KUALA LUMPUR (Oct 14): Telecommunications firm Reach Ten Holdings Bhd filed for an initial public offering (IPO) on the Main Market to raise funds for expansion and build more towers.

In the pipeline are plans to expand its fibre optic infrastructure in Kuching and set up three new networks in Miri, Sibu and Bintulu, according to its draft prospectus posted on the Securities Commission Malaysia's website. 

"The expansion of our existing fibre optic communication network infrastructure in Kuching will enable us to reach underserved or newly developed areas, attracting new customers and thereby increasing our market share," Reach Ten said. 

Reach Ten mainly provides satellite-based communication networks and services as well as fibre optic communication networks and services. The company also sells telecommunications infrastructure services and managed services.

Last year, the company made a net profit of RM51.32 million on revenue of RM182.26 million.

Assets include a teleport and more than 1,200 small satellite ground stations, as well as fibre optic duct infrastructure spanning more than 200km and 467km of fibre optic cable link communication networks in Sarawak. The company also has some assets in Sabah and Peninsular Malaysia.

The proposed IPO involves public issue of 200 million new shares, and an offer for sale of 100 million existing shares at a price to be determined later. All in all, the listing offers investors up to 30% stake in the Sarawak-based company.

Proceeds from the IPO have also been earmarked for the construction of 100 4G and 5G towers in Sarawak. “Our group has identified Miri, Sibu and Bintulu” as the cities have large urban populations and established commercial and manufacturing activities that will support demand, it noted.

Further, “we intend to enhance our satellite-based communication networks and service capability by acquiring additional mobile and fixed satellite terminals, hardware and software as well as enhancing the facilities in our teleport”, the company said.

The rest will be used to repay bank borrowings, fund working capital requirements, and to defray listing expenses.

Under the public issue, Reach Ten is allocating 50 million new shares to the Malaysian public and 25 million to eligible persons. The company is also setting aside 125 million new shares to select Bumiputera investors through private placement.

Meanwhile, any proceeds from the offer for sale of existing shares will accrue entirely to Chin Yu Lay, who is Reach Ten’s managing director, and executive directors Lu Pak Lim and Wong Kiing Ting, and Eddryson Effe Kuehjin Anak Bika, who is a director at three of the company's subsidiaries.

Post listing, Chin’s shareholding will be reduced to 17.66%, while Lu will hold 14.66% of Reach Ten and Wong will own 12.9%. Eddryson will own 15.04% of the company upon listing.

M&A Securities is the principal adviser, underwriter and placement agent for the IPO.