Issue 104/2014

P1 to Become a Significant 4G-LTE Operator in Malaysia

Prospects Substantially Bolstered by New Investment Agreement and Partnership between TM, Green Packet and SK Telecom.

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TM, Green Packet and SK Telecom Partner to Deliver Next-Gen Converged 4G-LTE Services:
Telekom Malaysia Berhad (“TM”), Green Packet Berhad (“Green Packet”) and SK Telecom had entered into an Investment Agreement and partnership to deliver next-generation 4G-LTE converged services via Packet One Networks (M) Sdn Bhd (“P1”).

P1 is Malaysia’s first and leading 4G WiMAX player, which owns 50MHz of valuable wireless spectrums in the 2300MHz and 2600MHz bands. Its 2300MHz band was used to deploy WiMAX and it currently has a network footprint of 2000 WiMAX sites which are mostly LTE-ready. As at December 2013, P1 has 543,000 subscribers.

The strategic partnership between TM, Green Packet and SK Telecom is expected to deliver high synergistic value for P1 to become a significant operator and competitive 4G-LTE player.

mediaAt the signing ceremony, from left: Suk Hwan Lee, President, Southeast Asia, SK Telecom, SK Telecom; Datuk Che Azemi Haron, Deputy Secretary General II, Ministry of Communications and Multimedia; Dato’ Sri Abdul Rahim Mohamad Radzi, Secretary General, Ministry of Communications and Multimedia; Suk Hwan Lee, President, Southeast Asia, SK Telecom; Tan Sri Zamzamzairani Mohd Isa, Group CEO, TM; YB Dato’ Sri Ahmad Shabery Cheek, Minister of Communications and Multimedia; Puan Chan Cheong, Group MD and CEO, Green Packet; Dato’ Sri Dr. Halim Shafie, Chairman, TM; Tan Sri Datuk Dr. Haji Omar Abdul Rahman, Chairman, Green Packet; A. Shukor S.A. Karim, Chairman, P1; and Dato’ Mohid Mohamed, Deputy Secretary General I, Ministry of Communications and Multimedia.

Partners’ Unique Strengths and Collaboration Synergies
TM, the incumbent and leading fixed-line and broadband player is expected to inject stability and anchor P1’s business growth. In 2010, TM launched the nation’s high speed fiber broadband network of which it invested RM8.9bn to deploy in a public-private partnership with the government which co-invested RM2.4bn. TM’s retail and wholesale fiber business is its key growth driver today contributing to its solid financial performance of RM10.4bn in 2013 full year revenue.

TM owns 10MHz of the 850Mhz spectrum band which P1 plans to use for its LTE roll-out in combination with its 2600MHz TD-LTE spectrum subject to regulatory approval. The use of low and high band spectrums will carve out an advantage for P1, allowing it to build a high quality network that is good for both coverage and capacity. Under the partnership framework, P1 will also be able to leverage TM’s large customer base of 3.5mn and its strong market presence.

SK Telecom, the largest South Korean mobile operator had been a strategic partner of P1 since 2010. Having deployed one of the world’s most advanced LTE networks , SK Telecom will lend valuable technical and strategic knowhow to support P1’s transition to LTE. It is also at the forefront in developing market-relevant and innovative mobile services and applications.

Green Packet, which founded P1, will continue to lend management expertise. As a global provider of 4G connectivity devices and solution, Green Packet played a critical role in P1’s early success by making WiMAX devices available, hence enabling P1 to be the first-to-market and to gain a leadership position in Malaysia’s WiMAX space. Green Packet plans to rapidly expand its LTE devices and solutions portfolio to support P1’s requirements in the 2300MHz, 2600MHz, and 850MHz bands.

P1 and Green Packet Gets Total Investment of RM2.21bn
The investment agreement establishes a partnership framework for the three parties to jointly invest into P1. TM will initially invest up to RM560mn, of which RM350mm will be invested into P1 via the subscription of ordinary shares and RM210mn will be invested into Green Packet via newly issued exchangeable bonds, which may be exchanged for Green Packet’s stake in P1 in the future. The strategic partners are expected to invest a further RM1.65bnn for P1’s LTE roll-out and operations over the next few years.

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Future Prospect of Green Packet

1. Gain from potential upside in a transformed P1

  • Enter LTE market with strong partners who will contribute unique and complementary strengths
  • Attractive assets including extensive spectrum portfolio and access to Telekom Malaysia fiber
  • RM1.65bn funding plan in place for rapid nationwide LTE network deployment
  • Leverage on Telekom Malaysia’s strong market presence and large subscriber base
2. RM210mm investment into Green Packet

  • Grow the existing software & devices and communications businesses of Green Packet
  • Reduce Green Packet’s existing liabilities and obligations
3. New collaboration opportunities with P1 on LTE

  • Develop new LTE devices and solutions that support 850MHz, 2300MHz and 2600MHz spectrum bands

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Forward Looking Statement

This presentation and the following discussion may contain forward looking statements by Green Packet Berhad that reflect management’s current expectation, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. These statements are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially from those discussed in the forward looking statements. Such statements are not and should not be construed as a representation as to the future performance or achievements of Green Packet Berhad and Green Packet Berhad assumes no obligation to update any such statements.

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