By B.K. SIDHU and RISEN JAYASEELAN
starbiz@thestar.com.my
PETALING JAYA: At least three parties are said to be finalising their bids to buy over Jaring Communications Sdn Bhd after several failed attempts by the Government to sell the broadband company in the past.
One of the bidders is Puncak Semangat Sdn Bhd, a company linked to Tan Sri Syed Mokhtar AlBukhary. Another company called CMC Engineering Sdn Bhd is also in the running, while a third party is said to be one that is politically-linked.
CMC is a company more known for its bidding for engineering work for extensions to the light rail transit (LRT). The company was founded by Datuk Abdul Rahman Yusof, formerly general manager of Sapura's Uniphone business.
Puncak is slated as one of the nine telecom companies that will be receiving a block of the LTE 4G spectrum sometime this year, paving the way for Syed Mokhtar's entry into the digital communications space. An acquisition of Jaring by Puncak could be driven partly by an interest in the technical team in Jaring, whose staff strength numbers around 350.
“Puncak could expand Jaring's network, though it would mean pumping in money to expand the network. But if Puncak is serious about getting into the world of mobility and communications it has to start somewhere,'' said a source.
Sources said the three parties will submit their bids “in the next few weeks” to the Finance Ministry (MoF), which wholly-owns Jaring.
“It is not an open bid. Some parties are keen and want to submit their proposals. It is purely an industry initiative and they (the bidders) may have conducted a due diligence on Jaring,'' said a source.
This is not the first time there has been talk of the sale of Jaring as this company has been a takeover target many times over, beginning as far back as 2001 when Telekom Malaysia Bhd (TM) had first expressed an interest in buying Jaring.
That didn't materialise. Interestingly, a government budget speech a few years later had also indicated that Jaring would merge with TM but that too didn't materialise.
A few years later, Time dotCom Bhd had sought to acquire Jaring but its low offer price didn't interest the Government.
Subsequently in 2007/08, a tender exercise was called by MoF, using an advisory firm to handle the bids. Again, Time dotCom was one of the bidders, along with four other parties, including Packet One Networks Sdn Bhd.
No deal was struck and industry sources said that pricing and policy issues were the stumbling block.
Then the parties were said to have offered between RM15mil and RM27mil.
One source said that MoF was hoping to get a price of RM50mil for its 100% stake in Jaring. Jaring is barely profitable but has valuable government contracts that amount to more than RM50mil in revenue every year. These include providing fixed broadband services, back-end infrastructure solutions and data centres to government offices and universities. It also earns revenue from providing the same services to private sector clients although that business faces tough competition from TM and Time DotCom.
Jaring was the first company to provide Internet access to Malaysians. However, over the years, due to competition and lack of an extensive infrastructure, it has remained a niche player.
That Jaring is up for sale is in line with the Government's drive to sell down its stakes in companies, especially those in non-core areas of business. Last month, Prime Minister Datuk Seri Najib Tun Razak told Khazanah Nasional Bhd and Permodalan Nasional Bhd to divest their non-core holdings or stakes in companies to bumiputra companies via an open tender exercise. Thus far, ten companies have been identified for potential divestment. Jaring however, was not one of them.
It is not known why CMC would be keen in Jaring, but the purchase of Jaring by Puncak would make a lot of business sense to the latter. -thestar
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