Sep 22, 2016

    Foreign firms may sell stakes in KL telcos


    TWO foreign shareholders of large stakes

    in leading Malaysian telecommunications companies are exploring a possibility of

    divesting off their stakes, indicating that the industry could be maturing in the nation.

    Reports also indicated that these parties might be more keen on investing in higher-growth markets such as Indonesia and Vietnam.

    In other parts of Asia, investments by

    foreign cellular companies in Asian telcos

    have dried up.

    Over the past few days, reports had emerged that Norwegian telco, Telenor ASA, might be considering a sale of its stake in Digi.Com.

    Saudi Telecom was said to be exploring options to dispose of its indirect stake in Maxis.

    Intense competition could be the main factor behind the decisions, insiders said, coupled with the fact that the market in Malaysia is crowded, prompting price wars and thinning margins.

    Telecom penetration levels have reached

    nearly 150 per cent.

    "Three players in the cellular field are ideal, four are still manageable but five to six have made the scene too crowded, not forgetting the growing number of many mobile virtual network operators," said an analyst.

    However, while these parties may be

    exploring a divestment of their stakes,

    the big question is whether there will be takers.

    Digi offers a yield of 4.26 per cent at its

    current share price while Maxis' yield is

    3.25 per cent, Bloomberg data revealed.

    In comparison, Singtel offers a yield

    of 4.41 per cent.