It appears the Norway’s Telenor ASA (OSL: TEL) will have no choice but to follow a Government directive to cut its stake in mobile phone operator DIGI.com Berhad (DIGI : stock-code 6947) by the end of the year. Energy, Water and Communications Minister Lim Keng Yaik said that the company would not be given another deadline.
Telenor which was given a year extension earlier must now cut its holdings to 49 per cent from 61 per cent currently by end of 2007. CEO Jon Fredrik Baksaas said last month he was in talks with Malaysian authorities to find a solution, possibly by extending the exemption, which is due to run out at the end of this year.
Considering the floating shares of 750 million in the stock market, a 12 percent stake would cost a whopping RM1.746 billion based on the current DIGI.com share price of RM19.40 a piece. Who on earth would have such a financial strength to purchase the shares?
It was reported that CIMB (Commerce International Merchant Bankers), an investment bank of Bumiputra-Commerce Holdings Berhad (KLSE: COMMERZ, stock-code 1023) would be the banker to arrange for the selloff. A mere 1 percent of commission from the selloff will bring in RM17.46 cool profit to CIMB. Are you still wondering how CIMB’s staff could enjoy bonus from 12-months onwards? Go and join CIMB if you’re looking for the best yearly bonus a company can ever give you.
Just how much is RM1.746 billion? As a starter, Telenor can acquire 100% of Time Engineering (KLSE: TIME, stock-code 4456) which will cost only RM534.92 million based on current share price of RM0.69 per share, leaving Telenor with more than RM1 billion extra for further shopping. Time Engineering holds 40.68 percent stake in Time DotCom, the loss-making but was awarded a 3G license earlier.
Alternatively Telenor can go on a buying spree and gain access to the 3G license by acquiring the controlling 51% stake of Time DotCom Berhad (TIMECOM : stock-code 5031) for a cash of RM1.42 billion (based on RM1.10 per share), still have extra money to be wired back to Norway. Of course the above are just for fictitious illustrations purpose as foreigners are not allowed to hold more than 50% stake in Malaysia. Telenor will most likely repatriate the money back home after paying the tax.
Or maybe there’s an arrangement made between Telenor and the government to retain the money by allowing Telenor to do some sort of “diversification”? RM1.746 billion is a lot of money when comes to currency exchange losses, but then compare to PKFZ’s scandal of RM4.6 billion, maybe its just chicken feed.
Who has the deep pocket to acquire the 12 percent stake? Many, if you’re talking about foreign buyers. Not many, if you’re looking for local purchasers. You can count on PNB (Permodalan Nasional Berhad), EPF (Employees Provident Fund) or Khazanah to buy the stake. Probably some Middle-Eastern investors already had been identified as the buyers.
Other Articles That May Interest You …
- What if Telenor refuse to sell-down DIGI.com?
- Malaysia’s Biggest Scandal – Business as Usual
- China Mobile the Actual Rescuer for TIME?
- DIGI – If You Can’t Beat Them, Suck the Coffer Dry
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September 11th, 2007 by financetwitter
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