Finally the guessing game of who will get the huge chunk of the broadband project reaches its peak when Telekom Malaysia Berhad (KLSE: TM, stock-code 4863) received a letter of award from the Government today. From the start it was almost certain that the country’s dominant fixed-line provider, TM, would get the deal considering its monopoly status. The state-controlled company will be investing RM8.91 billion and the remaining RM2.4 billion will be funded by the government in the ambitious RM11.31 billion project over 10-years – HSBB (High Speed Broadband) project.
The project’s objective is to increase broadband penetration from current 18% to half of all homes by 2010 and it was thought to be safely in Telekom’s hand. The risk was high and investors were worried that Telekom’s dividend payout could be affected. At the eleventh hour of signing ceremony suddenly it was called off hastily when a Pahang-based High Speed Broadband Technology Sdn Bhd (HSBT) stormed into the picture and forced a presentation to the Cabinet. Interestingly HSBT proposed an alternative plan which costs less and does not require financing from the government.
The mind-boggling news back then – Pahang Menteri Besar (Chief Minister) Adnan Yaakop was to lead the Pahang team to present its RM18 billion proposal to the deputy PM, Najib Razak. Strangely Adnan Yaakop is the chairman of Pahang Technology Resources Sdn Bhd which owns 20% stake in HSBT with the remaining owned by Bumiraya Resources Sdn Bhd. It was rumored that the 20-minute presentation made by Adnan Yaakop was just a concept paper and things were very sketchy. HSBT plan was to bring in technology partners from Japan, South Korea and Sweden which means HSBT has no value at all except to own and operate (after built by the foreigners) based on a 25-year concession before returns it to the government. Yeah! It’s something like the toll operator PLUS Expressway Berhad (KLSE: PLUS, stock-code 5052), easy money huh?
However people are still wondering why such huge project does not involve open tender. Rumors also said Adnan was actually Najib’s proxy but such claims could not be true, could it? The stake is just too high to gamble away RM18 billion at the current sensitive political climate and you do not need Anwar to start the accusation of corruption should the incompetent HSBT be given the project. In actual fact whoever wins the project there’s a hidden winner who manufacture fiber-optic cables, the main component which estimated would eat about 15% – 20% of the project’s total cost – RM1.7 billion to 2.3 billion. Opcom Holdings Berhad’s chairman and MD, Mukhriz Mahathir, is said to be optimistic and is seen smiling all the way to the bank.
Can you imagine such person given the RM18 billion project?
Still, the government should promote competitive via open tender (yeah, I’ve said that earlier) to get the best pricing and technology but then without this project, TM would be almost worthless. Well, I meant what else could move TM’s big fat arse from its comfort chair if not to hurt where it hurts the most – its pocket? Has TM Net’s Streamyx improves since donkey years ago? Like it or not, we are where we are today partly because TM was given the privilege of monopoly.
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September 2nd, 2008 by financetwitter
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Comments
Well, open tender would be the best option. However, TM being given the contract is much more comforting than the other alternative.
Just hope that this upgrade will allow more households to have broadband access at a more affordable cost.
I don’t get it why you said HSBT’s alternate plan costs less when it is almost RM7Billion more than TM’s
hello anonymous (September 03, 2008 8:16:00 AM) …
i don’t think i would go for TM for obvious reason, at least not now … it’s the same like genting when it won the singapore’s sentosa deal … the cash is going out instead of coming in … so why chase a cow that you can’t milk yet? just my opinion …
cheers …
stocktube
hello anonymous (September 03, 2008 12:51:00 PM),
the capex for HSBT was said to be lower at RM7,200 per-line while HSBB is RM8,700 …
cheers …
stocktube
well,it was in no doubt that TM will get the contract…so,what is your target pricefor TM now?