Technology Resources Industries' (TRI) boss Tajudin Ramli had earlier said that its subsidiary Celcom has held talks with SingTel about a possible tie-up. However, Tajudin would not comment on whether SingTel would become a substantial shareholder of Celcom, The Business Times reported.
SingTel has always been interested in moving into the Malaysian market. Last May, it made an unsuccessful attempt to buy into Time dotCom, which provides mobile, fixed-line, payphone and Internet services. SingTel was also reportedly in talks with Ananda Krishnan's Maxis Communications.
SingTel's possible deal with Celcom was made known during a press briefing yesterday in Kuala Lumpur, when the latter announced a RM3.8 billion (S$1.8 billion) restructuring exercise.
According to The Edge, the proposed exercise includes raising RM1.8 billion through a one-for-one rights issue and a restricted share issue, and RM2 billion through private debt securities, bank loans and suppliers' financing. The move will make Celcom the new listed vehicle of the group, replacing TRI.
Meanwhile, it remains to be seen if SingTel would benefit from acquiring Celcom as the latter has incurred a debt totaling RM2 billion (S$959 million).
As Gabriel Yap, Ong Asia director of institutional sales put it: "There are many motivations (for the announcement)."
"TRI is in dire straits. Any kind of help, such as an announcement like this, would be good (for TRI's stock)," Yap added.
Celcom shares last traded at RM1.96, up almost 16 percent from RM1.69 Thursday. About 11.6 million shares changed hands, from a mere 1.7 million yesterday.
"Celcom needs someone with the money and management expertise to improve its operations, which is currently inefficient. Tajudin is mainly chairing Celcom as a figure head...he does not have the management expertise. If Tajudin is good, Celcom would not be in such a huge debt," Yap noted.
He added that if SingTel is willing to pay a "premium" for Celcom and lend its management expertise, he would rate Celcom a "trading buy" from the current "avoid". However, he noted that the final rating would depend on the actual price paid for Celcom if a deal with SingTel materializes.
"Celcom is in big trouble and has incurred heavy debts. It has courted a few parties for mergers but they fell through," Yap said.
Staff writer Susan Tsang contributed to this report.