Digi deal

The much-talked-about sell down by parent company Telenor ASA of its stake in DiGi could be a win-win deal just biding its time. The attention on this development is also on the rise with the latest comment from the Minister of Energy, Water and Communications regarding the non-extension of Telenor's compliance with the foreign ownership regulations. In the face of corrections in the KLCI, market conditions are ideal for encouraging investment and for companies to take profit. It seems like the right time for DiGi to open its doors to a new party to enter into an equity partnership. "Even if any exchange is not effected at current prices, the final agreed price would still fetch a handsome profit," concurred MIDF research analyst Sharath Somasundaram. "And based on current sentiment, there is good reason to feel that the right buyer can afford the valuations to offer a strong price in return of owning a slice of a blue-chip company.Furthermore, the slew of de-listings have given rise to huge amounts of funds floating among cash-rich investors looking for the just the right target to inject their money into. As the only public listed telco in Malaysia, the odds are in DiGi's favour. Even if Telenor does not favour a direct sale of shares, other options are available such as a well-timed, new shares issue or a split. Selling a whole 11% - 12% slice to one investor could mean the new party wanting to 'lend' its creative direction into management, which may disrupt current smooth business flow," explained Sharath. Yet the stake can be pared into smaller pieces and made available to many minority investors.