest mobile operator, DIGI is one of the most profitable, efficient and innovative Telco companies in Malaysia. When it launches a new product or marketing plan to consumers, all the others listen and follow. Somehow DIGI is the leader in Telco arena. DiGi chief executive officer Morten Lundal has said DIGI promised to invest hundreds of millions of ringgit to roll out high-speed mobile Internet services if it wins a WIMAX license.
  • The most compelling reason is the statement from DiGi, majority owned by Telenor, that it could roll out its services in as early as six to nine months from the day it receives the license. Lundal said “We will be able to offer nationwide broadband coverage in as early as one year.”
  • DiGi, as of September 30 2006, had more than RM1.13 billion cash in hand (excluding the RM700 million unused commercial papers and medium-term notes). It’s better to allow DiGi re-invest this huge chest back to infrastructure than giving them no choice but to sit idling or relocate the funds to elsewhere out of Malaysia. Malaysia is a follower now to Singapore despite started the MSC (Multimedia Super Corridor) ahead of them. It’s time to leap-frog to catch-up with the rest of the countries.
  • Malaysia needs competition to move forward – a comparison of how a stubborn mule needs a carrot to make it move. Telekom is too big and complacent a company to provide any impetus. Maxis is not as innovative as before – its’ growing work-force created much bureaucracy and efficient decision-making is a rare commodity nowadays. It too became too complacent as of now. Forget about Time DotCom and MITV – they’ve far more internal problems to think of than to profit from the 3G they won. And DiGi is the only company which can provide the competition and business-threat to pull everyone.

It’s time the government starts learning to make wise and feasible decision based on the nation’s benefits and not handicapped political policies. Otherwise, even poor countries such as Vietnam or Indonesia will wave their hands to Malaysia saying “Sayonara dude”.

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