Telenor given extra year to comply with FDI laws

14 Dec 2006

The Malaysian government has granted Telenor an extra year to cut its 61% stake in mobile operator DiGi Telecommunications to comply with foreign direct investment (FDI) legislation. The Norwegian group has until 31 December 2007 to reduce its stake to less than 49%. It must also increase the DiGi equity held by the investors from the country’s indigenous ethnic population from 10% to 30%.

According to TeleGeography’s GlobalComms database, DiGi entered the Malaysian telecoms market in May 1995. Originally known as Mutiara Telecommunications, it changed its name to DiGi in January 1999 and Norway’s Telenor took a 30% stake in the company at the end of that year. After gradually upping its holding until it reached a level where a general offer could be made, in September 2001 Telenor increased its direct ownership to 61%. At the time of the deal, Malaysia’s Foreign Investment Committee (FIC) gave Telenor a five-year waiver from the country’s standard 49% FDI limit. Telenor spent much of 2006 attempting to negotiate a further year extension on the waiver, leading many to speculate that it would look to seal a long-rumoured tie-up between DiGi and fixed line operator TIME dotCom, reducing its stake to a permitted level in the process.

Malaysia, Digi Telecommunications, Telenor Group