(Nikkei BP Group)
(No.1 High Tech News Site in Japanese)
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| British Telecom Buys Stake in Malaysian Telecom Firm
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July 28, 1998 (KUALA LUMPUR) -- British Telecommunications Plc. has acquired
a one-third stake in Binariang Bhd., a cash-strapped telecom company,
for 1.8 billion ringgit (about US$450 million).
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The deal is the single largest investment for BT in the Asia-Pacific
region, and the biggest by a foreign party in a Malaysian telecom company.
The July 24 announcement ended months of speculation in which Binariang
had been linked with various foreign telecom firms including Britain's
Cable and Wireless Plc. as well as Singapore Telecommunications Ltd.
Richard Slogrove, BT's managing director for Asia Pacific, said BT decided
to invest in the company because it is confident of Binariang's long-term
prospects.
"Our investment in Binariang represents a total and long-term commitment
of a foreign company in the local telecommunications industry as a whole
and Binariang specifically," he said.
Slogrove said BT's investment in Binariang would assist the local company
in becoming a global player.
Binariang chief operating officer Jamaludin Ibrahim said BT will provide
Binariang with more technical and financial resources to pursue the
company's vision of becoming "the preferred supplier of communications
services to all Malaysians."
Binariang operates a fast-growing GSM mobile phone service, maintains
a small fixed-line network and has an international gateway license.
It also owns two satellites. They are a part of a satellite-based regional
television broadcast service called Astro, which is run by a related
company.
Prior to the deal, Binariang was in need of a capital injection. The
regional economic crisis had cut into its revenues, undermined its expansion
plans and forced the company to postpone indefinitely its scheduled
public listing. In recent months, the company has reduced its staff
and halted fixed-line network expansion in an attempt to curb the slide.
Jamaludin said the 1.8 billion ringgit cash infusion by BT represents
a portion of the 3.5 billion ringgit to 4 billion ringgit that Binariang
had planned to raise over the next five years for capital expenditures
and network enhancement. He said the company also plans to alter the
ownership structure of its satellite business.
Additional funds may be raised from the international bond market in
the future.
Jamaludin said that about 60 percent of the capital raised will go toward
expanding and upgrading its Maxis Mobile cellular network service, which
has a market share of 22 percent.
The company said its cellular subscriber base is expected to grow from
the current 422,000 to about 500,000 by the end of this year and up
to 650,000 in 1999.
Jamaludin also confirmed that the fixed-line network expansion, which
was suspended, will likely be revived.
Binariang will be able to tap into BT's global business services called
Concert Communication Services, and become a non-exclusive distributor
of Concert together with Telekom Malaysia Bhd.
Following BT's move, Binariang's existing foreign shareholder, MediaOne
Group Inc., formerly a part of US West Inc., will have its 19 percent
stake diluted to 12.67 percent.
Local conglomerate Usaha Tegas, controlled by prominent businessman T.
Ananda Krishnan, will have its stake reduced from 76 percent to 49 percent,
while the remaining 5 percent stake held by state investment fund Permodalan
Nasional Berhad will be maintained.
Total foreign equity in the company will be 46 percent, still well below
the government-allowed foreign equity cap of 61 percent. The government
raised the cap twice this year first from 30 percent to 49 percent,
then to 61 percent, in a bid to attract much-needed foreign capital
for ailing telecom companies.
"The 33.33 percent represents an appropriate stake in an appropriate
company at an appropriate time," Slogrove said.
Slogrove also said he hopes that BT's acquisition will set a trend for
more foreign companies to come to Malaysia to form partnerships with
local companies.
BT is one of the world's largest telecom companies and serves more than
27 million residential and business exchange lines through a largely
digital network in the United Kingdom.
(Julian Matthews, Asia BizTech Correspondent)
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