Malaysian cellco DiGi has ended two years of speculation and confirmed it has sealed a deal to buy TIME dotCom’s 3G licence, plugging a strategic gap in its portfolio and allowing DiGi’s parent, Telenor, to lower its stake in the company to meet foreign ownership rules. Under the plan, DiGi will issue 27.5 million new shares, valued at MYR649 million (USD194.6 million), as payment for TIME dotCom’s 3G spectrum. The new shares will represent 3.5% percent of DiGi’s enlarged paid-up capital. Telenor is required to reduce its 61% stake in DiGi to 49% by the end of December, to comply with foreign ownership rules.
DiGi is the only Malaysian mobile operator without a 3G concession; it failed to secure a licence in last year’s auction, losing out to TIME dotCom and MiTV (now known as U Mobile). Maxis Mobile and Telekom Malaysia’s Celcom secured 3G concessions in 2002.
The exact shareholding post-acquisition has not yet been defined; analysts predict that the most likely scenario will be a share-swap arrangement between TIME dotCom’s subsidiary TT dotcom, which holds the 3G licence, and not with TIME dotCom directly as the latter has extensive fibre-optic infrastructure deemed ‘national interest’ assets and would be highly sensitive if acquired by foreign investors such as Telenor.