YTL Power recently paid RM0.3m to acquire a 60% stake in YTL Communications Sdn Bhd from YTL e-Solutions. YTL Communications, previously known as Y-Max Networks Sdn Bhd, holds a WiMAX licence for the 2.3 GHz wireless broadband access spectrum. (BT)
This news on YTL Power’s potential foray into WiMax is a negative surprise given that i) it does not seem to fit in well with its existing portfolio of power- and water-related assets, ii) such an investment could raise the risk profile of its existing stable of defensive and resilient assets, at least over the short- to medium-term and iii) an investment in WiMAX networks is said to require sizeable capex and opex allocations but break-even periods could be relatively stretched. We will review our earnings forecasts and recommendation pending further clarification from management.
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