SINGAPORE Technologies Telemedia Pte Ltd (ST Telemedia) is buying a third of U Mobile Sdn Bhd for RM1 billion, making it the second foreign partner for the mobile phone operator.

It will enter the competitive Malaysian mobile communications industry after Japan's NTT DoCoMo and South Korean partner KT Freetel collectively exited U Mobile last year.

U Mobile is said to be 96.1 per cent owned by U Television Sdn Bhd (UTV), which in turn is controlled by Tan Sri Vincent Tan Chee Yioun. The remaining 3.9 per cent in U Mobile is held by Multi-Purpose Holdings Bhd.

ST Telemedia's investment will cover its initial stake purchase and the subscription of a rights issue.
"It (rights issue) is substantial enough to beat the competition," Tan, U Mobile's chairman, told a news conference

Asked if ST Telemedia had been given an option to raise its stake in U Mobile, Tan said that nothing had been discussed yet.

"At the moment, it is 33 per cent; further down the road, nothing definitive. We are looking at investment criteria, but nothing more promised than this," he said.

ST Telemedia is owned by Singapore investment arm Temasek Holdings (Pte) Ltd.

ST Telemedia president and chief executive officer Lee Theng Kiat described its U Mobile acquisition as a "strategic decision" for the company to build a strong business in Asia.

ST Telemedia is the parent of Singapore's second largest telecommunications company, StarHub, a listed info-communications company.

Besides U Mobile, ST Telemedia in January completed the takeover of Eircom Holdings Ltd, the majority owner of indebted Irish telecoms group Eircom. Last week, it bought 10 per cent of VNPT Global, the offshore arm of Vietnam Post and Telecommunications Group.

U Mobile deputy chairman Rosman Ridzwan said it plans to accelerate its third-generation (3G) network rollout and expand 3G coverage by leveraging on ST Telemedia's extensive expertise and experience regionally.

"U Mobile will be able to form close partnerships with ST Telemedia's presence in many countries, resulting in many more attractive services to Malaysians," he said.

U Mobile reportedly has about 4 per cent of the country's mobile market.

It offers broadband services in the Klang Valley in addition to more than 1,000 3G sites covering locations in the Klang Valley, Ipoh, Seremban and Johor Baru.

"Plans are under way to grow the coverage aggressively in the next three years," Rosman said at the signing of the agreement between UTV and ST Telemedia.

The signing was witnessed by Information, Communications and Culture Minister Datuk Seri Rais Yatim.