Vodafone front-runner for Telekom Malaysia stake

LONDON: British telecom giant Vodafone, which owns a controlling stake in a leading Indian mobile firm, has emerged as a front-runner to acquire 25 per cent stake in the mobile arm of Telekom Malaysia Berhad for about three billion dollars, a report said here.

The state-run Telekom Malaysia is likely to announce this week the sale of a strategic stake in its mobile arm Telekom International and Vodafone is the front-runner for making this investment, The Sunday Times reported over the weekend.

Telekom Malaysia also owns a 49 per cent stake in India's regional mobile operator Spice Telecom. Vodafone acquired a controlling stake in Hutch-Essar, another mobile operator in India, now known as Vodafone-Essar, for about $11 billion earlier this year.

Telekom Malaysia already has a marketing pact with Vodafone under which it sells Blackberry devices with Vodafone branding.

Telekom International, which is being demerged from Telekom Malaysia's fixed-line domestic business, has considerable holdings in mobile businesses across nine Asian nations, including Indonesia, Cambodia and Bangladesh, and has a total subscriber base of 32 million, it noted.

"In anticipation of a sale, Telekom Malaysia has been courted by a range of foreign operators and private-equity firms. But sources say that Vodafone is the front-runner to make the investment, which could cost up to three billion dollars (1.4 billion pounds) for 25 per cent of the new company.

"If Vodafone pulls off a deal, it would be another major step in chief executive Arun Sarin's strategy of diversifying into fast-growing, underdeveloped markets...He has largely won over rebellious shareholders with well-judged acquisitions in Turkey and India that have offset sluggish growth in its European operations," the Sunday Times reported.

The report also said that Vodafone was on track to take control of its South African joint venture Vodacom before Christmas, even as the Malaysia deal might stretch to the next year. The analysts have valued the 50 per cent holding, not already owned by Vodafone in Vodacom, at $10 billion, it said.

Vodafone, which has the pre-emptive rights to buy out its South African partner Telkom, is looking to increase its stake to 75 per cent and the remainder could be a free float of shares in order to comply with the regulations, the Sunday Times said.