So far if you read the news on DIGI, their investors have already agreed with the proposal to issue up to 27.5 mil new shares to be 'given' to TIMECOM for the 3G spectrum.

The only thing blocking it would be Telenor's stake in DIGI which has to be reduced to below 50% as required by Ministry of Energy, Water and Communication.

DIGI has until June 30 2008 to reduced it's stake.

TIMECOM's gain is about RM600 mil in shares. Not 10% of DIGI, but about 3.5% if the deal goes through. TIMECOM is politically linked, which is how it got the 3G spectrum license even though it doesn't have the capital to pull it through.

TIMECOM has been a loss making company for the past 5 years. Probably because it has nothing to offer and this 3G license is supposed to be their lifeline for new capital.

And it does not mean 3.5% share of DIGI, means TIMECOM share price also must be at least 3.5% of the counter it owns.

This post has been edited by skiddtrader: Mar 13 2008, 10:39 AM

I won't say what you think is wrong but I'm rather opinionated that there are other counters more 'safe' compared to TIMECOM. If you think TIMECOM has some future to it's earnings based on it's future ownership of DIGI shares and think the price will reflect it, then by all means go for it.

Normally counters who announce changes or business revamp without details are as good as having no idea how to go ahead with the revamp in the first place. Looking at it's past 5 year performance, not only is it making a loss, but it's revenue has been dropping as well meaning they are not improving their sales performance.

If 3.5% of DIGI shares equals 3.5% of DIGI profits then its a different matter, but I doubt they have such an agreement. If they did, it would stand to gain about RM37mil yearly based on DIGI's 2007 earnings. The share ownership just increases their assets holding but not their earning potential. Its the same as having plenty of factories but none are making any money.

In the end though, since it is a GLC it wouldn't just go bankrupt since it will most likely be bailed out again. Just my opinion of the matter. As long as you've done your research on the matter and are convinced they are about to turnaround, I would say go with your decision based on the facts.