Telekom Malaysia (TM) will buy a majority stake in Packet One (P1) after agreeing to invest MR350m (US$106.3m) in the local WiMax operator through a new share issue.
The deal sees the incumbent re-enter the mobile market after exiting it in 2008, and…
Telekom Malaysia (TM) will buy a majority stake in Packet One (P1) after agreeing to invest MR350m (US$106.3m) in the local WiMax operator through a new share issue.
The deal sees the incumbent re-enter the mobile market after exiting it in 2008, and gives it a 56.8% stake in the unit, taking over as controlling shareholder from Green Packet.
After completion, Green Packet will own 30% of P1, down from 57.9% at present, while South Korea’s SK Telecom will see its stake reduced from 27% to 13.1%. US IT giant Intel and other minority shareholders will no longer be invested in P1.
As part of the agreement, Green Packet will issue MR210m (US$63.7m) of exchangeable bonds to TM, which can be converted into Green Packet’s stake after five years. However, Green Packet can buy back the notes at any time and TelecomFinance understands that this is both Green Packet and TM’s preference.
If TM chooses to exchange the bonds during or after 2019, the value will be based on the fair market value at the time. Green Packet anticipates that value to be substantially higher than the notes, and so expects to retain any shares over and above the value of the exchangeable debt.
Commenting on its convergence play, TM CEO Tan Sri Zam said: “We are further expanding our capabilities into the adjacent wireless broadband space, as a natural evolution of our suite of internet and data services, in order to better serve our customers’ needs. The partnership provides an LTE-ready platform for us to more efficiently roll out wireless broadband products and accelerate time-to-market for our customers.”
Green Packet expects regulatory approval and the green light from its shareholders during Q2, and anticipates closing the deal in Q3.
Green Packet was advised by RHB Investment Bank and JP Morgan, while TM mandated CIMB Investment Bank and Goldman Sachs.
