Telekom Malaysia picks up key TRI stake


Tajudin Ramli set up TRI in 1989

Staff and wires

KUALA LUMPUR, Malaysia -- State-owned Telekom Malaysia has paid $189 million for a key 13 percent stake in No. 2 mobile phone operator Technology Resources Industries (TRI).

The deal means Malaysia's biggest fixed-line telco could also emerge as the country's top mobile phone provider.

The 13 percent stake was owned by TRI chairman Tajudin Ramli, who had pledged it to the state asset manager Danaharta as part of security towards personal loans of 1.4 billion ringgit ($368 million).

Tajudin missed a Friday midnight deadline to repay Danaharta $34 million for rights shares issued by TRI as part of a $1 billion recapitalization.

"Telekom will seek to explore with TRI the feasibility of merging their cellular businesses or cooperating in some other manner," Telekom said in a statement.

Telekom shares traded about 1 percent lower at 9.60 ringgit late Tuesday. TRI was up 4.3 percent to 2.65 ringgit.

Second default

The sale left Tajudin with just 3.0 percent of TRI, the company he set up in 1989 and which for most of the past decade has been Malaysia's leading mobile operator.

Friday's default, the second by the embattled tycoon, gave Danaharta the right to foreclose on the phone, aviation and property stakes Tajudin pledged to secure personal loans.

Reuters news agency reported Danaharta said it sold Tajudin's TRI stake at 2.75 ringgit, an 11.3 percent premium over the stock's volume weighted average price of 2.47 ringgit last Friday.

Telekom has a near monopoly over fixed line connections but a weak cellular arm. TRI is Malaysia's second biggest mobile operator with annual sales of 2.5 billion ringgit ($658 million).

Analysts said the purchase could spark a shake-up in the 18 billion ringgit ($4.7 billion) market, according to Reuters.

A merger could also put Telekom in position to overtake mobile market leader Maxis Communications, run by tycoon Ananda Krishnan.

The sale will give Telekom direct and indirect control of about 15.6 percent of TRI, Telekom said in a statement.

It said it would use internal funds to pay for the 717.4 million ringgit ($189 million) cash purchase.