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.