Telekom Malaysia will be de-mergered

Prime Minister Dato’ Seri Abdullah Ahmad Badawi announced today in New York that Telekom Malaysia (TM) will be de-mergered, between its fixed line, cellular/mobile and other services, including operations abroad. This exercise would be completed by mid of 2008.

Khazanah Holding Bhd. would be the substantial shareholder in both companies that would be created from this exercise, RegionCo, which oversee all TM mobile businesses (formerly known as TM International) and overseas operations and FixedCo, which will oversee all other TM businesses, which include broadband services.

Bernama.com has the story:

September 29, 2007 15:20 PM

PM: TM’s Demerger Plan Good For The Company In The Long Run     NEW YORK, Sept 29 (Bernama) — Prime Minister Datuk Seri Abdullah Ahmad Badawi says the separation of Telekom Malaysia Bhd’s (TM) fixed line and mobile services will be good for the company in the long run. On Friday TM announced a demerger of the group’s mobile and fixed-line businesses which will see Celcom (Malaysia) Bhd being transferred to TM International Sdn Bhd, its international arm. Abdullah said TM and Celcom chairman Tan Sri Md Radzi Mansor and TM group chief executive officer Datuk Wahid Omar had seen him on the proposal sometime back. The linkage between two companies after the demerger will be via the government’s investment arm, Khazanah Nasional Bhd, which will hold a 40 percent equity in each of the two - RegionCo and FixedCo. “I agreed to the proposal as it will be good for Telekom Malaysia in the long run,” the prime minister told journalists after he had attended the 62nd United Nations General Assembly here. TM International, which will become the holding company known as RegionCo for all of the group’s mobile and non-Malaysian businesses, will be listed on Bursa Malaysia by the second quarter of 2008. The rest of TM Group, under FixedCo after the demerger, will comprise the fixed-line voice, data and broadband services and other telecommunication and non-telecommunication related businesses, and will remain listed as TM on the Main Board. The demerger, to be completed by next June, will create two entities to serve the different market segments within the telecommunications industry. The final structure to create a regional mobile champion and a domestic broadband champion will known in December. RegionCo will have a total 31.8 million subscribers in high growth markets in Asia while FixedCo will have 4.4 million fixed-line subscribers and 1.1 million broadband subscribers. The exercise will also involve a management shake-up, with TM’s Abdul Wahid becoming RegionCo group CEO and Zamzamzairani Mohd Isa, currently the CEO of TM’s Malaysian business, as CEO of the FixedCo group. Datuk Seri Shazally Ramly will remain as Celcom CEO. – BERNAMA

TM broadband services is expecting growth in the near future. The Government has awarded TM a RM RM 15.2 billion high broadbandwith project. This was announced by Deputy Prime Minister Dato’ Seri Mohd. Najib Tun Razak. The roll out plan is expected to begin within six months after the partnership agreement was signed with the various implementation partners.

Since Abdullah took over and his administration, via the Policy Office which was created by then Deputy Chief Secretary Khairy Jamaluddin in the Prime Minister’s Office started a restructuring exercise which saw a lot of new decisions and policies have been implemented in almost all GLCs, especially under Khazanah Holdings Bhd., which had departed from the previous administration’s policies and strategic planning. For example, 5% of TM Holdings were sold off to Singapore’s strategic investment arm, Temasek Holdings. “Close co-operation with our most strategic and influential neighbour” was cited from one of the ‘Level Four Boys’ as the reason why this strategic move was made.

The grouping and streamlining of TM’s businesses into separate firms are evidently clear. The suspicion at this point is Temasek, as an existing shareholder wanted to invest more in TM’s lucrative business tracks such as mobile and overseas operations but not interested in contributing and subsidising TM’s agenda of nation building process such as communications and internet access to the rural and under developed areas, especially all over Sabah and Sarawak.

In 2006, Khazanah’s interests in Pantai Holdings Bhd. were sold of to the Singaporeans, which attracted a lot of attraction.

Another major landmark Government decision was the merger of Sime Darby Bhd., Guthrie Bhd. and Golden Hope Bhd. into Synergy Drive, an exercise championed by CIMB Group, which saw the creation of the largest plantations firm in the world. CIMB Group itself saw a consolidation and re-structuring exercise where the merchant bank subsidiary took over the parent holdings position of Commerce Asset Holdings Bhd. and lead within the Group, last year.

The latest rumours along the grapevine that TM CEO Dato’ Abdul Wahid Omar has been tipped to be the next Maybank Bhd. CEO/President.