TELEKOM Malaysia Bhd, Southeast Asia's second-biggest phone company, may raise as much as US$700 million in an initial share sale of its wireless unit on the Kuala Lumpur exchange to fund overseas expansion.
Telekom Malaysia may also sell a separate stake in its mobile division to a strategic investor, Yusof Annuar Yaacob, Chief Executive Officer of TM International Sdn, Telekom's wireless unit, told Bloomberg News.
Telekom seeks to expand in emerging markets where mobile usage is low, mirroring the strategy of larger rival Singapore Telecommunications Ltd. Competition in Malaysia has intensified after U Mobile Sdn and TT Dotcom Sdn entered the market, in which at least 70 percent of the 27 million people own handsets.
"Telekom Malaysia has shown progress in expanding overseas and the IPO of the mobile unit will allow investors to take part in that growth," said Ang Kok Heng, who oversees US$130 million as chief investment officer at Phillip Capital Management in Kuala Lumpur, including Telekom Malaysia shares.
Kuala Lumpur-based Telekom plans to split its wireless unit, whose assets the operator has valued at 28 billion ringgit (US$8.6 billion) from the fixed-line division, where sales have been eroded as users switch to mobile phones.
TM is the holding company for Celcom (Malaysia) Bhd, Telekom's domestic cellular business, and owns stakes in mobile phone operators in nine countries including Indonesia's PT Excelcomindo Pratama and India's Spice Communications Ltd. TM will probably be listed on the Malaysian stock exchange by the middle of the second quarter, Yusof said.
Vodafone Group Plc, the world's largest mobile-phone operator by sales, Emirates Telecommunications Corp, AT&T Inc, China Mobile Ltd, Orascom Telecom SAE and Vivendi SA, owner of the world's biggest music company, are among "numerous parties" who have expressed interest in buying a strategic stake in TM, Yusof said.
"As a strategic investor, they'll probably be looking at a minimum of a 20-percent stake," Yusof said. "We haven't made a decision if we want a partner or when. The strategic partner has to bring assets to the table and pique our interest in them."