Telenor awaits to raise stakes in Malaysia’s Digi


Norwegian Telenor ASA is not opposed to further increasing its stake in DiGi.Com Bhd but will decide on the exact percentage once the Malaysian Government issues more details on the plan to further liberalise the local telecoms sector to allow foreign equity ownership to go up to 70%.

The current ceiling for foreign equity ownership is 49% and that is how much Telenor has in DiGi, the Star reports.

“We hear the Malaysian Government might make a decision on foreign ownership for the telecoms sector. We wish and welcome that. We had even asked for that when we had to reduce our stake from 60% to 49% (several years ago),” Telenor chief executive officer Jon Fredrik Baksaastold StarBiz in an interview recently.

How much more stake Telenor will eventually raise in DiGi will be dependent on the Government’s guidelines that have yet to come out. “We will have to see how the Government liberalises the foreign ownership of this sector and we will have to address it when it becomes relevant to us. But for now we think that it is okay, and we appreciate that the Government is taking the step,” he said.

During Budget 2013’s presentation and at the Economic Transformation Programme (ETP) briefing on Nov 16, the Government said it would permit up to 70% foreign equity/ownership of the Network Facilities Provider and Network Services Provider class and individual licences.

However, no details have come out since as to how the foreign parties can take advantage of buying or increasing stakes in the telecoms sector.

Telenor has been a long-term investor in DiGi and Baksaas said “Telenor has enabled DiGi to move up the ladder to become a strong number three (player in the local market).”

“DiGi employees and management have managed over the years to consistently build DiGi’s position and I am proud of seeing that happen. And now we will have to see if the Government finalises what it needs to decide on the liberalisation,” he said.

He went on to add that DiGi also had some long-term local investors and that “was important to show the local and domestic side of a global company. It is also the same way as we operate in Thailand and Bangladesh.”

The local shareholders in DiGi include the Employees Provident Fund (EPF) which holds a 16.09% equity stake, Skim Amanah Saham Malaysia(3.56%), Time dotCom (1.77%) and several local and foreign funds that hold less than 2% equity stake. The remainder is held by retail investors.

DiGi shares closed unchanged at RM5.29 a share yesterday.

Telenor has several ventures in Asia but the DiGi investment is often referred to as the star investment and it has been a star performer for the group when it comes to investments in Asia. Telenor is also active in India, Thailand, Bangladesh and Pakistan.

Globally, it has mobile operations in 11 markets, and more if its stake in Russia’s VimpelCom Ltd is counted.

“DiGi has been an impressive performer for the Telenor group for many years and investors in the Telenor group see DiGi as a strong company and strong contributor to group performance.

“DiGi has also delivered quite a lot of innovation and new elements to the Malaysian marketplace over the years. I think we can say that we have contributed to the development of DiGi, which in turn has contributed to Telenor,” he said.

DiGi has been declaring handsome dividends year after year. For its third quarter, it reported a revenue of RM715mil and an after tax profit of RM315mil.

The company has 5.6 million subscribers and has pledged to invest about RM700mil in capital expenditure to grow its business.

DiGi was recently awarded the 4G long-term evolution (LTE) 2.6G spectrum to enable it to offer more applications that can run faster on the 4G platform. It intends to deploy 4G-enabled services within this year.

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