Rumors of a TM takeover of P1 don't add up

Tony Brown/Informa Telecoms and Media
30 Oct 2012

Like most other people in the telecoms industry I do love a good rumour, there’s simply nothing better than working out the different reasons behind a rumoured deal and then wondering if there’s some magic angle that you’re missing, the link that makes the whole thing make perfect sense.

Well, I’ve spent much of the last week going over the speculation that Telekom Malaysia is planning a 1.8 billion ringgit ($590 million) swoop for the 61% stake in local Wimax player Packet One Networks (P1) owned by technology firm Green Packet. So far at least, I am pretty stumped.

The driving force behind the rumours is pretty obvious, Green Packet reportedly wants to focus on its core technology business and get out of the operator market whilst Telekom Malaysia – having spun off Celcom as part of Axiata back in 2008 – has never hidden its desire to make a return to the mobile market.

Although Telekom Malaysia has pulled off a huge coup with the deployment of its 1.3 million FTTH High Speed Broadband (HSBB) network both on time and under budget, the firm realises the dangers of being left on the sidelines as a fixed-line only operator. It knows that to keep pace with key rivals such as Maxis it needs to offer mobile services.

For its part, whilst denying it had received a bid for P1 from Telekom Malaysia, Green Packet management did release a statement saying it was exploring possible strategies for P1, “Including the possibility of merger, consolidation, to sell a stake and other options to maximise shareholders’ value.”

The reality is different

The fact is though that it remains hard to see the value for Telekom Malaysia in buying into P1, the deal just does not add up.

Before we start let’s clear something up, P1 is one of my favourite companies in the region, they have done a brilliant job going from scratch to deploying 1,700 base-stations and reaching over 400,000 subscribers in a very competitive marketplace – and their CEO Michael Lai is indeed a gentleman and a scholar.

What’s more, it is not just myself who is an admirer of P1. South Korean mobile market leader SK Telecom is also a fan of the company, and has built up a 28.2% stake in the company since first investing in the operator back in mid-2010, when it paid $100 million for a 25.8% stake.

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