Window for TM to exit Measat

Wednesday August 11, 2010

By ANDREW LEE
andrewlee@thestar.com.my

Telco stands to gain RM100mil from 15% stake sale
KUALA LUMPUR: Telekom Malaysia Bhd (TM) stands to book a one-off profit of around RM100mil if it chooses to part with its 15% stake in satellite service provider Measat Global Bhd, analysts said.

This was based on estimates that TM had written down its investment in Measat to around RM2.50 per share since 2003. TM owns about 60 million shares in Measat.
Measat’s major shareholders have announced plans to take the company private at a price of RM4.20 per share. If TM sells its Measat stake, it would gain a gross figure of RM252mil. Compared with the written-down price of RM2.50 per share, or RM150mil, this gives a gain of over RM100mil.

TM declined to comment on how much it had written down the value of its Measat shares. The offer price is close to TM’s original entry cost.

TM says it is waiting for the offer document before announcing its decision(Pic shows TM HQ off the Federal Highway in Kuala Lumpur)

 

TM had paid RM4.165 per share for its investment in Measat, which it acquired through a private placement by a T. Ananda Krishnan vehicle in December 2003.
Ananda had injected Measat into Malayan Tobacco Co via a reverse takeover in December 2003.

An AmResearch analyst reckoned that the profit and cashflow from the Measat share sale could enhance TM’s dividend payments. “The sale of TM’s Measat shares to Ananda would free up more cashflow for the company to use elsewhere,” he said.

However, he said the profit TM stood to gain from the sale of its Measat stake would not be substantial in relation to its earnings. “Otherwise, TM would have made an announcement to Bursa Malaysia to this effect,” he said.

Another analyst said: “If you add up the opportunity and holding costs, then it is a negative for TM. This could be their way of getting out of Measat, which has not given dividends thus far, nor does TM have control in the company.”

The analyst said there was little upside for TM to retain its Measat stake, and that it was a mistake for TM to have bought into Measat in the first place.

TM still has the choice of not accepting Ananda-linked Measat Global Network Systems Sdn Bhd’s general offer. TM could scupper the plan to take Measat private by not subscribing for the general offer. A 15% block is substantial enough to prevent Measat Global from delisting Measat.

However, insiders said that TM was unlikely to reject the offer as the promoters were inclined to have approached the company before the deal was announced to get their buy-in due to the 90% acceptance condition.

“It would be rather inappropriate for us to comment on our intention as we have yet to receive the offer document from the offerer stating their rationale as well as the finalised terms and conditions of the proposed takeover offer,” TM said in an email reply to StarBiz.
It said that subsequent to receiving the offer document of Measat shares, it would await the independent adviser’s circular advising all minority shareholders of Measat.

“It is currently premature to comment. The interests of all shareholders of Measat are best served if we were to await for these documents first before making a decision on the proposed takeover offer,” TM said.

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