TELEKOM MALAYSIA BHD may sell shares in its cellular unit by October to realise gains in the value of the business purchased last year, chief executive Datuk Dr Md Khir Abdul Rahman said.
It had yet to decide on the size of the share sale, which might include an offer to strategic investors, Khir, said in an interview.
Telekom paid RM3.5bil last year to buy out Deutsche Telekom AG and other investors in Celcom (M) Bhd, to boost its mobile phone business and counter slowing growth in fixed-line
Money from selling shares in Celcom would add to the RM3.35bil cash the company had at the end of December, some of which might be used to pay debt, Khir said. The sale might proceed before the mobile businesses were integrated, he added.
Telekom will hire “one or two'' advisers on the sale of Celcom, which earned RM101.8mil in the fourth quarter of last year, compared with a RM171mil loss a year earlier. Telekom's profit rose almost five-fold to RM499.8mil. Deutsche Bank AG advised Telekom on the purchase of Celcom.
“The board will determine the timing, but it can be earlier than October,'' Khir said. “The most important thing now is to focus on value creation towards integration.''
Five days after Telekom reported earnings, Temasek Holdings Pte, a Singapore state-owned investment company, bought 5% of the Malaysian phone company for RM1.6bil. The shares were sold by Khazanah Nasional Bhd, which sold investors 9.2% of Telekom and pared its stake to about 25%.
“We were caught by surprise, too. Of course, I was delighted to suddenly know we have a new shareholder,'' Khir said, declining to comment on whether Temasek or its 67%-owned unit Singapore Telecommunications Ltd may invest in Celcom.
He said he had not had talks with either Singapore company on the matter.
Khir said Telekom would use some of the proceeds from the sale of Celcom shares to reduce debt because gearing, which measures gross debt against shareholder funds, rose to 0.7 times after the Celcom purchase, from 0.5 times before the acquisition.
As it reduces costs involved in integrating Celcom, the company is maintaining capital expenditure at about RM2bil this year, from RM1.98bil in 2003 and RM2.7bil in 2002. Most of the spending is for upgrading fixed lines so they can handle broadband and other advanced services.
Funds are also needed to expand overseas. “We have our eyes on some good areas and we might be considering seriously on having some presence'' in the Middle East, Khir said, describing Saudi Arabia “as an interesting market.''
Telekom would focus on expanding into mobile phone markets where it could be one of the top three operators, Khir said.
Telekom Malaysia made a non-binding bid last year for a stake in PT Excelcomindo Pratama, Indonesia's third-largest mobile-phone company. Telekom was still interested in the stake, Khir said. – Bloomberg