Redtone

News report that BJCorp and owner of U Mobile Sdn Bhd, Tan Sri Vincent Tan Chee Yioun, had lifted his stake in the company to 13.13%.

The same day, a strong partner line up that included financial backing from the Johor royal family for its bid against two others for the multi million DTTB infra tender.

Its largest shareholder is Indah Pusaka Sdn Bhd with a 32.79% stake as at Oct 9 2012. Datuk Wira Syed Ali Syed became chairman on Nov 2012 controls Indah Pusaka.

It was speculating that Tan could be mulling some sort of collaborating and even a backdoor listing for U Mobile via Redtone. Both Redtone and U Mobile have the 2.6GHz 4G long term evolution (LTE) spectrum allocations and active network sharing agreements with Maxis Bhd.

Redtone’s co founder and MD Datuk Wei however said that Tan has not indicated any intention of a strategic collaboration between U Mobile and Redtone or expressed desire to seek board representation at Redtone as the latter’s second largest shareholder/

Redtone is on track to launching its own mobile services riding on MAXIS’ network by Sept 2013.

Positive developments within the group would likely lead to a price to earnings band expansion.

The other shortlisted for the DTTB bids are i-Media Broadcasting Solutions Sdn Bhd and Puncak Semangat Sdn Bhd which is also a 4G LTE spectrum holder and is linked to businessmen Tan Sri Syed Mokhtar.

Bids are to be submitted by June 3 2013 and the results are expected to be announced by the MCMC in July 2013. DTTB rollout is expected to be start in 2014 with full nationwide coverage by end 2015 upon which the existing analogue TV broadcast is to be terminated.

To recap, Redtone had entered into an agreement to divest 21% stake in its subsidiary Redtone Network Sdn Bhd to Sultan Ibrahim Ismail Lbni Almarhum Sultan Mahmud Iskandar of Johor.

The Berjaya linked firm said consideration for the divestment of 315000 shares of rm1.00 each which represents 21% of RN’s paid up capital was rm315000.

Upon divestment, RN will be a 49% company of Redtone and Sultan Ibrahim will hold 51% stake in RN. Prior to divestment, RN was a 70% subsidiary of Redtone whilst the balance 30% was held by Sultan Ibrahim.

RN had been shortlisted by the MCMC as one of the three companies for the digital terrestrial broadcast (DTTB) infra contract in Nov 2012.

DTTB infra will provide the necessary platform for current free to air broadcasters to migrate from the current (May 2013) analogue system to a digital broadcasting method.

The three short listed companies are now (May 2013) required to submit more detailed business plan based on their original submission.

The first rollout of DTTB services to the public is expected be in 2014 with full nationwide coverage targeted for end 2015.

REDTONE notes that the DTTB business will involve continuous investment and full management commitment and D.Y.M.M. Sultan Ibrahim has agreed to invest in DTTB business should the contract be awarded to RN.

It is working with three big global in its DTTB bid. The bid is undertaken by RN.

RN is expected to submit a detailed business plan June 2013 in round two of the tender process.

After four straight years in the red, it made a net profit of rm2.15 million for the fiscal year end May 31 2012.

USP project and synergies arising from its network service agreement with MAXIS as near term catalysts for the stock.

Its future earnings are likely to depend on its ability to secure more USP projects and the degree of MAXIS’ 4G LTE services rollout which it had yet to impute in the forecast.

ICap: It became a target of a hostile takeover by European hedge fund Laxey Partners in 2012, could itself find itself fending off yet another unfriendly bod.

A large block of 3.58 million shares representing a 2.56% stake was traded in several off market deals on May 8 2013. It has found that another European fund, City London Investment Management, has been consistently buying up ICap shares to increase its stake.

The foreign fund manager has been increasing its stake and its nearing the crucial 10%, a lelve which gives it the power to call for an EGM. As of May 28 2013, it holds a 9.13% stake in ICap Biz.

In 2012, Laxey Partners had also built up its stake in ICap to 6.9% stake prior to AGM to put forward a request to have board representation. So will City London follow Laxey Partners’ original lead to ask for board representation?

The biggest fear is that the two European funds might team up as the combined shares held by both parties will be of a significant size.

Both funds had said that most shareholders would like to see the ICap trade closer to NAV.