Telekom Malaysia to Demerge Fixed Line, Mobile Unit
Telekom Malaysia, the country's dominant phone company, plans to demerge its mobile businesses to help unlock the value of its fastest-growing operations, the firm said on Friday.
The news confirms a Reuters report that Telekom's board agreed on Thursday to house domestic and offshore mobile assets in one firm, TM International, whose shares would be distributed to existing group shareholders and then separately listed.
The move will galvanize improvements and growth by providing a clearer strategic and organizational focus, Telekom Malaysia said in a statement.
"It is also expected to provide greater transparency on the financial and operational performance of each entity," the firm said. Additional details of the state-controlled firm's decision are due to be announced at a news conference set later this afternoon.
Under the plan Telekom Malaysia's chief executive, Abdul Wahid Omar, is expected to head TM International, a source told Reuters earlier.
"The idea is to rationalize the mobile assets and house them under one company," the source told Reuters. "It will split Telekom Malaysia into two but the government intends to maintain significant shareholding in each entities."
"The move will help unlock the value of the mobile assets," the source said.
Telekom Malaysia owns the country's second-largest mobile operator, Celcom, and also has mobile businesses in Indonesia, Bangladesh, Sri Lanka, India, Singapore and Cambodia.
Together, these mobile businesses deliver most of its growth, but the group's share price has been constrained by its large and dwindling domestic fixed-line business.
Telekom Malaysia called a halt to trade in its shares on Thursday, saying it would make an important announcement on Friday. The stock last traded at 9.70 ringgit (US$2.84).
Telekom Malaysia's offshore mobile subsidiaries are Indonesia's PT Excelcomindo Pratama, Sri Lanka's Dialog Telekom, Cambodia's Telekom Malaysia International Cambodia and TM International Bangladesh. Its mobile affiliates are India's Spice Communications, Singapore's MobileOne.