Wednesday, February 3, 2010

Vincent Tan said to be selling 33% in U Mobile to STT

PETALING JAYA: U Mobile Sdn Bhd’s major shareholder Tan Sri Vincent Tan is said to have struck a deal to sell a 33% stake in the celco to Singapore Technologies Telemedia Pte Ltd (STT) in a deal that could be worth RM626mil or RM5 a share.

It is learnt that a term sheet was signed this week by Tan’s company, U Television Sdn Bhd, and STT, the parent of Singapore’s second largest telco, StarHub.

Singapore Exchange-listed StarHub is a info-communication company that delivers a full range of information, communications and entertainment services over fixed, cable, mobile and Internet platforms in the republic.

Tan Sri Vincent Tan

It operates a 3G network in additional to GSM and given its expertise and knowhow in the telecoms sector, StarHub is seen as the logical choice to drive U Mobile once the deal is formalised in the next few weeks.

Sources said talks with STT began last September and a due diligence on U Mobile is said to have been completed.

As at September last year, the paid-up share capital of U Mobile was 379.403 million RM1 shares and 33% of that works out to 125.203 million shares.

If the deal is formalised, it would put an end to the search for a strategic investor for U Mobile that had last September witnessed the departure of two strategic foreign investors, Japan’s NTT DoCoMo and South Korea’s KT Freetel.

Since the departure of NTT and KT, Tan has been looking out for a strategic investors with the right expertise and technical knowhow to jumpstart the smallish celco that has about 4% share of the country’s mobile market.

U Mobile is one of four 3G spectrum holders; the others being Maxis Communications Bhd, Celcom Axiata Bhd and DiGi.Com Bhd. It would be interesting to see how STT via StarHub shapes U Mobile in a competitive market which is controlled by established players.

NTT and KT sold their combined 33% stake in U Mobile to U Television for US$200mil (RM680mil) in September, citing differences with management for their exit.

U Television’s acquisition raised its stake in U Mobile to 96.04% from 63.04%.

It was reported then that U Mobile shares were pledged to AmBank as part of a fund raising exercise for Tan to buy out NTT and KT.

Since U Mobile is a loss-making concern, there was a put option arrangement offered by Multi-Purpose Holdings Bhd (MPHB) that acted as a sort of guarantee against any loan default. This option was for 41.63% block in U Mobile at RM280mil which was for 13 months, starting September 2009. In the process, MPHB also bought a 3.96% stake in U Mobile.

If the deal goes as planned, this would be the second attempt by a Singaporean telco to enter Malaysia’s telco market via an equity stake purchase.

A few years ago Singapore Telecommunications tried to buy about 30% in Time dotCom Bhd but the deal could not be concluded as too many parties objected to the entry of a Singapore telco in Malaysia.

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