What if Telenor refuse to sell-down DIGI.com?

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Aug 23 2007
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End of 2007 is suppose to be Judgement Day for DIGI.com Berhad (DIGI: stock-code 6947) of which the company is required to reduce its interest to below 50 percent. Earlier, the Malaysian authority indicated that there won’t be any extension for Norway’s Telenor ASA (OSL: TEL), DiGi’s main shareholder with a controlling 61 percent stake, to reduce its stake to the allowable level.

Nevertheless, Reuters today quoted Telenor as saying that it will probably not have to reduce its stake in Malaysian mobile operator DiGi.com to below 50 percent, despite rules ordering it to do so before 2008. Telenor Chief Executive Jon Fredrik Baksaas said Telenor has been a positive player in helping Malaysia’s telecoms market develop and said he was in talks with authorities to find a solution, possibly by extending the exemption.

digi.com mobile operatorMalaysian regulations say foreign companies are not allowed to own more than 50 percent interest in telecoms firms, a rule from which Telenor has been given a temporary exemption.

FinanceTwitter was wondering as well what could possibly happen if Telenor refuse to sell-down by way of holding to its 61% well into end the of 2007. You can’t simply point a gun at the head of Baksaas to sell it. So would the government extend the deadline until the country join the WTO (World Trade Organization) to which the pathetic foreign ownership is no longer valid?

Probably certain government officials could be “talked” into giving the leniency to extend the deadline until a win-win solution can be found. It actually doesn’t make business sense to Telenor to hold on to 49% stake as it could mean its’ roadmap to continue wrestling the market share might be met with multiple red-tapes from other majority shareholders. DIGI.com is already the leader in pulling the nose of other mobile operator in moving forward with its innovative marketing plan and services. You just need to take one lousy yet useless majority shareholder to create havoc by showing power within the board of directors, not that he or she can contribute positively.

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