Cahya Mata Sarawak eyes state's telecom infrastructure

PETALING JAYA: Cahya Mata Sarawak Bhd (CMS) which has its fingers in almost all key economic areas of the state, is now looking at a piece of action in the telecommunications segment.

Sources said CMS was looking at taking over state-controlled Sacofa Sdn Bhd which is an infrastructure and multimedia service provider in the telecom sector. It is learnt that Sacofa was worth at least RM200mil and based on CMS’ cash pile of RM613.7mil as at end-2013, funding would not be an issue.

“They are still negotiating ... the definitive terms and valuations of the possible purchase are not decided yet,” he added.

According to industry sources, CMS could be eyeing Sacofa for its track record in building telecom towers and fibre-optic network in the Land of the Hornbill.

This comes as the federal government has plans to enhance high-speed broadband connectivity throughout the country.

Under Budget 2014, RM1.5bil has been set aside for 1,000 telecom towers worth RM1.5bil to be built to improve Internet coverage while RM850mil was allocated to lay underwater cables in Sabah and Sarawak.

Sacofa’s website showed that it had completed 611 towers as at Jan 31, 2013.

Filings with the Companies Commission of Malaysia showed that Sacofa’s net profit stood at RM62.78mil on the back of RM155.28mil in revenue for the financial year ended Dec 31, 2012 (FY12).

Its largest single shareholder is Sarawak’s State Financial Secretary Inc with 70.51%, followed by Celcom Axiata Bhd at 15.12%, Sarawak Information Systems Sdn Bhd at 7.57% and Yayasan Sarawak at 6.8%.

An observer told StarBiz the acquisition could be synergistic for CMS, which had positioned itself as the proxy to Sarawak’s economic growth while the prospects for Sacofa could bode well for its future performance.

Sacofa has reserves of RM207.54mil, non-current assets of RM432.85mil, current assets of RM311.13mil, non-current liabilities of RM294.65mil and current liabilities of RM156.93mil as at end-2012.

“The company (CMS) has always been keen in investments that are linked to the development in Sarawak,” he said, adding that Sacofa could also benefit from CMS’ financial strength if it were to undertake more telecom jobs.

CMS has major investments in Sarawak Corridor of Renewable Energy (Score), including 20% in the US$592mil ferro alloy smelting plant OM Materials (Sarawak) Sdn Bhd and a 40% stake in the RM1.04bil integrated phosphate project in Samalaju.

It also owns 20% in KKB Engineering Bhd, a Sarawak-based company that fabricates steel and provides civil engineering works.

In an earlier interview with StarBiz, its group managing director Datuk Richard Curtis had indicated that it might invest in a third project in Score.

Apparently there were several proposals on CMS’ plate.

It was reported that the conglomerate might be increasing its stake in K&N Kenanga Holdings Bhd by buying Deutsche Bank AG’s 13.84% from the existing 25.07%.

If the deal materialises, CMS will be diversifying from its core businesses that include cement, construction materials, construction and maintenance and property development.

Notably, Sacofa has an outstanding sukuk worth RM225mil via its subsidiary Pinnacle Tower Sdn Bhd and any possible takeover would require the green light from bondholders.

In a report, Malaysia Rating Corp Bhd said Sacofa’s construction of towers have trended downward due to reduced demand stream from the telcos as most populated areas have been covered.

“Revenue contributions from tower rental which have benefited from an increase in multiple tenant leases is expected to show a flatter growth trajectory,” the rating agency said.

CMS’ share price has been moving steadily, rising 42.2% year-to-date. It is also deemed as one of the top performers on the local bourse as its share price more than tripled in a year.