Business

Friday September 18, 2009

U Mobile said to be in talks to get strategic investor

By B.K. SIDHU


KUALA LUMPUR: Preliminary talks are said to have taken place between U Mobile Sdn Bhd’s major shareholder and a Singapore telecommunications company for the latter to come in as a strategic investor with up to 30% equity stake in the former.

Names such as StarHub and SingTel have been bandied around and while the former seems a more likely candidate, the parties are not willing to confirm it. At this juncture, a lot depends on the direction of the talks and the due diligence that will be conducted on U Mobile.

But there is no denying that U Mobile needs a strong strategic investor to drive it forward to offer more than voice telephony. This is necessary since Japan’s NTT DoCoMo and South Korea’s KT Corp called it a day at U Mobile earlier this week.

U Mobile has declined comment on purported talks with any strategic investor. Multi-Purpose Holdings Bhd (MPHB), which this week bought 3.9% stake in U Mobile and has a “put” option to buy an additional 41.63% stake, also declined comment.

“At this stage we are only involved in the put option,’’ MPHB managing director Datuk Surin Upatkoon told StarBiz in an interview.

Asked why MPHB was buying a stake in U Mobile, Surin said: “It is an investment to us. MPHB is into a lot of businesses from gaming, property, stockbroking and insurance. We see U Mobile as a growth company and margins in the telecom sector are still good. But we are not going to manage the company, it is (purely) an investment.’’

He also declined to disclose the amount MPHB paid for the 3.9% stake.

U Mobile is one of four 3G spectrum holders in the country. It was assigned the spectrum in 2006 and last April got two foreign investors – DoCoMo and KT – to take a combined 33% stake in the company. The remaining 67% in U Mobile is held by U Television Sdn Bhd (UTV), a company controlled by businessman Tan Sri Vincent Tan.

DoCoMo and KT each held a 16.5% stake and when exiting U Mobile, cited differences of opinion with other shareholders over management.

The two are selling their U Mobile stakes to UTV for the original amount they paid, US$100mil each, or a total of US$200mil.

To pay the Japanese and South Korean investors, UTV took a financing facility from AmBank to part finance the payment and pledged U Mobile shares as collateral.

MPHB’s entry into U Mobile is as a guarantor for the pledged shares; so if UTV defaults in repayment, MPHB can exercise the put option to buy the 41.63% stake in U Mobile for RM280mil.

Is there a possible default?

“To me, Tan will never default. It is only RM280mil but I wish he will (default) as we can then sell the shares for, say RM500mil or even more. Everyone knows there is a value out there. To us, this is a friendly deal,’’ said Surin.

If there is no default, MPHB will be left with a 3.9% stake in U Mobile, but ideally it would like to have about 10%-15% stake, the strategic investor about 30% and UTV the remaining 55%-60%.

MPHB shares took a hit after the deal was announced. Yesterday, the stock slid two sen further to close at RM1.86.


MPHB : [Stock Watch] [News]


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