This article first appeared in The Edge Malaysia Weekly on December 9, 2024 - December 15, 2024

In a surprise admission last Friday evening, Singapore’s ST Telemedia Pte Ltd told The Edge that it had “certain instruments which are convertible to ordinary shares” as it helped fund the growth of U Mobile Sdn Bhd, which was named the winner of Malaysia’s second 5G network (effectively spectrum) bid on Nov 1. This was in reply to questions seeking clarification on whether ST Telemedia had a “majority stake” in U Mobile, which typically means more than 50% equity interest.

While it is unlikely that ST Telemedia, a company ultimately controlled by the Singapore government via Temasek Holdings Ltd, breached Malaysian foreign shareholding rules — especially given that ST Telemedia plainly announced to the Singapore Exchange that it was selling a “majority stake” in U Mobile to Mawar Setia Sdn Bhd — one cannot help but wonder about the gap in information disclosure.

Latest data from the Companies Commission of Malaysia (SSM) shows ST Telemedia’s equity interest in U Mobile to be at 48.25%, below Malaysia’s 49% cap on foreign shareholding for telecommunications companies.

An analysis of shareholding of U Mobile obtained from the SSM by The Edge also shows that only 48.26% of U Mobile’s equity is controlled by non-citizens. Yet ST Telemedia tells The Edge that Mawar Setia will have a more than 51% stake after the paring of its stake to 20%.

While both ST Telemedia and U Mobile are not publicly listed, surely something as critical as the exact level of foreign shareholding should be more readily available, even if the 49% threshold would only be breached once “certain instruments” are converted into shares?

Is the Malaysian Communications and Multimedia Commission (MCMC) aware of the convertibles?

If this is a loophole in Malaysian rules, this might be an opportunity for policymakers to insist that the SSM summary filings also indicate the potential impact of instruments that are convertible into shares. Such critical information should not be allowed to be buried under a myriad of disclosures.

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