MACC investigates possible irregularities in P1 acquisition

Under the 2014 deal, TM acquired a 57% stake in the wireless broadband service provider for RM350m

by AZREEN HANI / pic by ARIF KARTONO

THE Malaysian Anti-Corruption Commission (MACC) is investigating whether there are irregularities in Telekom Malaysia Bhd’s (TM) 2014 acquisition of wireless services company Packet One Networks (M) Sdn Bhd (P1).

Under the deal, the government-linked company acquired a 57% stake in the wireless broadband service provider for RM350 million with a further RM210 million capital injection via newly issued redeemable bonds.

Presently, TM owns 72.9% of the wireless operator — the brand name of which had undergone numerous changes from P1, to “webe”, and now to “unifi”.

But the 2014 acquisition of the capital-intensive business has tailed TM’s profits. The telecommunications operator posted its first quarterly loss in 10 years during the third quarter of last year (3Q18), with impairment provisions ballooning to RM934 million including for assets related P1.

Three sources confirmed with The Malaysian Reserve (TMR) that the visit by MACC officers to the telecommunications company on June 13 this year was related to P1 acquisition.

TM had confirmed the visit by MACC officers to the company’s headquarters, stressing in an email reply to TMR that the visit was to “seek certain information”.

One source told TMR that a few individuals are being probed over the half-billion ringgit deal for possible irregularities. But nobody has been charged for any wrongdoing. It is believed that the report to the MACC was recommended by the company’s board.

TM in an emailed statement said: “We will continue extending our cooperation to the MACC as needed.”

One of the sources said the inquiry into the P1 acquisition had delayed the appointment of a new CEO.

The company had been without a permanent head for about a year after the resignation of MD/group CEO Datuk Seri Mohammed Shazalli Ramly. Some parties previously claimed that interference from Putrajaya had delayed the appointment of the CEO.

Last month, the company announced the appointment of Datuk Noor Kamarul Anuar Nuruddin as its new MD, group CEO and ED, ending months of speculations on who would lead the telecommunications company. Imri Mokhtar was the acting CEO before Noor Kamarul’s appointment and will resume his role as the COO of the group.

Rosli Man was appointed as chairman, effective Dec 3, 2018. He replaced Tan Sri Sulaiman Mahbob who resigned at the end of November 2018. Rosli, a seasoned practitioner in the sector, is seen as capable of steering the company out of its current rut.

Khazanah Nasional Bhd is a substantial shareholder in the company.

The lack of progress and improvement for P1 continues to raise alarm — especially regarding the technology rollout of 4G when the industry is moving towards 5G, said another source.

Issues at TM saw the firm shedding over RM14 billion in market value after its share price dropped from a high of around RM5 in May to a 52-week low of RM2.11. It was also removed from the main constituent of the benchmark Bursa Malaysia.

However, its share price has recovered — closing last Friday’s trading at RM4 and valuing the company at RM15.03 billion.

Its net profit for the first three months of this year rose to RM308.28 million from RM157.15 million recorded a year ago, boosting the company’s prospects.

But the company continues to feel the pressure to find a solution and resolve the issues faced by Streamyx customers.

According to figures, there are 1.27 million Streamyx customers as at the end of last year and the company had upgraded 226,000 of these customers in areas covered by its fibre network.

The government wants the company to find a solution to resolve the problem faced by these customers. But the capital expenditure to move these customers to a faster network will cost a hefty sum.

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