Monday, 20 April 2015

TDC: ESOS and Digi's 3G licence

Article in The Star "TdC rewards CEO" about Time dotCom, some snippets (my comments in blue):

.... last week TdC granted him [Afzal Abdul Rahim, the CEO] a share option to subscribe to up to 17.22 million new TdC shares or 3% stake at an undisclosed price.

Afzal holds a 75% equity stake in Pulau Kapas Ventures Sdn Bhd, which owns the 36.24% stake in TdC, and Gan holds the remaining 25%.

“So if I am able to raise funds to exercise the option, that is an additional 3% over the next five years,’’ Afzal adds.

I am not in favour of share options and the like, I favour normal wages and a bonus based on realizing long term goals. That is more transparent and more fair, since shares can fluctuate wildly in the short term.

However, if share options are given out, then I would suggest to give it to management that has no stake yet in the company, to align their interest in the company. But Afzal has already a 75% stake in a company holding a 36% stake in Time dotCom, valued at RM 1.25 Billion. Surely someone owning such a large stake doesn't need anymore encouragement nor alignment?

“Had we [Time dotCom Bhd ] kept the 3G spectrum, we would have made a colossal mess of trying to roll it out. It was the right decision to transfer it to an operator [Digi] who knew what to do with it.

This is a rather stunning comment from somebody in the know and reflects badly on the controversial way the 3G licenses were given out in Malaysia in 2006. For some historical perspective, please read this article in The Star:

The government is not against foreigners investing in Malaysia, but "3G spectrum is a scare national resource,'' Lim said, according to the newspaper.

While admitting that the decision was controversial, Lim rejected criticism from analysts that the government had been unfair to DiGi.

"If I had given it to an unqualified company, then it is not fair,'' he was quoted as saying. The companies were evaluated based on their technical capability, financial management and business plans, he said. The Communications Ministry could not be reached Sunday to comment on the report. The two 3G licenses were awarded to fiber-optic operator TIME DotCom and unlisted pay-TV operator MiTV Corp. 

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