TM to buy P1?

FLASHBACK: StarBizWeek report on March 22

PETALING JAYA: Trading in the shares of Green Packet Bhd and Telekom Malaysia Bhd (TM) has been suspended, sparking speculation that both companies have reached a strategic merger and acquisition agreement.

Green Packet in its filing with Bursa Malaysia said it had requested for suspension of the trading in its shares for one market day today while TM said trading would be suspended with effect from 9am today. Both said they requested the suspension pending a material announcement.

Green Packet’s shares were last traded yesterday at 52 sen, up 5.5 sen. The counter was one of the most actively traded stocks, with 165 million shares changing hands.

Green Packet’s warrants also saw active trade yesterday. Its warrants gained three sen to close at 15 sen on volume of 102 million.

TM’s shares were last traded yesterday at RM6.20 after gaining nine sen on volume of 13.3 million.

Green Packet has long been speculated to be in talks with several major telecommunications companies, including TM and DiGi.Com Bhd, to sell a substantial stake in its 51%-owned Packet One Networks (M) Sdn Bhd (P1).

P1 owns valuable wireless spectrum for broadband services. The other substantial shareholder of P1 is South Korea’s SK Telecom (SKT), which has a 26% stake. Sources said a “TM-P1” merged entity could become a significant player, considering the “spectrum power” and synergies this combined force would have.

TM has 10 MHz of telecommunications spectrum in the 850MHz band and another 8.5MHz of the 450MHz band, while P1 has 30MHz in the 2.3 gigahertz or GHz band and 20MHz of the 2.6GHz band.

“A combination of these low and high-frequency bands makes a very powerful player, at least spectrum-wise, for building a strong 4G footprint in the country,” said one industry player.

TM has also communicated in the past its firm strategy of venturing into the data-centric 4G market, reportedly saying that it has plans to use its 850MHz spectrum as its long-term evolution (LTE) frequency band and aims to have 100,000 users on its wireless LTE network by 2014, and more than one million by 2017. Hence, if TM does merge with P1, then it will gain a head start on its 4G strategy by being able to utilise P1’s spectrum.

It will also give TM the advantage of utilising P1’s base stations, which number around 2,000 units. P1 boasts a coverage of 50% of the Malaysian population.