What’s Up? Redtone

Redtone

What’s Up? … dated Feb 2011

It has been dragged down by losses in the new segments it ventured into, such as its WiMAX operations in Sabah and Sarawak and its Chinese oriented IPTV service.

It has also not stayed the same as a telco, which means consumers can count on RedTone to always innovate and try something new. Although it burnt its fingers in the Pakistan market some years ago, the company’s entry into China in 2006 appears to be finally bearing fruit.

Redtone’s valuations of Redtone Asia Inc, which houses its China operations, was US$22 million (rm67 million) in 2010 – close to Redtone’s market cap of rm90 million. This valuations was derived in Redtone’s reverse takeover of Hotgate Technologies Inc.

Its China ’s operations contributed 16% to Redtone’s top line in 2010 and was the most profitable segment, posting. Now into 2QFY2011, China looks set to contribute more to Redtone’s bottom line.

The good performance in China is attributed to ultra low capital expenditure and a highly scalable and replicable business model.

Redtone’s cap expenditure for China is only around rm1 million to rm2 million a year.

In Malaysia , the group is in the red in two of its segments – its IPTV business and WiMAX operations in Sabah and Sarawak . Their losses overwhelm the profits from China ’s at parent company level.

However, Redtone has a few options to turn the tide.

First it is planning to pare down its stake in RAI to around 70% from the current 90% through a share placement exercise in 2011 that could boost its coffers and results. A 20% stake could fetch around US$4.4 million.

Second, the company’s IPTV market will grow. TM’s goes into the mainstream market, so it foes head to head with Astro. Redtone’s is estimated to have invested some rm20 million in the IPTV business over the last three years. The service was launched in 2010.

The other options is to cut its losses in Sabah and Sarwak. It hints that parties have expressed interest in acquiring the company’s WiMAX operations there, which have seen rm20 million in investment till Feb 2011. This presents another opportunity for Redtone to turn things around.

As for its 4G licence in Peninsular Malaysia , Redtone hopes to roll out the services by 2011, pending approval from the MCMC. It is targeting corporate and SME customers.

With so many possibilities, it is likely that RedTone will kee

JIT News - Redtone,Maybank,Kencana,S & G Election. 14/2/2011

Redtone: Redtone’s China ’s operations contributed 16% to Redtone’s top line in 2010 and was the most profitable segment, posting. Now into 2QFY2011, China looks set to contribute more to Redtone’s bottom line.

Maybank: Maybank has sent out a request for proposals for the secondary placement of at least 17% block in BII, which could net some rm2.35 billion in proceeds. Maybank has until June 2011 to reduce its stake in BII to 80%, hence the placement are likely to be done in the next few months (Feb 2011-June 2011).

Kencana: Kencana plans to finance the US$200 million required to jointly develop and operate the Berantai oil and gas field through an equity/debt fund raising exercise. The detailed breakdown between the various sources of funding has yet to be determined at this juncture, pending completion of the company’s proposed fund raising exercises in its entirety.

Sarawak & General Election: Najib meets Umno division leaders in mod Feb 2011 ahead of polls. Prime Minister Najib Abdul Razak starts his meet with the Umno division leaders in Kuala Lumpur this morning with the Kedah contingent kicking off the proceedings. Prime Minister Najib Abdul Razak in mid Feb 2011 hinted at the Sarawak state elections are around the corner, saying that Chief Minister Abdul Taib Mahmud is “inspired”. The Prime Minister says the Sarawak Chief Minister Abdul Taib Mahmud has received a "certain inspiration" on when to call for polls.

 Meanwhile key infrastructure works in SCORE will be intensified with the award of several major road projects said to be worth some RM2bil. These projects include access roads to the proposed hydroelectric dams in Kapit and Limbang and to a coal mine in Kapit. Tenders for these projects were closed between August and October 2010. It is understood that leading construction firms from Sarawak and Peninsular Malaysia were among the bidders. Sarawak Infrastructure Development andCommunications Minister Datuk Michael Manyin said the Public Works Department was evaluating the various tenders. It is learnt that Hock Seng Lee Bhd (HSL) and Naim Holdings Bhd are among the bidders for the road projects.

HSL: 2.32 (OSK), 1.90 (MBB), 2.28 (AMResearch), 2.30 (MBB)

Naim:  5.09 (AMResearch), 3.52 (OSK), 4.10 (Kenanga)

The Sarawak Election Stocks: CMSB, KKB Eng, Naim, Dayang, TA Ann, Sarawak Plantations, Encorp, Zecon, Sarawak Cable, Sarawak Consolidated, SIG Gases, Petra Energy