Digi.com Drops as Telenor Said to Review Options for Stake

  • Carrier may explore joint venture or sale of Digi holding
  • Norwegian firm’s 49% stake in Digi valued at $4.5 billion

Digi.com Bhd. dropped to the lowest level in eight weeks after people familiar with the matter said Telenor ASA is reviewing options for its stake in the Malaysian mobile-phone operator facing fierce domestic competition. 

Digi.com fell 1.6 percent to 4.88 ringgit, the lowest intraday level since July 25, at 10:53 a.m. in Kuala Lumpur. The benchmark FTSE Bursa Malaysia KLCI Index rose 0.1 percent. Telenor may explore a joint venture with Asian carriers or a sale of its stake if it doesn’t find the right partner, the people said, asking not to be identified because the deliberations are private. 

The review is at an early stage, and no final decision has been made, according to the people. Telenor’s 49 percent holding in Digi has a market value of about $4.5 billion.

Telenor’s operations in Malaysia have been subject to fierce competition even as the Norwegian carrier looks at expanding operations in Asia. Digi’s revenues as measured in the local currency declined 4 percent in the second quarter due to reduced phone sales, and customers’ average monthly bills fell about 6 percent because of heavy competition for subscribers, Telenor said in July.

“Compared to regional peers, Digi is still trading at a discount,” Kaladher Govindan, head of research at TA Securities Holdings Bhd. in Kuala Lumpur, said by phone Monday. “Telenor is unlikely to sell at current levels and will probably wait for a better price as this is a controlling stake.”

A representative for Telenor declined to comment.

Proceeds from the company’s sale of its stake in Russia’s VimpelCom Ltd. may help with plans to expand in Asian markets, such as Vietnam and Indonesia. Oslo-based Telenor said Monday it had begun selling American depository shares in VimpelCom valued at about $556 million.

Digi is the third-largest mobile operator in Malaysia, with about 12.3 million subscribers, according to the company’s website. Telenor reduced its stake in Digi in 2008 to 49 percent from 61 percent.

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