Coffee Shop Talk Over The Weekend
Friend: Hey, I tell you something very exclusive ...
Me: Go on.
Friend: Unbelievable la...
Me: Go on or I will be going.
Friend: Maxis to be privatised la
Me: You got to be joking!
Friend: I know, some more its for 41bn ringgit
Me: If it was a stranger telling me this, I would whack him over the head already, but since its you, I'd give you the benefit of doubt. Very rarely do you find telcos being taken private because they need huge capital spending, need to tap capital market. Then they usually have a low NTA to share price as they have little real assets such as land or buildings. Their assets are in the infra they built and the subscribers they have.
Friend: Yea, its unbelievable but this source very choon-la.
Me: I guess they could take it private as Maxis is printing money, but they are also investing into Indonesia, India and Sri Lanka... which requires capital. Come to think of it, their free cash flow is sufficient to for that.
Friend: Think some more.
Me: If you are having 1-2 bn free cash, take the company private, then assemble all your foreign telco holdings and relist in Singapore, Maxis could come out in front. I mean, Usaha Tegas could come out in front. Actually since you mentioned 41bn ringgit, can see whether got some truth in it by doing some exercise.
(2 minutes later)
Me: Chee b.. , 41bn equals about RM16.20. Compared to closing RM13.00, looks real and believable. Did my computation, all covered warrants would gain 100% or near that if the news is true.
Friend: Ya la, no harm right, opening Monday buy a few hundred k Maxis-CD at 20 sen. If it turns out well, good la, if not, Maxis is not going to tank, right?
Me: Sounds OK, but I tell you, taking a telco private is rare indeed.
(Monday morning, Chee-b.. the stock suspended..)