Temasek purchase stake in Telekom Malaysia

Temasek purchase stake in Telekom Malaysia

Associated Presse Kuala Lmupur, Malaysia

Malaysia has sold a 5 percent stake in its national telephone company to neighboring Singapore, signaling a warming of sometimes-frosty relations between the two countries.

Khazanah Nasional Bhd., the Malaysian government's main investment arm, announced late on Monday that it had sold 300 million shares, or about 9 percent, of Telekom Malaysia to foreign and local investors.

In Singapore, official Eva Ho of Temasek Holdings Pte., the Singapore government's investment arm, confirmed on Tuesday that the agency had taken a 5 percent stake for about 1.6 billion ringgit (US$420 million).

The entire sale, which reduced the Malaysian government's stake to 34 percent, was valued at 2.91 billion ringgit (US$765.8 million) and was believed to be the biggest placement in Malaysian history.

The Malaysian government has indicated that it is willing to cut its stake in state-owned companies, but the sale to Singapore shows that political sensitivities that once blocked such deals have eased since Prime Minister Abdullah Ahmad Badawi took office Oct. 31.

Abdullah has visited Singapore and emphasized friendly relations, turning the page on the 22-year rule of his predecessor, Mahathir Mohamad, which saw disputes over land and water rights bog down in distrust.

Just four years ago, Malaysia cited "security concerns" in stopping Singapore Telecommunications from buying a stake in Telekom Malaysia.

Temasek is also reportedly interested in buying a 30 percent stake in the small Alliance Bank Bhd., which is linked to Mahathir's one-time finance minister, Daim Zainuddin.

Khazanah has stockholdings in many of Malaysia's largest traded companies, but the government has been reducing its stake in some of them, helping fuel a stock market boom.

Separately, the Star newspaper reported that Khazanah will not buy the 15.8 percent stake held by Japan's Mitsubishi Corp. and Mitsubishi Motors in national carmaker Proton. The shares are now likely to be placed with institutional investors.

Managing Director Anwar Aji told the newspaper that Khazanah does not wish to increase its stake in Proton, which already stands at 32 percent.