(AFP) – Sep 28, 2007

KUALA LUMPUR (AFP) — Telekom Malaysia on Friday announced it will revamp its operations and split its mobile and fixed-line businesses into two separate entities listed on the local bourse.

Under the plan, TM International Sdn Bhd will take over Telekom's domestic mobile operators and non-Malaysian businesses. It will seek a listing on Bursa Malaysia.

Telekom, already listed on the exchange, will hold remaining businesses comprising fixed-line voice, data and broadband services and other telecommunication and non-telecommunication related businesses.

"The proposed demerger allows for improvement of organisational focus through more explicit management mandates and accountability for each respective business entities and tailored performance management," Telekom said in a statement.

In total, TM International Sdn Bhd will hold stakes in eight mobile service providers including Celcom in Malaysia, PT Excelcomindo Pratama in Indonesia, Sri Lanka's Dialog Telekom, Spice Communications in India and TM International Ltd in Bangladesh.

It will have a total mobile customer subscriber base of 31.8 million.

Telekom chief executive officer, Abdul Wahid Omar said final terms of the demerger will be announced in December and the exercise likely to be completed by June next year.

"The way we structure, at this moment, it will be a very simple distribution of shares in TM International to the shareholders of Telekom, that is on the basis that there will be no capital raising exercise," Wahid told reporters.

TM International Sdn Bhd's market value could potentially be worth about 27.75 billion ringgit (8.1 billion dollars), making it the eighth largest listed company on the local bourse, Wahid said.

Meanwhile, the local fixed-line and broadband operations could be worth about 12.3 billion ringgit, keeping a restructured Telekom within the top 20 largest listed companies on the exchange, he added.

The demerger will make TM International Sdn Bhd a compelling investment option and the group may sell shares to foreign strategic investors, Wahid said.

"We have been approached by quite a number of parties for (stakes in) TM International. But that is a decision that the board will have to debate on," he said.

Telekom also said it would work with the government to develop high-speed broadband infrastructure through a public-private partnership arrangement to achieve a broadband penetration of 50 percent in Malaysia by 2010.

Wahid said the company would provide two-thirds of the project's funding requirement of 15.2 billion ringgit over 10 years but it has yet to finalize funding options.

Telekom has about 95 percent market share in both the fixed-line and broadband business in Malaysia, with 4.4 million fixed-line subscribers and 1.1 million broadband subscribers at the end of June.

Shares of state-owned Telekom, Malaysia's largest telecommunications provider, were suspended from trading Thursday and will resume on Monday.

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