State-run telco Telekom Malaysia’s plans to take over local mobile operator Celcom were threatened yesterday when German incumbent Deutsche Telekom (DT) – a minority shareholder in the cellco – filed a claim with the International Court of Arbitration in Paris. DT, which bought a 20% stake in Celcom in 1996 but wrote off the majority of it two years later and now owns just 8%, claims that an agreement signed with Celcom’s former management gave it a veto right to block any merger with a rival operator. It went on to say that it will only approve Telekom Malaysia’s takeover if it receives MYR7 a share, an unreasonable demand considering Celcom’s current share price of just MYR2.58. Although Telekom Malaysia is confident that DT’s agreement with Celcom is not valid, as it was not disclosed to minority shareholders when it was signed, the court could still rule in the German telco’s favour, making the merger too expensive to go ahead.
Telekom Malaysia first acquired a 13% stake in Celcom last May from state debt-restructuring agency Danaharta after the cellco’s previous owner Mr Tajudin defaulted on bank loans. The following December it increased the stake to 31%. Before DT’s intervention, Telekom had made a general offer for the remaining stake in Celcom of MYR2.75 a share.