Saturday, March 08, 2014

GPACKET Is Coming Back?

Green Packet! As the name we are all familiar, a communications solutions provider and a wireless broadband operator. It has been in hot watch since last year around September of possible sell off its loss making Packet One (P1) business. The potential partner for M&A could be either from DIGI or TM as per speculated. But till today we yet to see any of its official statement been announce. Could the deal still ON? Below is the extract on the Jan/2014 coverage from TheStar paper.

PETALING JAYA: Packet One Networks (M) Sdn Bhd (P1) is inching closer to a merger and acquisition (M&A) deal with legal documents having been drafted by advisers, banking sources said. 

However, it isn’t clear who the exact party the M&A is with, but indications are that it is either DiGi.Com Bhd or Telekom Malaysia Bhd (TM), both of whom have been widely speculated in the past to be eyeing an M&A with P1. 

It had been earlier reported that DiGi.Com was the front-runner, but industry sources pointed out that TM was just an equally strong contender for a controlling stake in P1

P1 is a 57% unit of listed Green Packet Bhd and owns valuable wireless spectrum.

Sources also said that the TM-P1 deal was being speculated among business partners of TM, such as their distributors.

Industry observers noted that a “TM-P1” merged entity could become a significant player, considering the “spectrum power” and synergies this combined force would have.

TM has 10 megahertz (MHz) of telecommunications spectrum in the 850MHz band and another 8.5MHz of the 450MHz band, while P1 has 30MHz in the 2.3 gigahertz or GHz band and 20MHz of the 2.6GHz band.

“A combination of these low and high-frequency bands makes this a very powerful player, at least spectrum-wise, for building a strong 4G footprint in the country,” said one industry player.

TM has also communicated in the past its firm strategy of venturing into the data-centric 4G market, reportedly saying that it has plans to use its 850MHz spectrum as its long-term evolution (LTE) frequency band and aims to have 100,000 users on its wireless LTE network by 2014, and more than one million by 2017. LTE relates to the technology infrastructure to deliver 4G type of services in the future.

Hence, if TM does merge with P1, then it will gain a head start on its 4G strategy by being able to utilise P1’s spectrum.

It will also give TM the advantage of utilising P1’s base stations, which number around 2,000 units. P1 boasts a coverage of 50% of the Malaysian population.

Another notable aspect of P1 is its strategic partner in the form of South Korea’s SK Telecom (SKT), which has a 26% stake in P1.

SKT is an advanced player in the LTE space, with more than 10 million subscribers, possibly making it the LTE player with the highest subscriber base in Asia.

DiGi.Com remains the player in Malaysia with the least amount of telecommunications spectrum. This is why it has long been speculated by analysts that DiGi.Com is also motivated to acquire WiMAX players like P1, as such a deal would give it access to 50MHz of valuable spectrum.

It has been reported that DiGi.Com would need to acquire an additional 30MHz of the 900-band and 20MHz of the 2.6GHz band to be in the same “spectrum position” as Maxis Bhd and Celcom Axiata Bhd. The latter two had been quick to ink collaboration deals with other recipients of the valuable 2.6GHz wireless spectrum band.

P1 was valued at RM1.45bil in 2010 when SKT invested more than US$100mil into it for its 26% stake. At that time, P1’s subscriber base was less than half the number today, which stands at around 553,000.

Furthermore, that deal was inked before P1 received its 20MHz of the 2.6GHz LTE spectrum. P1 has a few other minority shareholders including Intel Capital.

Should I buy or hold the GPACKET shares? Does above news still valid? I have been told (insider info) that DIGI will be the winner! Reliable or not, I not sure. This is the interesting part as we are taking risk here to bet on news! Do you foresee the news just a false news that created to lure us to buy their lose making company shares? Only trader are interested to buy such shares - buy on rumour sell on news, does this still valid? Hmmm... From the technical stand point, the shares price still on consolidation and trading sideway on the downtrend trading band. There will be most likely a breakout above 0.51/0.52 going to happen. If this is a decisive move with great volumes than we can bank on more upside and this will be an explosive one! My target still unchanged at RM1 and RM1.50 respectively. Do be alert also any price penetrate below 0.42 will not be a good sign. If this happen, 0.30 will be the target and sure it will go on hibernate itself! Let see, time will reveal either is a true McLaren P1 racer! :-)

Good Luck and Happy Trading and Cheers!

No comments: