What’s the game plan post-Ananda?

WHEN billionaire Ananda Krishnan passed away on Nov 28 at the age of 86, there were numerous reports on his achievements and contributions to the nation.

But there was none on what would happen to his wealth as he had no heir apparent.

His only son, Ven Ajahn Siripanyo, gave up his claim to the over US$5bil empire more than two decades ago to embrace a monastic lifestyle.

Ananda has two daughters who have stayed out of the public eye and have shown little interest in taking over their late father’s business.

Ananda was one of Malaysia’s wealthiest individuals, with an empire spanning telecom, satellites, oil, real estate and media.

In the wake of his death, shareholders of Ananda’s Bursa Malaysia-listed companies such as Maxis Bhd, Astro Malaysia Holdings Bhd and Bumi Armada Bhd, must be wondering what the impact will be on these companies.

Drawing a parallel to the passing of Public Bank Bhd’s Tan Sri Teh Hong Piow on Dec 12, 2022, at the age of 92, there was a quick response from the banking group.

However, a key difference is this: not only was Teh very clearly involved in the running of the business, he was also the chairman of the bank. After he retired at the end of 2018, he was conferred the position of chairman emeritus and adviser of the bank.

In Ananda’s case, his name does not appear anywhere except in the shareholder list and that too it’s just his investment vehicle’s name, Usaha Tegas Sdn Bhd.

It is still a concern if you are a banker or investor in these companies.

The big question is what will happen to Ananda’s stake.

With his children unlikely to take over, the management of his business empire and philanthropic efforts may continue through established structures like Usaha Tegas.

But investors may be unsure about the ownership of Usaha Tegas, which will ultimately hold the key to the direction of its listed companies.

In contrast, Teh’s shares in Public Bank were already part of a structured estate plan before his death, ensuring a smooth transition of wealth management, although there had always been questions about who would succeed him and what would happen to his block of shares in the bank he founded.

Teh had a 23.41% stake in Public Bank that is worth more than RM20bil. The block is held through Consolidated Teh Holdings Sdn Bhd and the estate of the late Teh.

It was only two years after Teh’s death that his family decided to reduce its stake in Public Bank to 10% over the next five years.

This move more or less addresses the question as to how the Teh family would comply with the requirement of the Financial Services Act 2013 (FSA), which has restrictions on the shareholding of family companies and individuals in financial institutions.

It also put to rest any speculation over the shareholding of the bank’s largest shareholder.

Similarly, Ananda, who was battling a progressive lung disease, would have put in place an inheritance plan, which would include his stakes in Usaha Tegas.

Whatever it is, it is important for investors to know the game plan for Maxis, Astro and Bumi Armada.

Will talk of a merger between Astro and Maxis resurface?

Recall that there was speculation six years ago that the changes in the operating environment for the satellite pay-TV operator would force Ananda to consider all possibilities.

A merger between Astro and Maxis would make good business sense as it will likely result in a company that is strong in telecommunications and broadcasting.

As more people consume content through their data network, the merger will allow Astro to become a full-fledged data-based broadcaster.

Over the years, the way consumers consume content together with the proliferation of internet-based video-on-demand services have had a huge impact on Astro’s subscriber growth.

Astro also found it challenging to keep up with the high content costs on the back of dwindling advertising revenue.

However, it managed to turn in its best quarterly results since the quarter ended January 2023.

Its net profit more than doubled year-on-year to RM54.71mil in the second quarter ended July 31, 2024 (2Q24) from RM23.65mil on the back of lower expenses and better finance costs on favourable foreign-exchange impact.

This is despite a 5.98% decline in revenue to RM787.3mil from RM837.37mil due to lower subscription and advertising revenue.

As for Maxis, it saw higher net profit of RM366mil in 3Q24, versus RM287mil a year ago while revenue rose to RM2.58bil from RM2.44bil.

However, analysts are cautious over the longer-term performance as Maxis’ postpaid average revenue per user (Arpu) continued to decline quarter-on-quarter, reaching RM67 compared with its high of RM73 in 4Q22.

According to BIMB Research, inflationary pressures are expected to impact Arpu, as consumers reduce spending and opt for more basic data services.

It adds that high-value postpaid plans, which could support Arpu growth, are expected to remain limited due to the maturity and saturation of Malaysia’s mobile market.

Also, will the proposed merger between Bumi Armada and MISC Bhd be derailed following the passing of Ananda?

It was recently reported that Bumi Armada is exploring a merger with MISC’s offshore business, which could create a global energy services powerhouse with combined assets worth over RM20bil.

Under the memorandum of understanding signed, the parties will have nine months to conduct due diligence and sign a definitive agreement.

It would be foolish to think that things will not move in the absence of Ananda as these companies have in place professional managers to steer the strategic direction.

However, it would be good governance for these public listed companies, in the near term, to provide some guidance on how things would look like for Usaha Tegas, post-Ananda.