It was a huge victory for Celcom (M) Bhd when it won shareholders' approval at an EGM yesterday to buy TM Cellular Sdn Bhd for RM1.68bil, although Deutsche Telekom (DT) opposed the plan.
The company also revealed that it would stick to the Celcom brand name for the merged entity while TMTouch would be phased out. This will take effect in the third quarter of the year.
According to Celcom chairman Datuk Dr Munir Majid, about 80.8% of the votes cast in a poll at the EGM favoured the merger, while 19.2% were against. DT was among those that voted against the merger.
The resolutions were passed with a resounding majority. The outcome indicates support for the merger. It is a new beginning for us,'' Munir said after the meeting, which lasted almost three hours.
Even with the shareholders' nod, Celcom cannot implement the merger until parent Telekom Malaysia Bhd secures its own shareholders' approval at an EGM scheduled for March 31. Telekom owns 31.25% of Celcom, and DT 8%.
Telekom is selling TM Cellular, which operates the TMTouch mobile network, to Celcom in order to merge both the entities to create a larger unit which will control a 42% share of the mobile market.
Since the sale of TM Cellular would be via a share swap, Telekom's stake in Celcom would rise to 48%, triggering a mandatory general offer which Telekom would make at RM2.75 per Celcom share.
Telekom chief executive Datuk Dr Md Khir Abdul Rahman said in a statement that Telekom was pleased with the outcome of Celcom's EGM, which showed that shareholders recognised the compelling benefits of the merger.
But DT does not share the same sentiment. Before the EGM, DT officials handed a strongly worded three-page statement to Celcom shareholders saying that all its rights contained in the agreement with Celcom were valid and enforceable.''
DT is of the opinion that the proposed valuation (of Celcom) does not reflect the true value and enormous potential of the restructured and listed Celcom. DT is convinced of the correctness of its position and it will take all steps necessary to protect its rights and interest,'' the statement said.
As a long standing and reliable major foreign investor that stayed committed to TRI/Celcom and Malaysia, even through the Asian crisis, Celcom, under its new management, now appears to have total disregard for the contributions and rights of such foreign investor, and after having long benefited from its agreements with DT, now seems willing to disclaim certain portions of such agreements as and when it suits Celcom,'' it said.
Failing to settle the dispute (over valuations of Celcom) amicably, DT has filed for arbitration in Paris.
At the EGM, Deutsche Telekom Asia Pte Ltd president Axel Hass said DT was willing to sell its 8% stake in Celcom if it received a price above RM7 a share. He also clarified that DT was an international company that was acting on its own behalf, contrary to speculation that it was acting in concert with other shareholders over the valuation issue.
On the arbitration, Celcom senior independent non-executive director Azzat Kamaludin could not say how long the arbitration process would take. It would be held in Geneva, although the filing by DT was made in Paris. The arbitration process would be in English and based on Malaysian law.
Since DT had submitted its statement, Celcom would have to do the same and both parties would also have to appoint arbitrator who will decide the chairman for the arbitration committee.
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