M&A in the works for Time dotCom?

PETALING JAYA: The move by Time dotCom Bhd (TdC) to disposed of 49.9 million DiGi shares or a 0.64% stake in DiGi through private placement comes as a positive surprise, bringing forth speculation that merger and acquisition (M&A) may be in the works.
"This comes as a positive surprise. Since capex (capital expenditure) for all new submarine cables are already provided for, this new fund-raising inevitably lead us to speculate M&A may be in works," HLIB Research said in a report yesterday.
"Recall that TdC has been planning for regional expansions for the past years, especially in data centre business," it added.
It said the disposal price, transacted at RM6.23 per unit, is fair compared with its in-house fair value of RM6.30 and that to forgo steady dividend income, the new venture should return a higher yield than 4.2% per year.
HLIB revised downward TdC's FY15-16 earnings per share by 12.1% and 2.2%, respectively mainly due to lower dividend income in line with reduced stake in DiGi.Com.
It maintained a buy call on TdC after raising its target price by 10.6% from RM6.13 to RM6.78.