More details of TM's demerger announced

TM has announced full details of its proposed demerger (go here), which was first announced on September 28 (go here). The proposal involves the splitting up of TM's businesses into 2 separate entities, i.e.

1. TM International, which will undertake the mobile and non-Malaysian businesses of the TM Group, which is presently being carried out collectively by Celcom and the various operating subsidiaries and associated companies of TM International; and
   
2. The new TM, which will carry on the retail, domestic and global wholesale fixed-line voice, data and broadband services and other telecommunication and non-telecommunication related businesses in Malaysia and regionally.

Based on the latest announcement, an existing TM shareholder with 1000 units of share will get 1000 units of the new TM share; 1000 units of TM International share; and a special dividend of 65 sen (less tax of 27%) upon completion of the demerger. With the complete details, investors will be able to appraise the value of TM more confidently. Since the structure is not unconventional and the only goody is the special dividend, I expect the immediate boost to the share price of TM to be limited (maybe, a rise of 30-50 sen). We must bear in mind that the share price of TM has increased by 15% from RM9.70 on September 27 to RM11.20 as at last Friday (December 7). Longer term, an existing TM investor, who holds onto the new TM share & TM international, might see greater combined price appreciation if the benefits of the demerger (i.e. greater autonomy & accountability) can be harnessed.