At the point of writing, Time dotCom (Tdc) only has about 3.5% equity interest in DiGi or about 27.5 million shares. It earlier had 7.1% shares in DiGi before it sold 3.6% of those shares(via Hakikat Pasti Sdn Bhd) through a private placement for $171.7 million or 604.95 million ringgit last week.
Since TdC held those shares in 2007, it received a net dividend income of RM68.27mil, or RM2.46 per share. For the three months ended June 30, TdC posted a net profit of RM24.4mil on revenue of RM67.9mil compared with RM71.2mil previously.
In my personal opinion, I think they are probably making a mistake here. Why would they give up shares that promises good dividend over their debt? DiGi’s dividend policy is to pay out at least 50% of its net profit, which is good enough. While TdC could pay off their debt (RM552.7 million in bank borrowings), they can never afford to buy back these shares, which might have more value after DiGi launch 3G for voice.
In January, TdC disposed some 2.9% shares in DiGi through a book-building exercise for RM463.5 million cash, also to pay debt (reducing their stake to 7.1%). Norway’s Telenor still owns 49% of DiGi.
Malaysia’s Time sells stake in DiGi for $171.7 mln
Malaysia’s Time dotCom (TCOM.KL: Quote, Profile, Research, Stock Buzz) said on Wednesday it has sold a 3.6 percent stake in mobile phone company DiGi.com (DSOM.KL: Quote, Profile, Research, Stock Buzz) for 604.95 million ringgit ($171.7 million).
Time dotCom, a fixed-line services provider, said its wholly owned Hakikat Pasti sold the shares at 21.80 ringgit a share via a private placement.
Time said its shareholding in DiGi has been reduced to 3.5 percent from 7.1 percent following the share sale.
Norway’s Telenor (TEL.OL: Quote, Profile, Research, Stock Buzz) owns 49 percent of DiGi.
DiGi shares ended 1.18 percent lower at 21.72 ringgit on Wednesday. Time shares were up 1.3 percent at 0.385 ringgit. ($1=3.523 Malaysian Ringgit)