With a strategic partnership to jointly roll out 4G LTE services and products, Packet One Networks Sdn Bhd (P1) stands to become a contender in the Malaysian telecommunications sector soon.
Its tripartite partnership with Telekom Malaysia and SK Telecom, through the holding company Green Packet Berhad, will place the broadband provider a step closer to offer full broadband mobility which currently only local telcos provide.
Telekom Malaysia is the leading fixed broadband and integrated information and communications group in Malaysia. SK Telecom, on the other hand, is a South Korea-based international telco that pioneered the roll-out of LTE services.
“Telekom Malaysia used to be our sole competitor because we both provide fixed broadband. But, going forward, we along with Telekom Malaysia will support each other to compete with other telcos in the mobile broadband,” said an unnamed executive from P1.
In Malaysia, mobile broadband, or data service, is largely provided by telcos such as Maxis, DiGi.com, Celcom and U Mobile. P1 has always been a fixed broadband provider through its WiMAX wireless service.
In April this year, Telekom Malaysia had agreed to acquire a 57% equity stake in P1 for MYR350 million (approximately $107 million). The acquisition was to facilitate the exit of investment firm Kendall Court Capital Partners Ltd.
Kendall Court’s exit was, according to the executive, part of the tripartite partners’ decision to have complete control over P1.
“We have mulled over the deal structure (of this partnership) for a long time before we came to a conclusion that it’s better for us to buy out the shares from the minority shareholders (which is Kendall Court),” said the executive.
With that, Telekom Malaysia surfaced as the new holding company for P1 with a shareholding of 55.3%; Green Packet with 31.1% and SK Telecom 13.6%.
“Kendall was not so much a strategic partner for us, they were financing partners for us,” she said, “We have always been interested in both home and nomadic broadband so we thought that LTE service will take P1 to the next level and that requires a lot of capex.”
Kendall Court had backed P1’s early LTE development, leading a syndicated financing package worth $51 million for P1’s 4G network development in August 2012 through loan and warrants.
Now, P1’s LTE plan will support Telekom Malaysia’s roadmap to become the top local converged communications service provider.
According to Telekom Malaysia’s statement, the group saw the provision of mobility solutions to customers as a natural progression in line with industry trends.
“(This) essentially enables P1 to crossover to LTE and offer full mobility while providing us with an LTE-ready platform to accelerate and make more efficient wireless broadband products available to our customers,” the statement said.
The partners, together with P1, are currently developing a joint business plan and strategies based on the potential synergies. They are also conducting an operational review to optimize the operations for P1’s future business.
Latest numbers show that P1 has more than 2,000 network sites and over 500,000 subscribers. SK Telecom has 14 million LTE users and a total subscriber base of 27.4 million while Telekom Malaysia’s broadband customer base stood at 2.25 million.