KUALA LUMPUR: U Mobile Sdn Bhd is set to sign a “strategic partnership” with Singapore Technologies Telemedia Pte Ltd (STT) on Monday, according to wire reports yesterday.

STT is the parent of StarHub, which is the second largest telco in Singapore and which also provides Internet and entertainment services over fixed, cable and mobile platforms.

It was reported early last month that a “term sheet” had been signed by the two parties for STT to take a substantial 33% stake in U Mobile, whose current major shareholder is Tan Sri Vincent Tan. Term sheet refers to a non-binding investment agreement that acts as a template to develop more detailed legal documents.

Sources said STT was likely to acquire the stake at just under US$200 million (RM664 million), which would be close to the amount Japan’s NTT DoCoMo and South Korea’s KT Freetel sold their combined 33% stake in loss-making U Mobile in September last year.

Singaporean parties had earlier tried to enter the Malaysian 3G market by bidding for a 30% stake in Time dotCom Bhd in 2001, but the bid was said to have been quashed for political reasons at that time.

U Mobile is one of four 3G-spectrum licence holders in the country and STT’s entry would see a Singaporean telco enter the Malaysian mobile market. Maxis Communications Bhd, Celcom Axiata Bhd and DiGi.Com Bhd are the other 3G licence holders.

The entry of STT signals that it is unlikely for Multi-Purpose Holdings Bhd (MPHB) to take a stake of 41.63% in U Mobile.

On the exit of NTT and KT Freetel, MPHB entered the picture by investing in a 3.9% stake in U Mobile and granting a put option to AmBank (M) Bhd for the 41.63% stake. AmBank required a guarantor to provide the financing for Tan’s buyout of NTT and KT Freetel. MPHB agreed to be the guarantor and therefore granted AmBank a put option on some 158 million U Mobile shares that were pledged to the bank for the funding.


This article appeared in The Edge Financial Daily, March 12, 2010.