KUALA LUMPUR (NewsRise) -- Telekom Malaysia's stake in wireless broadband service provider Packet One Networks, or P1 has risen to 72.9% from 55.3% after its wholly-owned unit received nearly 11 million new shares of P1 upon early conversion of convertible medium-term notes and also some fresh stocks.
Mobikom, a unit of Telekom Malaysia, got nearly 10.7 million new P1 shares following conversion of medium-term notes that it had subscribed for 622. 55 million ringgit on 15 September, 2015. It also received 133,726 new P1 shares for net debt adjustment, Telekom Malaysia said in a stock exchange filing.
While the transaction lifted Telekom Malaysia's holding in P1, it lowered Green Packet Bhd's share in P1 to 18.9% from 31.1%, Greenpacket said in a separate stock exchange filing. The remainder 8.2% in P1 is held by South Korea's SK Telecom.
P1's convertible medium-term notes programme is spread over 16 years through which the company aims to raise 1.65 billion ringgit in three tranches to fund its capital expenditure. It has yet to issue notes worth 1 billion ringgit.
"Assuming SK Telecom and Green Packet do not take up their remaining P1 CMTN (convertible medium-term note) allocation of 25% and 15% respectively, we estimate that Telekom Malaysia's equity stake in P1 could eventually rise to 89%," said Alex Goh, an analyst at AmInvestment Bank.
In March 2014, Telekom Malaysia had invested 350 million ringgit in P1 to secure a 57% equity stake in the last-mile broadband provider as part of its broader strategy to bundle fixed-telephony, mobile and broadband services to its customers.
P1, which reported a loss of 186 million ringgit for the first nine months of 2015, is expected to boost its earnings in the first half of this year helped by new bundled product offerings and benefit from its pact with Axiata Group's Celcom to offer domestic roaming services to the company's second and third generation network, or 2G and 3G users.
Last month, Celcom signed multiple pacts with Telekom Malaysia and P1 to boost broadband service offerings by optimising costs and sharing resources for at least next five years.
Goh of AmInvestment kept his Hold rating on Telekom Malaysia and estimates 7.20 ringgit a fair value for its share. Telekom Malaysia shares ended unchanged at 6.59 ringgit a piece while the benchmark FTSE Bursa Malaysia index closed 0.01% lower.