To Gatsby, The Green Light represents his hopes and dreams of the future which he associates with Daisy.

Today, The Green Light that I would like to associate with is Packet One Networks (Malaysia) Sdn Bhd (“P1”) that Green Packet Bhd (“Green Packet”) owns 55% followed by South Korean telco SK Telecom Co Ltd of around 28%.

In Aug 2008, P1 under Green Packet was the first in Asia and Malaysia to embark on the provision of WiMAX wireless broadband services after clinching one of the four 2.3GHz wireless broadband spectra issued by the Malaysian Communications and Multimedia Commission (“MCMC”) in 2007.

P1 incurred significant losses till today (although on lesser magnitude) due to the huge start-up costs and higher depreciation costs arising from the substantial investment to roll out the infrastructures.

In Dec 2012, P1 was also one of the eight to be awarded with 2.6GHz spectrum to offer 4G LTE services.

About P1’s parent company

Green Packet made its debut on Bursa Malaysia’s ACE Market (formerly known as MESDAQ market) in 2005 and transferred to the Main Board in 2007. The company managed to more than quadruple its market capitalization between 2005 and 2007, underpinned by robust sales of its seamless connectivity solutions to China, its biggest export market then. Since 2008, it embarked on large-scale commercial WiMAX deployment undertaken by P1 which is classified as Broadband Services among its key business segment.

Green Packet’s business could be categorized into 3 segments:-

(i)            Solutions (supplies customer premise equipment and connectivity services),

(ii)           Broadband Services (provision of wireless broadband services) and

(iii)          Communication/Voice Services (provision of total communication services, solutions and products).

Key segment revenue continues to grow…

…along with its total subscriber (‘000)…

…but PBT mainly drag down by its Braodband Services due to huge start-up costs and high depreciation costs.

Industry analysis

The local telco industry is similar to a Monopoly board-game.

With saturated mobile penetration rate, intensifying competition in broadband space and with majority of the market share occupied by big players, the smaller players struggle to win on data usage growth.

Likewise, in a Monopoly board-game, when most of the strategic properties occupied by other players, the one who tries to find a niche section or has limited properties to survive in the game will face higher failure rate. Furthermore, when the disadvantaged player has to sell any assets, it basically means tight cash flow with either urgent need of luck (in the game) or new strategy (in real business) to turnaround. 

Latest Developments of Green Packet

Green Packet recently went though shrinking workforce [1], cutting down marketing expenses[2], sale and leaseback of property[3] and resignation of Michael Lai[4].

The turbulences within Green Packet are certainly an uphill tasks for those still in the boat (typically Green Packet founder CC Puan) to carry on. Perhaps, the sale of P1 to other deep pocket big player is soon on the card[5].

There shouldn’t be any lack of appetite by big players for the spectrum allocated to Green Packet. It offers the opportunity for any big players to widen the range of services they could provide.

Question now is perhaps at what price will Green Packet fetch and the willingness of major shareholder to let go? Green Packet was in the limelight since last Oct 2012 when various big names such as TM[6], DiGi, YTL Comm and even SK Group[7] were said to bid for Green Packet’s P1 stake.

The price tag that has been talked about ranged from RM1.8 bil to RM2.0 bil. If materialises, that would jack up Green Packet’s net book value from existing RM18 sen towards RM97 sen to RM1.13 per share[8].