Maxis Taken Private - Not So Good News for Minority Shareholders

Today Maxis, Malaysia's largest mobile telco, suspended its shares upon receiving notification that Usaha Tegas ("UT"), a company controlled by substantial Maxis shareholder Ananda Krishnan, will make a general offer for shares of the company that it does not already own.

In reality, Maxis had always operated on the basis that UT was the only shareholder. A long running inside joke at Maxis was that whilst everyone in Maxis Tower jumped when they got a phonecall from the 23rd floor (home to all the "C" officers of Maxis including the CEO), everyone on the 23rd floor in turn jumped when they got a phonecall from the 44th floor (home to Ananda Krishnan's lieutenants (read Ralph Marshall et al) and Ananda himself when he is not on his Dassault Falcon).

So in a way, corporate governance is better served by making explicit this master/servant relationship between Usaha Tegas and Maxis. Indeed, the PT Natrindo deal as well as Aircel was brought to the table by Ananda and UT. Maxis was never a master of its own (and minority shareholders') destiny.

So in the past 5 years as a listed company, Maxis could have done better for its minority shareholders. I have not yet had a chance yet to dig precise comparative share price and dividend statistics between Maxis and its 2 competitors, Digi and Telekom, but suffice to say that since Dec 2004, Digi's share price has increased about 300%, not to mention pleasing shareholders with 2 rounds of capital repayments. Maxis on the other hand etched only a gain in share price of 30-40% during the same period, with most of the gain in the last 6 months (after Hutchison Essar deal got folks a little excited about Maxis' Aircel subsidiary).

So yes, taking the company private under the control of UT would reflect the defacto situation today at Maxis. But whilst folks at Aseambankers and the Asian Wall Street Journal think its positive in that it gives flexibility for Ananda to inject fresh capital in the company, my take is a little less sanguine.

My hypothesis is that minority shareholders will miss out on the windfall that is likely to result from 3 factors.

First , the increasing robust valuation of Maxis's Indian subsidiary Aircel, which has not been fully factored to Maxis's stock price

Second, and conversely, the increase in Maxis stock price that would result from cutting loose PT Natrindo (and the capital outlays that it would require) .

Thirdly, a balance sheet approach that is more minority shareholder friendly e.g. returning cash to shareholders in the form of dividend and capital repayments, and introduce more debt to the company to finance this as well as future capex (as opposed to sitting on a cash hoard, which will now, of course, accrue to UT).

So fellow minority shareholders, think about these when deciding whether to sell your shares to UT (not that you have a choice when 47%+ of the vote is already in the hands of AK and UT). To be fair, Ananda has given you a return of about 200% over 5 years since IPO. But I think you deserve more.

Reminder

Just a reminder to myself to post up articles on WiMax business model and what I would do if I were one of the three WiMax players in Malaysia.

Windows Mobile® 5.0 Pocket PC Phone Edition

Sigh, I think Microsoft should just send all its mobile OS guys to Korea, Singapore, London, Beijing, or wherever, so long as they get out of Redmond.

I just bought a Treo 750V. Interestingly, this Palm runs a Windows Mobile 5.0 version which has been tweaked by Palm. I would never have bought a Windows Mobile device, but because Palm had a hand it, I decided to give it a try for the first time.

I have a litany of bug bears about Windows Mobile, but I will leave all of it out of this post bar one. The reason I am choosing this particular bug bear is that it just exemplifies the dangers of having product developers based in the US for the global mobile industry.

Someone calls me on the phone. He's a new caller (i.e. not on my current contacts list). After the call, Windows Mobile automatically prompts me to add his number to contacts. Great stuff so far.

I select Create New Contact. A new contact form is open. But here comes the rub. The caller's number is automatically assumed to be a work number (i.e. a fixed line non-mobile number).

Let me ask Microsoft this. I am carrying a mobile phone. Do they expect more callers to be on the mobile phone like me or are they more likely to be calling me from a fixed line phone?

I would have thought the answer to this is obvious. Well, its obvious if you're anywhere in Asia or Europe (and I dare say the US also), that most calls you receive (or make) on your mobile phones are to other mobile phones.

But no, Microsoft assumes it to be a fixed line work number. Which means that after entering the caller's name, one has to select the work telephone number field via the touchscreen, select the number which is in the wrong work number field, hold the entry down with your thumb (I'm too impatient to use the stylus), then select Cut, then scroll down another 5 fields past fields like Work Address, Work Fax, E-mail (did I forget to mention this is a mobile phone, albeit that of a PDA variety) to the Mobile Number field, hold down with thumb again and then finally select Paste.

All in all, 12 more steps than if they use mobile numbers as a default instead.

One could try ignore it and leave it as a work number, but there are severe repercussions. When trying to SMS, the contact list will only list contacts with mobile numbers. So if you did not change as per 16 steps above, you're hosed.

It's not just Microsoft, Treo 650 with Palm software that I had, had the same issue of defaulting to a work number too (which leads me to suspect its the US mobile environment). But in mitigation, with Palm, the steps to correct this oversight are just 2 (as one can actually change the work number field to mobile number field, as opposed to doing all that cutting and pasting stuff).

More bugbears on Pocket Mobile soon, but this is the biggy.