ST Telemedia to bail out U Mobile

Nicole McCormick
16 Mar 2010

ST Telemedia has inked a deal to buy a 33% stake in tiny Malaysian 3G operator U Mobile, but it will need deep pockets if the embattled startup can make head-way in the saturated market.

The company said on March 10 it had signed an agreement to buy a 33% stake in Vincet Tan-controlled U Television, the major shareholder of U Mobile, partly through a rights issue.

Price was not disclosed, but several reports peg the price tag at around MYR1 billion ($300.5 million), which is more than the $200 million former U Mobile investors NTT DoCoMo and KTF paid for a joint one-third interest in the firm in December 2007.

For its part, DoCoMo is believed to have pulled out of U Mobile because its calls for a faster 3G network deployment were blocked.

As a result, U Mobile’s 3G network coverage is limited to Klang Valley, Seremban/Port Dickson, Ipoh and Johor Bahru.

It is critical for U Mobile to expand its own network because its 2G roaming deal with Celcom is unfavorable.

U Mobile and its new backer seem to realise this. ST Telemedia said U Mobile is indeed “planning to accelerate” its 3G network rollout.

But ST Telemedia - which owns stakes in StarHub, Mfone and Lao Telecom - will have its work cut out if it is to impressively increase U Mobile’s mobile share beyond its current 1%-2% mark.

First, U Mobile needs to expand its retail presence, according to company sources.

Second, it will have to contend with three incumbents – Celcom, Maxis and DiGi – that are aggressively competing for a slice of the infant mobile broadband pie, leaving a handful of MVNOs to compete in the low-end voice market.

Moreover, Malaysia is a small market of 27 million people, with mobile penetration already above 100%.

U Mobile will indeed need the deep pockets of its new white knight investor if it is to expand and compete in the mature market.

Related content

Follow Telecom Asia Sport!
No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.