General MCMC/SKMM Mobile Network Operators

DiGi has access to 3G but it can’t use it, for now

23/11/2007

Gone are the days where DiGi did not had a 3G license when its competitors where doing nothing much with it. Now, DiGi has a 3G license, yet it can’t use it until it receive an approval from MCMC and KTAK.

According to the authorities, Time dotCom will have to write in seeking permission to transfer the use of its 3G spectrum to DiGi.

Last time, when DiGi failed to get the license from the Government, losing to loss making company, Time dotCom, and new player MiTV(now U Mobile), the MCMC and KTAK where questioned about it since DiGi was excellent in everything except it was not a Malaysian company although it is listed here. Now that DiGi could be considered a partly owned Malaysian company(aka Government company, indirectly via Khazanah Nasional for at least 10%) what excuse is MCMC and KTAK going to give now?

Time dotCom earned 27.5 million of new DiGi shares with a value of RM654 million for doing nothing!! It later purchased another 50.25 million shares of DiGi for a total of RM1.08 billion. At the end of the deal, Time dotCom had a 10 per cent stake in DiGi that is worth for 1.74 billion.

The rest of the shares(around 3%) were bought over by some 40 local institutional funds via a placement exercise by CIMB and JPMorgan for a total of RM564 million.

Based on the current market price, a 12% stake in DiGi is said to be worth for some RM2.1 billion.

As part of the deal, Time dotCom is required to transfer the 1965Mhz-1980Mhz, 2155Mhz-2170Mhz and 2010-2015Mhz or the IMT2000 3G spectrum to DiGi.

Although the deal allows DiGi to use the 3G license until 2018, the deal can still be renewed or DiGi could opt for something like WiMAX or other upcoming technologies to stay ahead its competitors.

With less than 1 million 3G users in the Malaysian market, DiGi still has room to grow. As U Mobile comes into the picture by early next year along with Mobile Number Portability(MNP), Malaysians will benefit the most from these.

According to DiGi, it will spend additional RM600mil to RM800mil over the next three years for 3G.

Stay tuned to Telco Talk Malaysia for updates on DiGi 3G.