Telenor plans to cut equity in Malaysian carrier

Norway's Telenor will cut its equity in Malaysia's smallest mobile phone company DiGi to 49% by year-end but it will continue to be a major player in the company, officials, quoted by an Associated Press report said.

The Associated Press report quoted DiGi chairman Arve Johnson as saying that Telenor has no problem reducing its current 61% stake as there has been a lot of interest in its shares.

But the move doesn't mean Telenor is scaling down its interest, he said.

'Our intention is definitely to be in Malaysia,' he told reporters.

The Associated Press report also quoted DiGi CEO Morten Lundal as saying that DiGi is committed to build up its presence in Malaysia and has 'no plans to expand internationally.'

The report said Telenor bought DiGi shares in late 1999 and raised its stake to 61% in 2001. But it has to cut its equity to a maximum 49% by the year-end under local restrictions for foreign shareholding in DiGi.

Johnson said DiGi may, however, have problems meeting a 30% government target for ethnic Malay equity in the company, part of affirmative action efforts by the government to increase Malays' economic participation.

'It's been difficult to comply (with the 30% quota) .. it's almost impossible to get (Malay) investors with the capacity to take up the shares,' he was quoted as saying.

Malay equity in DiGi currently stands at 8.4%.

The 30% quota is aimed at increasing corporate wealth of Malays, who make up around 60% of Malaysia's 26 million people but lag economically behind minority Chinese who account for about a quarter of the population, the AFP report said.

It is unclear if there are any penalties if DiGi is unable to meet the 30% quota, the report further said.