Temasek’s ST Telemedia says financial instruments included in sale of ‘majority stake’ in U Mobile

KUALA LUMPUR - Singapore Technologies Telemedia (ST Telemedia), which is wholly owned by Singapore’s investment company Temasek, said financial instruments will form part of its sale of “a majority stake” in U Mobile to a company owned by tycoon Vincent Tan and the Malaysian king’s daughter.

When ST Telemedia 

announced the transaction last week,

it said subsidiary Straits Mobile was selling a “majority stake” in U Mobile and would own about 20 per cent of the company after the sale. The announcement drew scrutiny in local media because Malaysia has a 49 per cent cap on foreign ownership in telcos.

In a statement on Dec 11, ST Telemedia said it has provided funding to U Mobile from time to time in the form of “certain financial instruments” and they will form part of the sale.

ST Telemedia owns 49 per cent of U Mobile’s ordinary shares, consistent with U Mobile’s disclosures to the Companies Commission of Malaysia, it added.

Communications Minister Fahmi Fadzil told lawmakers on Nov 7 that U Mobile had not breached rules on foreign shareholdings. 

The stake sale agreement – which comes after U Mobile

won a major 5G contract

– values the Malaysian phone company at about RM7.5 billion (S$2.3 billion), according to people familiar with the matter.

ST Telemedia announced in 2010 that it had agreed to buy a 33 per cent stake in U Mobile. That cost RM625 million, Malaysian newspaper The Edge later reported, valuing U Mobile at about RM1.9 billion.

The current valuation based on the latest share sale agreement is almost four times that.

The buyer is Mawar Setia, a company that is 70 per cent owned by Mr Tan, the chairman of U Mobile. Princess Aminah Ibrahim of Johor, the only daughter of Sultan Ibrahim Iskandar, holds the remaining 30 per cent.

The purchaser negotiated for payment to be deferred for up to about a year, the people said.

ST Telemedia said in its Dec 4 statement that the stake sale is expected to be completed no later than the third quarter of 2025.

U Mobile’s selection to develop the network surprised analysts because it is a smaller player in Malaysia’s telecommunications industry and has a large foreign ownership. It also counts Malaysia’s monarch, Sultan Ibrahim, among its shareholders.

U Mobile hopes to go public in 2025, the people familiar with the matter said. The company said in a statement to Bloomberg News that it always has the intention to do an IPO and the timing depends on market conditions. 

U Mobile has said it will fund the 5G network rollout on its own, without any cost to Malaysian taxpayers. Earlier in 2024, Mr Tan said the company was rejecting a buyout offer from a bigger competitor, Maxis. 

Other local telecommunications companies such as CelcomDigi and Telekom Malaysia may be invited to buy stakes in U Mobile at some point, the people said. U Mobile said in its statement that it was not aware of any discussions.

Sultan Ibrahim, the ruler of Malaysia’s southernmost state of Johor, currently holds about 22 per cent of privately-held U Mobile, according to a filing. He has wide business interests, mainly through his shareholdings in various enterprises. 

Sultan Ibrahim became king in January under the country’s unique rotating monarchy where the heads of nine royal houses take turns to serve five-year terms. BLOOMBERG