22nd March 2014
The ongoing speculation that Telekom Malaysia Bhd (TM) will be involved in a merger and acquisition (M&A) deal with Packet One Networks (M) Sdn Bhd (P1) gives rise to an interesting proposition - could a new wireless giant be created?
While details on the actual deal structure are scant for now, insiders point to one end result if it goes through: TM and P1 will collaborate to target the wireless broadband market and that TM, which has the much larger balance sheet, will eventually assume control over the new entity.
Spectrum wise, there is a fit between what the two companies would bring to the joint venture.
Spectrum basically refers to a range of radio frequencies. The bandwidth of a radio signal is the difference between the upper and lower frequencies of the signal. A spectrum belongs to a specific operator. Only that particular telco can operate in that space. Also to be noted is that lower frequency bands have a wider range of coverage but have smaller capacity in terms of the amount of data or voice signals that can be carried. On the flip side, higher frequency bands have capacities to carry 4G type services but have a lower range of coverage.
PI currently owns valuable swathes of spectrum in the 2.3GHz and 2.6GHz bands whereas TM has some spectrum in the much lower bands, namely 450MHz and 850MHz. (See table). Notes an analyst: “A collaboration could create a very powerful player given the combined low and high-frequency bands they have that can provide for superior coverage and capacity. Of course it is left to be seen if they can successfully derive the synergies”.
Another analyst says: “We view the move as positive to TM since this gives it the opportunity to complement its fixed broadband services with a wireless platform.”
