Telenor’s DiGi to Buy Broadband Spectrum from Malaysian Telecom Firm

On November 13, 2007 DiGi , the smallest of Malaysia’s three mobile phone companies, is to buy broadband spectrum from Malaysian telecom firm TIME dotCom to plug a strategic gap and allow DiGi’s parent, Norwegian telecom group Telenor , to trim its stake to meet foreign ownership rules.
DiGi plans to issue 27.5 million new shares, valued at 649 million ringgit ($194.6 million) at the last traded market price of 23.60 ringgit a share, for TIME dotCom’s 3G spectrum. The new shares would represent 3.5 percent of DiGi’s enlarged paid-up capital.
TIME dotCom said Telenor invited it to take part in the placement of DiGi shares to comply with Malaysian equity rules. The share placement will be carried out through a book-building process. Telenor must reduce its 61 percent stake in DiGi to 49 percent by the year-end to comply with a cap on foreigners owning more than 50 percent of telecoms firms. Telenor had been given a temporary exemption from the ban.
DiGi will issue a guarantee to the Malaysian industry regulator to replace TIME dotCom’s 50 million ringgit guarantee for the 3G spectrum.
The alliance would also allow DiGi to explore sharing towers with TIME dotCom for TIME dotCom’s WIMAX wireless broadband service. In a statement, DiGi said that taking over the spectrum would give it greater growth potential and boost its long-term competitiveness. DiGi is the only one of three Malaysian mobile operators without a 3G spectrum.
State-controlled TIME dotCom won one of two 3G licences auctioned by the government last year. DiGi failed in that auction to secure a licence. It also failed in another spectrum auction in March to secure a licence to run WIMAX services.