Telekom Malaysia Bhd (TM) has increased its shareholding in Webe Digital Sdn Bhd to 91.8% according to an announcement it posted on Bursa Malaysia last Friday.
Mobikom Sdn Bhd, a wholly-owned subsidiary of Telekom Malaysia Bhd (TM), now holds 91.8% of Webe’s share capital while SK Telecom Co Ltd will hold the remaining 8.2%.
Part of the announcement to Bursa Malaysia below:
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We wish to announce that Mobikom has entered into an agreement, with amongst others, Green Packet Berhad (GPB) in relation to the exchange of all the Exchangeable Medium Term Note (EMTN) issued by GPB and held by Mobikom for the following forms of securities held by Packet One Sdn Bhd: (i) ordinary shares of webe and (ii) Convertible Medium Term Notes (CMTN) issued by webe (Scheduled Exchange).
Upon completion of the Scheduled Exchange, TM (via Mobikom) and SK Telecom Co Ltd will hold 91.8% and 8.2% of webe’s share capital respectively.
The Scheduled Exchange will not have any material effect on the issued share capital as well as the substantial shareholders’ shareholdings of TM as it does not involve any issuance of shares or other securities of TM.
Full announcement [here]
Packet One Sdn Bhd is a wholly-owned subsidiary of Green Packet while webe digital sdn bhd was formerly known as Packet One Networks (Malaysia) Sdn Bhd (P1).
AmInvestment Bank Bhd analyst Alex Goh wrote in a note that TM’s stake in Webe will rise to 91.8% from 72.9% with the exchange of its RM187 million exchangeable medium term notes (EMTN) for Green Packet’s remaining 5.2 milllon Webe shares and RM37.46 million worth of Convertible Medium Term Notes (CMTN).
“While the rationale for this exercise is to consolidate the group’s (TM) ability to expand wireless broadband to underserved and rural areas while facilitating TM’s convergence strategy, we are mildly negative on this development given the near-term earnings dilution.
“This exercise translates to a one-off 7% cut to FY20F earnings and a 9% decrease in net assets largely due to deemed fair value loss of RM67 million. Webe continued to suffer from losses even after being absorbed into TM’s Unifi division over the past two years.
“Assuming an annual Webe loss of RM50 million together with the absence of 8% MTN coupon rate income, we estimate that the additional stake could reduce TM’s FY21F–FY22F earnings by a slight 2%. However, we understand that TM hopes to return to EBITDA positive by next year, which could partly mitigate the earnings impact. Additionally, Webe has accumulated losses of over RM300 million which can negate future tax liabilities,” reports The Edge Markets.
TM first invested in P1 back in October 2014 with a shareholding of 55.3%; and the remaining 44.7% was shared between Green Packet (31.1%) and SK Telecom (13.6%). The largest fixed broadband service provider in Malaysia then increased its stake in Packet One Networks (Malaysia) Sdn Bhd (P1) to 72.9% in 2016. Last year, it was reported that the TM-P1-Green Packet deal was being investigated by the Malaysian Anti-Corruption Commission (MACC) for “possible irregularities”.
Unifi Mobile, a 4G LTE mobile service operated by Webe Digital now has over 1 million mobile subscribers.