KUALA LUMPUR (Mar 27): Telekom Malaysia Bhd is buying a controlling 57% stake in Green Packet Bhd's unit Packet One Networks (M) Sdn Bhd (P1) for RM350 million cash. P1 is a high-speed Internet network infrastructure provider.

In a statement to Bursa Malaysia today, Telekom Malaysia said its wholly-owned subsidiary Mobikom Sdn Bhd was buying new shares in P1 under an investment agreement with Green Packet, South Korea-based SK Telecom Co Ltd, and P1.

"The proposed investment presents TM (Telekom Malaysia) with an avenue to improve its value proposition to customers, in line with TM’s vision of being an “information exchange” and Malaysia’s broadband champion by expanding into the mobile broadband space.

"The advent of LTE (Long Term Evolution) has come at a timely moment for TM. As LTE is a full Internet protocol network, it harmonises with other radio access technologies, making it the natural evolution choice for wireless network operators and is becoming a single unifying global standard incommunications. It therefore provides TM with a platform to implements its long-term technology strategy," TM said.

Green Packet and SK Telecom already own 55% and 35% respectively in P1, according to Telekom Malaysia's statement.

Upon completion of the share acquistion, Telekom Malaysia, Packet One and SK Telecom will hold 57%, 30% and 13% respectively in the expanded issued share base of P1.

P1's expanded issued share base follows a planned internal restructuring exercise which includes the conversion of P1's preference shares.

"The proceeds from the proposed share subscription are intended to be used by P1 for the settlement of certain debts and trade payables, for P1’s working capital purposes and other operational or capital expenditures.

"Upon completion of the proposed share subscription, TM will subscribe for an initial tranche of EBs (redeemable exchangeable secured bond) to be issued by Green Packet with a subscription value of up to RM120.0 million ,"TM said.

Trading of Telekom Malaysia and Green Packet shares has been suspended today in conjunction with the announcement.

Prior to the suspension, TM shares were last traded at RM6.20. Green Packet's latest closing price was 52 sen.