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 Jul 3 2009 | 09:14
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Telekom Malaysia wins $3.4b broadband deal

Updated:2008/9/4 11:47

Tags:broadband

Shares of state-owned Telekom Malaysia were lower Wednesday despite news that it had won an 11.31 billion ringgit ($3.4 billion) high-speed broadband contract from the government.

In a statement, state-owned Telekom said it had received a letter of award to establish the broadband infrastructure over a period of 10 years.

The government will fund 2.4 billion ringgit ($727 million), or 21% of the project cost, with the rest to be footed by Telekom, it said, adding that further details will be announced later. Telekom shares fell 1.7% to 3.50 ringgit ($1.1) in trading.

Analysts said this could due to concerns that the high capital expenditure may hurt Telekom's dividend payout but they foresee little risk.

Aseambankers Research described the national project as a "safe bet" for Telekom.

"Unless operational indicators take a drastic turn for the worse, Telekom should generate sufficient free cash flows in 2008-2010" to pay dividend forecast of around 1 billion ringgit ($303 million) a year to shareholders, it said in a report.

About a fifth of Malaysia's 27 million people have access to personal computers. Broadband penetration is still low at around 5% of the population, but the government hopes to raise it to about 15% by 2010.

 

Source:AP News

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