TM decouples to produce a regional mobile player (Malaysia)The Telekom Malaysia Group ™ has announced the demerger of its cellular unit, Celcom, from the group’s fixed voice and broadband business. TM says this is to permit greater transparency, accountability and management focus.
Celcom will be absorbed into Telekom Malaysia International’s (TMI) umbrella of mobile assets in ten countries across the region, which is to be headed by current TM Group CEO, Dato’ Abdul Wahid Omar.
The regional and mobile-focused holding company – RegionCo – will comprise TMI and Celcom and will then be spun-off from Telekom Malaysia Berhad and be listed separately during the first half of 2008, possibly with a strategic foreign partner from the US, Europe or the Middle East.
TMI has made various acquisitions in recent years and it now owns stakes in several mobile operators across the region including PT XL (Indonesia), Dialog Telekom (Sri Lanka), Aktel
(Bangladesh), M1 (Singapore), Spice (India), TMI (Cambodia) and MTCE (Iran). The listing of TMI will allow the company greater flexibility in obtaining financial resources for expanding its regional mobile business.
TM or FixedCo is to be headed by Zamzamzairani Isa and has been identified as a participator in the Public-Private Partnership project to roll-out high speed broadband infrastructure over the next ten years. The ecost of the xercise is believed to amount up to RM15.2 billion, with 33 per cent being contributed by the Malaysian government.
Besides touting FixedCo as focusing on domestic broadband growth, TM released a statement saying that FixedCo remains focused in enhancing international connectivity within the region. This , it says, will help establish Malaysia as a regional Internet Protocol hub, serving as a digital gateway for Southeast Asia. FixedCo is described as the second largest ISP in south east Asia.
TM is also leading the Asia-America Gateway consortium and it is building an IP hub in collaboration with Verizon, both are due to be operational before the end of the year. With these two facilities in place, Malaysia will be able to peer with Tier 1 ISPs in the region, besides as well as encouraging content hosting in the capital, Kuala Lumpur.
However, an anonymous source comments, “It would appear the AAG will fall under RegionCo (and Wahid) given the separations of the Lines of Businesses.” Other observers note that the separation of fixed and mobile businesses seems to be bucking the trend of fixed and mobile convergence seen so often elsewhere in the world.
TM says, “All FMC benefits can still be realised through arms-length agreements post-demerger.” However, splitting Celcom from TM may inevitably pose challenges for TM in attempting effectively to bundle fixed, broadband and mobile services, particularly via integrated sales, branding and customer support.
Further details such as group debt allocation between the two new entities, capital management strategies and expected capital expenditure have yet to be made public but are expected by the first quarter of 2008. When reached for comment, Dato’ Shazalli Ramly stated, “I am the status quo… still CEO of Celcom…so it’s business as usual.”
Both RegionCo and FixedCo remain state-owned with stakes of 40 per cent held by Khazanah Nasional, the Malaysian government’s investment holding arm.
