The merger of Celcom (M) Bhd and Telekom Malaysia Bhd's cellular unit, TM Cellular Sdn Bhd, will not be jeopardised by the latest twist involving Deutsche Telekom AG (DT).
In an interview with StarBiz yesterday evening, Telekom chief executive Datuk Dr Khir Abdul Rahman said: DT had never publicly said that they were against the merger and (the latest twist of events) is an issue over agreements.
I believe the (objection by DT to some of the terms of the merger of TM Cellular and Celcom) will not in any way jeopardise the merger process. We are moving with our timelines.''
He also felt that the veto power vested in DT via the supplementary agreement signed in 1996 was not enforceable since the agreement was not made public and did not conform to the company's articles of association.
DT, via DeTeAsia Holding GmbH, has 8% stake in Celcom. In a letter last Friday, DT requested a meeting with Celcom executives.
Key to the disagreements is DT's assertion that Celcom needs to get prior consent to enter into a merger with Telekom as per a supplemental agreement signed in 1996.
Telekom, which has 31% stake in Celcom, plans to merge its cellular unit with Celcom to create the country's largest mobile firm. Last October, a sale and purchase agreement was inked: Celcom was to buy TM Cellular via a share issue. The deal will see Telekom owning up to 47% of Celcom, forcing it to make a general offer at RM2.75 a share.
Khir said, from Telekom's perspective, if there was a dispute, there was also a process provided for in the agreement to resolve the dispute. The issue is between Celcom and DT, and should be resolved through discussions.
Earlier in the day, Celcom chairman Datuk Dr Munir Majid said a committee would be set up to resolve the outstanding differences with DeTeAsia over the Celcom-TM Cellular merger (see Page 3).
DT first took up a stake in Technology Resources Industries Bhd or TRI (now known as Celcom) in 1996, and signed a subscription agreement dated June 26 with TRI, Celcom and TR International Ltd.
Over the years, six agreements (management, supplementary, amended and restatement supplementary) had been signed between TRI and DT relating to several matters, including giving DT veto power and say over technical matters.
DT also has a buyout clause in the agreements which allows it to exit if it were to veto any important decision; at a price believed to be RM7 per Celcom share.
Although some see DT's latest move as a spanner in the works, others are saying it wants to make an exit and that this may perhaps be the best move. Celcom may have to provide some form of compensation to DT to resolve the issue.
But Telekom is unlikely to buy up DT's stake. Although Telekom and DT officials have met several times, a stake sale was not discussed.
There is a lot of speculation in the papers, but there has been no discussion,'' Khir said. Asked if Telekom would offer to buy DT's stake, he said: We have not discussed that yet.''
An EGM is scheduled for the end of March for Celcom to seek shareholder approval for the merger exercise, and Khir is confident shareholders will give the nod.