DiGi offers RM700mil for TDC’s 3G spectrum Pact for proposed alliance expected to be signed today By B.K. SIDHU PETALING JAYA: DiGi.Com Bhd has proposed to pay nearly RM700mil in cash and shares to buy Time dotCom Bhd’s (TDC) 3G spectrum, a bandwidth which will turn this once smallish celco into an equally competitive player against its two rivals. Besides that, DiGi’s parent, Telenor ASA, has invited TDC to take part in the placement of DiGi shares to comply with the equity stake sell-down required of the Norwegian company by the Government. This would be carried out via a book-building process, TDC said in a statement to Bursa Malaysia. Telenor has to sell 12% in DiGi to bring its current shareholding of 61% to 49% by year-end. In a separate statement to Bursa, DiGi said it had extended an offer to TDC to enter into a heads of agreement, expected to be signed today, for a proposed alliance. The alliance, among other things, involves DiGi issuing 27.5 million shares, equivalent to 3.5% stake in the company, valued at RM654mil, or RM23.80 a share, to TDC for the transfer of the 1965Mhz-1980Mhz, 2155Mhz-2170Mhz and 2010-2015Mhz or the IMT2000 3G spectrum that is valid till 2018. DiGi would also issue a guarantee to the Malaysian Communications and Multimedia Commission in place of TDC unit TT dotCom’s guarantee of RM50mil. TT dotCom was assigned the 3G spectrum last November by the Government along with MiTV Corp Bhd – the two winners of the last two 3G spectrum. DiGi then failed to win the spectrum. Telekom Malaysia Bhd and Maxis Communications Bhd also have 3G spectrum. Under the proposed alliance, DiGi also wants to review its international and domestic fibre leases and contracts with TDC so that its usage of the services totals between RM10mil and RM15mil a year for a three-year period. DiGi would also explore ways to share telecommunications towers with TDC for the purpose of TDC’s broadband service in the 2.5G spectrum band or WiMAX. Both parties would explore joint development of fixed mobile solutions packages and training in the WiMAX area. DiGi said the proposed alliance aimed to allow both parties to collaborate for the purpose of consolidating their respective strengths in the telecoms market and to explore additional areas of cooperation with the objective of enhancing values of their respective businesses. There is no denying that without a 3G spectrum, DiGi’s long-term future is dim but that should change once the spectrum assignment is completed in due time. The parties are expected to enter into definitive agreements within 75 days. For now, analysts said both parties are winners in different ways. DiGi gets the access to a bandwidth, which is a rare commodity, and that will give it access to new markets and earnings. As for TDC, it will hopefully be able to move from its lethargic image to become a sizeable player in the broadband arena, riding on its fibre optic network, and tapping into the expertise and experience of DiGi and Telenor. But these announcements are not the end of the whole DiGi-TDC tie-up plan. Analysts are expecting more announcements in the coming days, and they have their own scenarios, one of which should see Khazanah Nasional Bhd – which has nearly 65% share in TDC – ending up with some stake in DiGi. [From DiGi offers RM700mil for TDC’s 3G spectrum]