TELECOM / MALAYSIAN CARRIER WANTS OPERATOR ROLE

Telekom Malaysia keen to re-enter Thai mobile carrier market

GEOFF LONG

Kuala Lumpur, Malaysia _ Telekom Malaysia will look to expand its activities in Thailand this year, despite the uncertain political and business environment. According to Yusof Annuar Yaacob, CEO of TM International, the Malaysian carrier's overseas investment arm, it would ideally like to be involved in a mobile network operation here.

''We've been in Thailand for a long time so we've been through a number of cycles,'' he said of the political situation, adding ''we're fairly pragmatic about management control'' in response to a question from Database about stricter controls on foreign ownership and management.

Telekom Malaysia International (TMI) has a 24 percent share in Samart I-Mobile, which makes the I-Mobile brand mobile phone and also distributes other brands as well as develops mobile content. However its involvement in Thailand goes back to 1997, when it invested in mobile operator DPC. It was ''squeezed out'' of that investment shortly after Samart sold its share of DPC to AIS in 2001.

Yusof suggested that future 3G operations in Thailand might bring new opportunities to re-enter the carrier market here in partnership with an existing licence holder. ''In Thailand we have no investment in mobile networks and we think we should change that,'' Yusof said.

The focus on Thailand is part of plans to expand its regional footprint in 2007 with a particular focus on Indochina. Yusof said that Vietnam, Laos and Burma will also be investment targets, while it is currently expanding its fully-owned Cambodian operation, TM International Cambodia (Hello), with a further 400 base stations this year.

While Thailand is a potential investement target, Vietnam is the main focus for Telekom Malaysia in 2007, both because of its potential and also because of recent regulatory moves by the government. As Yusof noted, as part of Vietnam's recent World Trade Organisation (WTO) commitments the country will be looking to allow foreign partners to take an equity stake in local telcos. Investment bankers have already been hired by the government to plan for local IPOs, with foreign partners expected to be sought after this.

However, he also noted that nearly every major telco is looking to invest in Vietnam at the moment, while valuations are increasing and likely to be significant. On TM's side is the fact that it has already worked or partnered with each of the country's three mobile operators, and it is also looking to push the country's existing investments in Vietnam through the likes of Petronas, which is a major player in the palm oil sector there. ''Hopefully it's a 'Malaysian Inc' kind of thing,'' he said.

TM has had mixed success since it started investing overseas in the mid-90s. It has pulled out of or is in the process of pulling out of a number of investments on the African continent. TM Group CEO Abdul Wahid Omar explained that the challenges it had experienced in Africa had caused it to focus closer to home.

Even in Asia, not all of its investments have succeeded and it has in the past divested itself of business in Thailand, India and Cambodia _ even though it is now re-established in each of those markets.

According to the TM Group CEO, today its overseas investments are growing ''very nicely'' and he said about one-third of profits are now from international operations. Other Asian operations are in Indonesia, Singapore, Bangladesh, Sri Lanka and Pakistan.

Yusof said that TM would look at all investment opportunities that have high growth potential in Asia, but he also conceded that TM's size would mean it may need to partner with other investors, particularly as valuations in places like India and even Pakistan are ''going through the roof.''

''We're recognising the limitations of our size and there's also the human capital issue,'' he said, noting that human resources was a critical issue when investing in emerging markets. He said one of the reasons for its investment in Singapore mobile operator M1 in 2005 was access to skilled people and high-quality services and content.

Bangkok Post
Wednesday January 31, 2007