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Dialog approves LKR15.5b rights issue; Telekom Malaysia to inject LKR13b in FDI

24 May 2007

Shareholders of Sri Lanka’s mobile market leader Dialog Telekom, 85%-owned by Telekom Malaysia™, have approved the launch of a rights issue with a value of LKR15.5 billion (USD140 million), reports local newspaper the Daily Mirror. The move represents the single largest equity raising exercise to be executed on the Sri Lankan capital market. TM pledged to increase its direct investment in the company by LKR13 billion through subscribing in full for its entitlement under the rights issue: ‘We have the utmost faith in the Sri Lankan market, the investment environment facilitated by the government, and the enabling environment we have enjoyed under the aegis of [regulator] the TRC, the Board of Investment and the Ministry of Media’ said Yusof Annuar Bin Yaacob, TM International’s CEO. The rights issue will provide ordinary shareholders of the company with an entitlement to one new share for every ten shares held, at a price of LKR21 per share, and is expected to attract substantial interest from minority stakeholders spanning foreign institutional, domestic institutional and domestic retail segments. Dialog expects the proceeds of the rights issue, in addition to a preference share issue, to come to an approximate total of LKR20.5 billion, which it plans to use to partially finance an aggressive expansion over the next three years targeting accelerated expansion of GSM network capacity and coverage and investments in convergent technologies spanning its newer fixed line, internet, data and multimedia business lines.

Dialog Telekom has around 58% of the Sri Lankan mobile subscriber market, with over 3.37 million GSM customers, and also operates retail and wholesale international voice and data gateway services through its Dialog Global unit, internet services via ISP Dialog Internet, mobile satellite services under the name Dialog SAT, backbone infrastructure services and data communications via subsidiary Dialog Broadband Networks (which is also in the process of rolling out CDMA fixed-wireless and WiMAX broadband services), and a direct-to-home satellite pay-TV service under the Dialog TV banner. It is the largest listed company on the Colombo Stock Exchange in terms of market capitalisation, which stood at LKR185.086 billion at 22 May 2007 (USD1.68 billion, representing 22.28% of the market capitalisation on the bourse. The company also has the distinction of having become the first company in Sri Lanka to achieve a market capitalisation exceeding USD1 billion. Dialog was listed in July 2005.

Sri Lanka, Dialog Axiata, Telekom Malaysia

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