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Telekom Malaysia broadband deal delayed: Source

india Updated: Aug 09, 2008 15:00 IST
Soo Ai Peng
Soo Ai Peng
Reuters
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The signing of an 11.3 billion ringgit ($3.43 billion) high-speed broadband agreement between the Malaysian government and dominant fixed-line provider Telekom Malaysia has been postponed, a source familiar with the terms of the deal said on Saturday.

As growth of its fixed-line business stagnates, Telekom Malaysia is looking to its broadband operations to drive future growth after its mobile-phone assets were spun off in April.

The two parties were originally scheduled to ink the deal on Aug. 14. This would be the second postponement in two months after the cancellation of a July 1 signing.

"The cabinet committee chaired by the deputy prime minister wants to look at other options after a company came out with a proposal which they said would be cheaper," the source, who asked not to be identified, told Reuters.

Telekom Malaysia officials were not immediately available for comment.

The high-powered committee, which oversees the development of the country's broadband network, is expected to meet on Aug. 20 to discuss a proposal brought up by private firm High Speed Broadband Technology Sdn Bhd (HSBT), the source said.

Earlier media reports have said HSBT, which is controlled by the state government of Malaysia's east coast state of Pahang, had proposed to develop the broadband network at 18 billion ringgit over 10 years without government funding.

The little-known company also said it would bring in Middle Eastern investors for the project.

State-run Telekom Malaysia's proposal involves the company investing 8.9 billion ringgit in the first phase, of the total cost of 11.3 billion. The government would invest the rest, the company has said.

The total cost of the project proposed by Telekom Malaysia would be 15.2 billion ringgit over 10 years.

Malaysia aims to increase broadband penetration to half of all homes by 2010, from 18 per cent now. This compares with neighbouring Singapore's rate of 78 percent and Hong Kong's figure of 80 per cent.