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By William Patalon III
Money Morning/The Money Map Report
U.S. telecom giant AT&T Inc. (T), looking to expand its network into the fast-growing markets of the Middle East and Southeast Asia, may buy an unspecified stake in the wireless unit of Telekom Malaysia Berhad (PINK: MYTEF) to help do so.
The potential move by AT&T once again illustrates the so-called "Global Titans" investment strategy that Money Morning experts have chronicled time and again: By investing in U.S.-based companies that are aggressively pursuing growth in the fastest-growing overseas markets, U.S. investors can profit from that foreign-market growth while still enjoying the relative safety provided by the stricter regulatory protections afforded by the U.S. financial markets.
Potential Deal Drivers
According to reports by both Forbes.com and The Malaysian Reserve, AT&T wants to buy into TM International SDN BHD, the mobile unit of the state-run Telekom Malaysia. The Malaysian business daily newspaper and the noted U.S. business magazine said that TM International has been "keen" to break into the fast-growing Vietnam market, and has been hunting for a strategic partner that can help make that happen.
AT&T – the largest U.S. phone company – is a front-runner, thanks to its deep pockets, and an existing presence in Vietnam. Telekom Malaysia would neither confirm nor deny the report, which was based on unnamed sources and first appeared in the Malaysian daily on Wednesday.
"Telekom Malaysia wishes to inform that it does not comment on any news that is speculative in nature," the telecommunications firm said in a statement.
Saudi Arabia's second-largest wireless carrier, Etihad Etisalat Co. [better-known as Mobily], is expected to be another suitor for the mobile business of Telekom Malaysia; in December, Mobily agreed to purchase a stake in TM's Indonesian unit.
Mobily's main shareholder is Etisalat of the United Arab Emirates, which owns a 35% stake. The Dubai-based Etisalat has been a highly acquisitive company.
If AT&T pulls off the deal, it would give the U.S. telecommunications firm an entrée into some of Asia's best regional markets, including Sri Lanka, Bangladesh, Pakistan, Indonesia, Singapore, Thailand and Cambodia, Forbes.com reported.
The Take on Telekom Malaysia
It was back in September that Telekom Malaysia unveiled plans to spin off its wireless business into the separately listed TM International – a business unit valued at $8.4 billion. The plan included its domestic Celcom BHD unit, and operations in nine other countries. The deal – termed a "de-merger" – .
Several foreign wireless phone firms have reportedly approached the Malaysian parent firm since the de-merger deal was unveiled. Last November, Telekom Malaysia denied a report that Great Britain's Vodafone Group PLC (VOD) had agreed to buy a 25% stake in TM International.
As currently planned, TM International shares will trade on the Bursa Malaysia BHD (PINK: BSAMF) – the main board of the exchange in Kuala Lumpur – while the remaining businesses, including the fixed-line voice, data and broadband services, will remain listed as Telekom Malaysia.
Telekom Malaysia expects the spin-off to be finalized by the conclusion of the second quarter.
News and Related Story Links:
- Money Morning News:
Emirates Telecommunication Eyes Controlling Stake in Oman Telecommunications.
- Money Morning Investment Analysis:
Global Memory Chip Leader SanDisk the Latest Heavyweight to Pursue Vietnam's Promise.
- Money Morning Investment Analysis:
Vietnam Growing at Exceptional Rate… American Investors Looking for Good Entry Point.
- Forbes.com: .
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.