Temasek firm’s deal values Malaysia 5G winner at RM7.5 billion

A TEMASEK Holdings firm’s stake sale agreement values U Mobile at about RM7.5 billion (S$2.3 billion), according to people familiar with the matter, after the Malaysian phone company won a major 5G contract.

Straits Mobile Investments, a subsidiary of Singapore Technologies Telemedia, which is wholly owned by Singapore state investor Temasek, is cutting its holdings after Prime Minister Anwar Ibrahim’s government picked U Mobile last month to build Malaysia’s second 5G network.

The purchaser, a company owned by the tycoon Vincent Tan and the Malaysian king’s daughter, negotiated for payment to be deferred for up to about a year, the people said, asking not to be identified because the information is private.

U Mobile’s selection to develop the network surprised analysts because it’s a smaller player in Malaysia’s telecommunications industry and has a large foreign ownership. It also counts Malaysia’s monarch, Sultan Ibrahim Iskandar of Johor, among its shareholders.

When ST Telemedia announced the transaction last week, it said Straits Mobile was selling a “majority stake” in ST Telemedia’s “subsidiary” U Mobile and would own about 20 per cent of the company after the sale. The announcement drew scrutiny in local media because Malaysia has a 49 per cent cap on foreign ownership in telcos.

In a statement on Dec 4, ST Telemedia said it has provided funding to U Mobile from time to time in the form of “certain financial instruments” and they will form part of the sale. ST Telemedia owns 49 per cent of ordinary shares, consistent with U Mobile’s disclosures to the Companies Commission of Malaysia, it added.

Communications Minister Fahmi Fadzil told lawmakers on Nov 7 that U Mobile had not breached rules on foreign shareholdings.

A representative for Temasek referred a request for comment to ST Telemedia. Spokespeople for ST Telemedia and the Malaysian Communications and Multimedia Commission declined to comment. Malaysia’s national palace and Tan did not respond to requests for comment.

U Mobile hopes to go public next year, the people familiar with the matter said. The company said in a statement to Bloomberg News that it always has the intention to do an IPO and the timing depends on market conditions.

ST Telemedia is selling the shares to Mawar Setia, a company that’s 70 per cent owned by Tan, the chairman of U Mobile, according to a filing. Princess Aminah Ibrahim of Johor, the only daughter of Sultan Ibrahim, holds the remaining 30 per cent. ST Telemedia said in its Dec 4 statement that the stake sale is expected to be completed no later than the third quarter of 2025.

U Mobile has said it will fund the 5G network rollout on its own, without any cost to Malaysian taxpayers. Earlier this year, Tan said the company was rejecting a buyout offer from a bigger competitor, Maxis.

Other local telecommunications companies such as CelcomDigi and Telekom Malaysia may be invited to buy stakes in U Mobile at some point, the people said. U Mobile said in its statement that it was not aware of any discussions.

ST Telemedia announced in 2010 that it had agreed to buy a 33 per cent stake in U Mobile. That cost RM625 million, Malaysian newspaper the Edge later reported, valuing U Mobile at about RM1.9 billion. The current valuation based on the latest share sale agreement is almost four times that.

Sultan Ibrahim, the ruler of Malaysia’s southernmost state of Johor, currently holds about 22 per cent of the privately held firm’s shares, according to a filing. He has wide business interests, mainly through his shareholdings in various enterprises.

Sultan Ibrahim became king in January under the country’s unique rotating monarchy where the heads of nine royal houses take turns to serve five-year terms. BLOOMBERG