Short Position

Can Gobind act fast?

ABOUT six months ago, the wholesale access pricing for high-speed broadband (HSBB) and transmission was mandated, but it has yet to be effected.

The onus is on Telekom Malaysia Bhd
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™, as it is the access giver to the new pricing. However, it has not acted. Why it has been dragging its feet is something only the company knows. It has to sign agreements with players and offer new pricing, which is 30%-60% lower than current prices. With lower access pricing, it should translate to lower retail pricing for users and a profit hit in the short term for TM.

TM’s share price plunge in recent weeks highlights the risk ahead for the company. A new pricing mechanism would see profits being squeezed, and with KPIs and profit targets to meet, it is understandable why such a plan was not carried out.

While commercial gains are a factor for any company, it may perhaps be time to relook at its model. TM acts as the provider of infrastructure and access, but it also has a commercial business that competes with those using its infrastructure.

Even though TM may deny it gives preferential treatment to its own units, there is always an element of doubt, given its own wants and requirements over the rest of the access seekers such as Celcom Axiata Bhd, Digi.Com Bhd
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, Maxis Bhd
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, U Mobile and other players.

Several countries such as Australia and Singapore have clear infrastructure players so that they just focus on providing infrastructure. There is also little need to invest billions of ringgit to build a second network even though the evolution of the Internet requires efficient networks. What TM needs to do is be more efficient.

Tenaga Nasional Bhd
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also has an HSBB network that can be used to provide access, but this powerhouse also will need to set up a separate company to manage it efficiently and monetise it to create competition in terms of infrastructure access and pricing. It’s about time there is some competition on the access side so that the cost of broadband can be lower for the rakyat.

Communications and Multimedia Minister Gobind Singh Deo (pic) on his first day on the job did say he wanted to “double the speed of broadband at half the price”. Users are waiting for this, and unless TM moves faster, that promise might take way longer than 100 days to materialise.



Reversing the transformation

THE transformation of government-linked companies (GLCs) has been hailed a success.

Profit by the grouping has grown over the years and on Khazanah Nasional Bhd’s website, financial highlights show how the company has performed when it comes to a matrix of different numbers.

Khazanah highlighted just how its realisable asset value and net worth adjusted has grown over the years, driven by policies that aimed to transform the group of GLCs under its umbrella and raise their profits.

Those numbers were borne through a transformation process that aimed to free GLCs from focusing more on national service and instead look to make a good profit.

In that aspect, the transformation accentuated the problems of the private sector. They growled at how GLCs, with their size and market access, were crowding out smaller and non-government companies. But an interesting development might just take place if close attention is paid to what leaders of the new government are saying.

The Finance Minister in a recent interview said that GLCs must not look at purely making more profit. He suggested they should look at strategic investments instead of competing with the private sector.

Khazanah under Tun Dr Mahathir Mohamad when he was Prime Minister the first time around looked at that. Profit was not the main objective and GLCs did get involved in strategic investments that aimed to add depth and breadth to the economy but were not always profitable. Investments in agriculture and wafer fabrication plants didn’t make money, but were seen to be important in the greater scheme of things.

Some are expecting a return to the past policy, where GLCs will look at furthering national agendas in terms of starting new businesses that do not compete with the private sector but have a bigger national connotation.

Risk-taking investments are also important in trail-blazing industries in Malaysia, where there is a need for large capital to get those businesses off the ground. The difference between then and now is that GLCs, such as Khazanah, can afford to undertake such investments, given how its finances have been built up over the years. It’s about investing in Malaysia rather than overseas and not everything is about making a profit above all.



A quick fix

ANYTIME there is a battered-down stock that is supposedly below what its owners consider to be fair value or intrinsic value, you can bet that one of the cards pulled from its sleeve is privatisation.

Companies have resorted to share buybacks, and sessions with the media, analysts and fund managers to repair sentiment in a stock that has seen a severe selldown. But nothing works miracles like the privatisation card.

When talk surfaced that the controlling shareholder of Astro Malaysia Holdings
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Bhd was mulling a privatisation offer, it served to lift the beleaguered share price of the company. The pop in the share price helped what was announced later, which was the resignation of its long-serving CEO and a weaker set of financial results.

Astro’s shares have struggled to keep afloat of where they were listed at and have for long periods been submerged below that level.

The privatisation card has also been played a couple of times when AirAsia Bhd
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’s share price sank, and news of other companies contemplating making similar overtures to the market has also cropped up periodically in times of stress. At other times, companies have made ludicrous takeover offers that investors at one glance know will not materialise.

The thing with the market is that it will know the worth of a company’s share. Often, there will be irrational selldown of a company’s stock and it serves as a buying opportunity for investors.

The best signal a controlling shareholder can make is to buy the stock of the company when it has been battered. That will send a more tangible signal than talk of privatisation.
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