M'sian telcos Time and Celcom likely takeover targets?

With the Malaysian government already stating that the country only needs three telco players, speculations are mounting on which network operators will be gobbled by rivals.

KUALA LUMPUR--With the government already stating that the country only needs three telco players, speculations are mounting on which network operators will be gobbled by rivals.

The country's "bad debt" authority, the Corporate Debt Restructuring Committee (CDRC) which was set up at the height of Asian financial crisis has already identified the telecoms sector as a priority area for restructuring and consolidation.

The five telcos in the country are Telekom Malaysia, Maxis Communication, Celcom, DiGi.Com and Time dotCom.

The Star report carrying interviews with several telco analysts said that Time dotCom and Celcom would most likely be a target for a takeover by rival telcos like Maxis Communications and Telekom Malaysia.

The analysts' reasons for picking Time and Celcom as likely candidates to be gobbled up are mainly due to their financial situation as well as lack of direction in the case of the former.

Even though Time has RM811 million (US$213 million) in cash reserves, it is not increasing its subscriber base fast enough.

"It is not growing as fast (as it should) and the company lacks direction. We foresee Time dotCom having difficulty meeting its overly bullish financial forecast," said an analyst with a local research firm who requested anonymity.

Celcom which is under the umbrella of Technology Resources Industries (TRI) has yet to plug its debt problems which makes it more vulnerable for a takeover.

The analysts said that Telekom Malaysia and Maxis were not takeover candidates as they possess the financial clout to acquire other carriers.

Meanwhile DiGi.Com which controls DiGi Telecommunications, another fast growing local telco, which will soon be 61 percent controlled by Norwegian telco Telenor, was predicted to be a niche player, with no intention of acquiring other telcos in Malaysia.

According to OSK Research research manager Pankaj Kumar, consolidation is something the sector cannot continue to avoid.

"It has to take place in view of market liberalisation and the government wants larger and stronger entities to compete in a liberalised environment," he was quoted as saying.

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