Malaysia Telekom positive in raising Rs. 15 billion from rights issue

Hiran H. Senewiratne

INVESTMENT: Malaysia Telekom (MT), the holding company of Dialog Telekom (DT), is positive about investing in Sri Lanka and has already assured to participate in the country’s largest rights issue to raise Rs 15 billion, company sources said.

MT has an 87 per cent shareholding of Dialog and will make maximum use of this rights issue. They expect to purchase Rs 13 billion worth of shares from it, Dialog’s Head of Finance and Internet Base, Tivanka Ranagala, said.

The company expects many foreign shareholders to take this issue in the right spirit and will obviously aid to improve the foreign investor sentiment in the country, Ranagala said.

This is the single largest rights issue a company will undertake in the Sri Lanka market, which is expected to raise Rs 15 billion for a major capital infrastructure development programme, he said.

From this issue the company would be able to admix equity and debt ratios in a balanced manner in their future expansion programmes, without exhausting their cash flow, he said.

This rights issue will be open till May 21 and the company has adopted a formula of 1:10 which could be exercised from after May 22.The bulk of the money that is expected to be raised from the rights issue will be for the improvement of GSM and voice businesses. They will also use part of it for the improvement of their band width of the network and media business.

Under the rights issue shareholders would get the privilege of purchasing shares for less than the market prices. The reason for the company to going for a right issue is that Dialog shares are heavily traded in the Colombo Stock Market and most foreign buyers are interested in buying its shares in chunks.

Further, it is also determined to increase the liquidity in the market and to offer an option for large shareholders to pick up shares of the company to enlarge the portfolio, sources said.

The number of Dialog shares traded in the Colombo Stock Exchange (CSE) are not ample enough due to the low volume in the market and it prompted the company to go for the biggest right issue, sources said. The company has already informed the CSE and it is following certain procedures imposed by various institutes.

The company expects that many foreign investors and institutional buyers would take this rights issue and which is some sort of a reward for the existing shareholders to purchase Dialog shares less than for the market value.