GERAKAN REFORMASI RAKYAT |
TRI's
Loose Connections
A
Malaysian cellular phone player falters
By
ARJUNA RANAWANA Kuala Lumpur
Tajudin Ramli is a name that opens doors in Malaysian business and politics. The
tycoon's stable of companies includes Malaysia Airlines. His flagship Technology
Resources Industries (TRI) controls Celcom, once Southeast Asia's largest
cellphone operator. These days, however, the Tajudin name has lost some of its
magic. He wants to bail out of the airline, but may not get the government to
pay the price he wants for his stake. And after competition ravaged its market
share and profits, TRI is struggling with debt, with no official relief in
sight.
"TRI is considered a private-sector operation and will not get much
help," says a source close to the government. In the early 1990s its share
price shot up 190-fold over 25 months. But now the company owes $842 million,
has defaulted on $150 million in bond payments, and has seen its stock plummet.
To some analysts, the company's travails demonstrate what is in store for some
leading Malaysian companies if state support evaporates.
TRI has not received the kind of help that Time Engineering, another
well-connected group with telecom interests, has. A unit of the Renong Group
once owned by the dominant UMNO party, Time recently got new capital from the
Khazanah state-run investment fund. Creditors also agreed to defer bond payments
to next year. Time's fiber-optic cable network is cited as a key strategic
resource, which is why the company got special attention. Another reason: an
attractive offer from Singapore Telecom to inject capital and expertise without
demanding management control. Time declined SingTel's bid, but only when
Khazanah pledged to come in.
TRI doesn't have such compelling reasons to command Kuala Lumpur's help. Its
stock price is down on rumors that it may not get enough support for its plan to
restructure bonds falling due, including the $150 million in default. There is
also talk that its 21% partner, Deutsche Telecom, was pulling out. Industry
insiders say barely 40% of bondholders have accepted the restructuring proposal,
far below the 90% needed. Though TRI insists it will get enough nods, few
analysts expect a deal before mid-November.
Even with debt relief, TRI still needs to raise a lot of cash. "They would
have to sell Celcom or part of it," predicts an analyst at a foreign
brokerage house. TRI is also hoping an economic turnaround will boost earnings
and its market value, which is far below its debt load. Deutsche Telecom could
increase its stake, but insiders think the Germans won't throw more money in.
Could Time help TRI? Some analysts see possibilities in the coming awarding of
3G high-capacity cellular Internet franchises. "The government will dangle
the carrot of Third-Generation licensing to force consolidation," says Yeoh
Keat Seng of Malaysiastreet.com. Shamsul Shamsudin of Jardine Fleming in K.L.
expects the government to issue just three of the coveted licenses. One may be
offered as an incentive for Time and TRI to set up a joint-venture 3G operation.
In the end, connections may still save the day.