Telekom Malaysia Bhd's capital expenditure (capex) for the financial year ended Dec 31, 2003, will drop to RM2bil from the RM2.7bil invested a year earlier, its chief executive Datuk Dr Khir Abdul Rahman said.
This was because of declining expenditures on cellular operations now that Telekom had sold its cellular unit, TM Cellular, to Celcom (M) Bhd.
“The merger of the cellular units (of Telekom and Celcom) results in synergies and capex savings, thus the lower capex investment this year,'' Khir said after the company's AGM in Kuala Lumpur yesterday.
Earlier, Khir said that Telekom would save RM1.55bil in operating and capital expenditure for this and next year. This was based on RM300mil to RM350mil savings in operational expenditure (opex), and about RM1.2bil in capex. Last year TM Cellular's capex was RM700mil.
Khir added that Telekom was committed to investing RM4.3bil over the next 15 years for the roll-out of 3G (third generation mobile broadband) services, but investment this year, for a trial rollout, would be only RM106mil.
From the trials, Telekom would be able to know what applications and services could be offered on a 3G network. Telekom also remains committed to the concept of sharing of infrastructure – such as telecommunications towers and domestic roaming and 3G network – in the future.
Meanwhile, Telekom expects to complete its offer to buy the remaining shares in Celcom by the end of June. Telekom would make the offer to Celcom shareholders this Friday.
On the expected take-up rate for the offer, Khir said: “Judging from the sentiment and support at the Celcom EGM recently, there would be good support for the mandatory general offer (MGO).''
As part of the merger of TM Cellular and Celcom, Telekom has to undertake an MGO for the rest of the shares in Celcom it does not already own at RM2.75 a share. This will cost Telekom about RM3.8bil. This is on top of the RM1.7bil it paid for its current 31.25% stake in Celcom. .
Telekom has arranged for a bridging loan to fund the MGO, to be redeemed by a RM4bil bond issue planned for the third quarter.
The integration process has begun and by October this year, Telekom's cellular arm would operate under the Celcom brand. Other components of the merger – including network integration and human resource rationalisation – would be completed by October 2004.
The merger is expected to boost Telekom's share of the cellular market to over 40% from 17% currently.
To further expand – and gain more revenue – from cellular investments now that fixed line telephony is saturated, Telekom has made an “indicative bid'' to buy Indonesia's third largest cellular operator, PT Excelcomindo Pratama.
“We have spoken to Excelcomindo. It is an indicative interest and they have allowed us to do a partial due diligence,'' he said.
Athough a partial review of the company had been conducted, Khir said Telekom had yet to make a decision on “which way to go.''
It is said that Citicorp group has been appointed to advise Telekom on its bid for Excelcomindo.
This is not the first time Telekom has made a bid for an Indonesian celco. Earlier this year it failed in a bid to acquire 41.94% equity interest in Indonesia’s leading overseas call operator PT Indosat.
“We are looking at the cellular sector as an area of growth. We have invested in the African continent, but would like to consolidate due to market conditions. We are, therefore, shifting our interest to regional markets such as Indonesia, China, Bangladesh, and even India.
“China is a big market, but we believe we have the capability and capacity to tap that market. We are already in Bangladesh and had tried for Indosat. And (Excelcomindo is an) opportunity we may not want to overlook,'' Khir said.
He said while Telekom was cautious about future investments, it talked to parties all the time in looking out for opportunities, but there were no definitive negotiations at this juncture.
Apart from Bangladesh, Telekom has investments in Malawi, South Africa, Guinea, Thailand, Cambodia, and Sri Lanka.
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