Celcom Axiata

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Telekom Malaysia Berhad (TMB), formerly known as Syarikat Telecom Malaysia, was created to take over all operating responsibilities of Jabatan Telekom Malaysia (JTM) which retained the regulatory responsibilities as part of the 1987 telecom reform in the country. TMB was awarded a 20-year license in the provision of all basic phone services (local, domestic long distance and international phone services) as well as other services such as mobile phone services, paging, trunking, among others. The company started to be divested in November 1990 when the government sold a 14% stake for US$870 million through an initial public offering. In a second public offering in 1996, a 7.5% stake in TMB was sold for US$417 in the local market. Most of the proceeds were used to prepay company loans from the government and finance capital expenditure programs. In March 2004, the government sold an additional 300 million TMB shares representing a 9% stake for RM2.91 billion (US$765.8 million). Temasek Holdings, Singapore's government investment arm, purchased a 5% stake in that offering for RM1.6 billion (US$420 million). The government's move was seen as aimed at trimming government debt and also making more shares in large listed state-controlled companies available to investors. As of end 2005, Telecom Malaysia's four biggest shareholders were still state-owned companies: Khazanah Nasional Bhd. (the investment arm of the Ministry of Finance) (35.1%) the Employees Provident Fund Board (15.47%), Bank Negara Malaysia (the central bank) (7.42%) and Permodalan Nasional Berhad (5.17%). Foreigners held 18% of the company while private Malaysian interests held the remaining shares not owned by the government. The company began its mobile services in 1995, with a total investment of US$137 million. Telecom Malaysia committed to spend over US$200 million from 1996-1999 to upgrade and expand its mobile communications network system. This included the acquisition of other private mobile communications providers such as Mobikom and Emartel (known as RTM Cellular or TM touch). TMB operated its cellular phone services with ATUR 450 and NMT 450 networks under the TM Cellular brand name. As of January 2003, the Group held a 31.25% equity interest in Celcom Malaysia Berhad (Celcom). The Group acquired additional equity interest of 16.68% in Celcom on April 17, 2003. As a result, Celcom became a subsidiary of the TMB Group with a total shareholding of 47.93%. TMB's 100% interest in TM Cellular Sdn. Bhd. (TM Cellular) became held via Celcom by way of share swap for a total consideration of RM1,684.0 million which was satisfied by the issuance of 635,471,698 new Celcom ordinary shares of RM1.00 each at RM2.65 per share to Telekom Enterprise Sdn. Bhd. (TESB), a wholly owned subsidiary of the Company. The TMB Group subsequently acquired the remaining 52.07% equity interest in Celcom, making it a wholly owned subsidiary. At the time of the acquisition, Celcom was the second largest provider of mobile services in Malaysia behind Maxis. The merger with TM Cellular created the nation's largest mobile company with about four million subscribers or about 40% market share. Telekom Malaysia had planned to relist Celcom in an IPO sometime in 2004 or 2005, but as of end 2005, this had not taken place. The Government awarded two 3G spectrums to TMB and rival Maxis in March of 2003. TMB paid RM50 million (US$13.2 million) for the license. Full launch of the 3G technology occured in 2004. Although the state-owned Telekom Malaysia no longer had a monopoly over the provision of telecommunications services by end 2003, it remained the dominant provider as it continued to benefit from government protection and restrictions on competition. This was especially true in the fixed-line market. TMB faced most of its competition from new entrants in the cellular sector including Maxis and DiGi. By end 2005, TMB had about 5 million fixed lines in service and 6.8 million mobile customers under Celcom throughout Malaysia. On September 28, 2007, Telekom Malaysia announced a revamp of its mobile communication units which include Celcom. The revamp plan was to group Celcom under TM International, which houses other TM regional mobile units and define it as a separate business entity. The restructuring exercise was completed by Q1 2008 and the new business unit listed on the Kuala Lumpur Stock Exchange by Q2 2008. TM International has been renamed as AXIATA as part of a telecom consortium in south east Asia. Its Stock Exchange code is AXIATA.