Politics in telecoms: Posters oppose Maxis entry …faults Dialog

Telekom Malaysia ups investment in Dialog

The Dialog Chairman, with The Sunday Times FT on his lap, and the CEO

It may have been just coincidence that the top brass of Telekom Malaysia TM, Dialog Telekom’s parent, were in town even as posters appeared on Monday on city streets opposing Maxis’ planned buyout of a stake in SLT.

“That’s a bit silly … to believe,” responded a company source when told the posters were opposing Maxis interest in buying a 25 percent stake in Sri Lanka Telecom held by Japan-based NTT, because of alleged links between Maxis founder Ananda Krishnan and the Tamil Tigers.

Former aides of Krishnan, a powerful Malaysian businessman with Sri Lankan Tamil roots, have rejected the claim saying the reclusive business baron is a devout Buddhist with a son who is a Buddhist monk, and helps the Sri Lankan origin community in Kuala Lumpur.
That said, the TM team led by its chairman Tan Sri Dato Muhammad Radzi bin Haji Mansor, chairman and Yusof Annuar bin Yaacob, CEO of TM International backed by Dialog Tekekom CEO Dr Hans Wijayasuriya were firmly of the view that they are ‘more than ready’ to do battle with their Malaysian counterpart, Maxis, if the latter succeeds in the buyout. With Malaysia emerging as the biggest players in the telecommunications industry, the biggest growth sector in Sri Lanka, The Sunday Times FT last week headlined its evolving story on the SLT-Maxis drama as “Malaysian battle on Lankan turf.”

Maxis is the leader in mobile communications in Malaysia while TM, which last week reduced its stake to 80 percent in Dialog after selling off some stock, is a leader in telecommunications across the board. “We are here … and we intend to stay despite the ups and downs of the macro economy. We see a strong market and we’ll be defending the market although we are aware that there are new entrants coming in.

We are positive (about the competition),” noted Tan Sri Radzi in an exclusive interview with The Sunday Times FT at the Hilton Hotel executive lounge, occasionally raising a copy of the paper’s FT section which was on his lap and saying, “I must read this, fully.”
“Maxis is the biggest mobile player but we are the biggest in terms of total communication,” he asserted as Wijayasuriya, seated next to him, joined in, adding: “Dialog has excelled in a competitive environment.”

The TM directors on Monday morning (May 21) attended the Dialog AGM being held nearly five months after its 2006 financial year ended, and also announced that the Malaysian telecom giant was taking up its full rights worth Rs 13 billion in the Dialog rights issue.
Last month Dialog said it was launching a Rs 15.54 billion rights issues to fund the aggressive expansion plans of the company. The proposed rights issue provides ordinary shareholders of the company with an entitlement to one ordinary share for every ten ordinary shares held, at a price of Rs. 21 per share, inclusive of a premium of Rs.20 per share. The rights issue was accompanied by a Rated Cumulative Redeemable Preference Shares (RCRPS) issue aimed at raising up to Rs 5 billion.

The proceeds of the Rights Issue and Preference Share Issue totalling approximately Rs. 20.54 billion is to partially finance the Dialog Group’s capital expenditure planned for the next three years targeting accelerated expansion of network capacity and coverage and transformational investments in convergent technologies spanning the multiple businesses lines of the group.

The Maxis offer, being scrutinised by a government committee within the framework of a shareholders agreement, has been marred by allegations that the government ignored other bids and that a top government advisor is on the ‘take’ to push through the deal. Maxis officials could not be reached for comment. SLT and NTT officials have also stayed away from the media.

Dialog’s Wijayasuriya, responding to whether the AGM was held within the prescribed period, said the timing of the AGM/EGM took into account the stipulated notice period (to shareholders) required in the case of special resolutions to be taken up at the EGM. “The provisions in the Companies Act are to hold AGMs within 15 months of each other and we always strive to conform to this rule,” he said.

Questions flowed from The Sunday Times FT about the Maxis business threat to Dialog. But Wijayasuriya was upbeat. “From the day Dialog started we have had healthy respect for the competition. As far as we are concerned the market has not been lacking in competition,” he said.

Wijayasuriya, dubbed the whiz kid of mobile communications in Sri Lanka due to giant strides made by Dialog, said the company has flourished through all this competition. “The Dialog character is seen in the challenges we have faced. Along the way we have faced relaunches, changes in ownership (Mobitel, Celltel), the entry of Hutchinson, relaunch of Celltel and advent of GSM. We believe our strength lies in knowing our market, knowing our environment and delivering to our customers.”

A TM spokesperson said the company sold a 3.82 percent stake in Dialog at the Colombo bourse but said: “Going forward, TM would like to reiterate that we are not obligated to sell any more shares and will only do so if the opportunity arises.”
SLT in contempt?

SLT may be in contempt of court by violating an order from the Court of Appeal issued on July 25, 2005 which held that its increased tariffs were ‘unlawful’. Subsequently SLT went to the Supreme Court for special leave to appeal which was granted but no stay order was issued on the Appeal Court verdict.

However SLT continues to enforce these increased tariffs and customers who don’t pay these ‘illegal’ tariffs have found their phones disconnected. “This is virtual contempt of court,” said Peter Jayasekera, lawyer and head of the Consumer Association of Sri Lanka who has urged aggrieved SLT customers to bring such instances to the notice of the Association at 18, A Rodney Place, Colombo 8.