Time dotCom to Raise $496 Mln; Biggest IPO in 5 Years (Update5)
By David Yong and Jane Lee
Kuala Lumpur, Jan. 22 (Bloomberg) -- Time dotCom Bhd., manager of Malaysia's biggest fiber-optic network, aims to sell 1.88 billion ringgit ($496 million) of shares, the nation's largest stock sale in five years, to expand its service area to 90 percent of the population.
The initial share offering, which will also raise money for parent Time Engineering Bhd., is the first of many planned by cash- strapped Malaysian business groups seeking to reduce debt.
Increased competition in telecommunications and declines in the shares of rivals such as DiGi.Com Bhd. and companies that sold stock late last year may make it harder to lure investors.
``We can afford to wait to buy the shares,'' said Philip Tan, a fund manager at MBf Unit Trust Management Sdn. ``It's back to whether the management can pull together to make Time dotCom'' a success as competition in the industry intensifies.
Time Engineering shares rose as much as 23 sen, or 9.8 percent, to 2.59 ringgit, the highest since Dec. 14. Renong Bhd., which owns 47 percent of the company, gained as much as 8 sen, or 6.8 percent, to 1.25 ringgit. United Engineers (Malaysia) Bhd., which is planning to buy Time Engineering shares from Renong, added as much as 24 sen, or 7.4 percent, to 3.48 ringgit.
Time dotCom and Time Engineering said they plan to sell a total of about 572 million shares at 3.30 ringgit each.
``That price is a bit high,'' said Tjandra Kartika, an analyst at G.K. Goh Research Pte. in Singapore. ``We don't expect the share price to perform well after the listing.''
Since the price was set last year, shares of DiGi.Com and Technology Resources Industries Bhd. both fell.
Malaysian companies, including construction group United Engineers and diversified Berjaya Group Bhd., postponed share sales last year. Four out of eight Malaysian companies that sold shares in the fourth quarter of 2000 have traded below their issue prices.
IPO Plans
Time dotCom plans to sell 174.7 million new shares and raise 576.5 million ringgit to help it expand its network and fight for market share, it said in an offer document published today.
Time Engineering will offer to sell 397 million shares from its stake to raise 1.3 billion ringgit and help pare about one- quarter of its 5 billion ringgit debt.
State-owned Petronas Gas Bhd. sold 450 million shares at 5.30 ringgit each to raise 2.3 billion ringgit in September 1995, in Malaysia's biggest initial share sale.
Time dotCom said the share sale will close on Feb. 8. Its share allocation and eventual listing on the Kuala Lumpur Stock Exchange will likely occur in March.
The offer price values Time dotCom -- the smallest of six mobile phone operators in the country -- at 8.35 billion ringgit, based on its 2.55 billion shares after the sale, which will make it the second-biggest Malaysian phone company.
Telekom Malaysia Bhd. has a market value of 36.1 billion ringgit, while Technology Resources Industries Bhd., which runs the biggest cellular network, is valued at 2 billion ringgit.
Time dotCom said it plans to spend 498 million ringgit of the share proceeds to expand cellular coverage by increasing its radio base stations to 1,000 sites from 700 by the end of the year.
The company said it has a 1.3 percent share of the country's 4.9 million fixed-line subscribers, making it a distant second in a market dominated by Telekom Malaysia. In the cellular market, its 588,000 subscribers gives it a 16 percent share of the country's 3.6 million users, it said.
``Due to the convenience of cellular phones, and its increasing versatility with technological advances, the cellular subscriber base is expected to grow faster than fixed lines,'' Time dotCom said in its prospectus.
Profit Target
Time dotCom expects its profit to more than double to 376.4 million ringgit, or 14.9 sen a share, in the year to Dec. 31, 2002, from 150.6 million ringgit, or 6 sen a share, this year, according to the sale documents. It forecast a 2.6 million ringgit loss for last year.
The company expects profit will grow at an annual compound rate of 40 percent to 1.14 billion ringgit profit, or 45.1 sen a share in 2007. It forecasts sales to grow at half that pace during the period to 5.46 billion ringgit from 1.76 billion ringgit this year.
Still, Time dotCom won't be as immediately profitable as rivals such as Telekom Malaysia, Pacific Century Cyber Works Ltd. of Hong Kong or Singapore Telecommunications Ltd., analysts said. Neither are the company's shares cheap.
Time dotCom's expected 2001 profit of 6 sen a share means it is selling at 55 times its price-to-earnings ratio. That's more than 1.5 times as expensive as Telekom Malaysia, twice as rich as PCCW and 2.5 times higher than Singtel, according to estimates compiled by IBES International.
Time dotCom's sale is being managed by Commerce International Merchant Bankers Bhd, a unit of Commerce Asset-Holding Bhd., owner of Malaysia's second largest banking group.
Other underwriters are Perwira Affin Merchant Bankers Bhd., Affin-UOB Securities Sdn., Amanah Merchant Bank Bhd., CIMB Securities Sdn., K&N Kenanga Bhd., Arab Malaysian Merchant Bank Bhd., HLG Securities Sdn., RHB Sakura Merchant Bankers Bhd. and Utama Merchant Bank Bhd.
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