What is not rightly written on JAKS by KYY

KYY has the tendency of not saying it all whenever he writes. 

Let me put into perspective. on this article that he writes. (Why I bought in JAKS)

His statements:

Malaysia’s first IPP

The YTL Group was just like any other ordinary contractor before the company was awarded its maiden IPP in Malaysia. From a humble beginning, YTL Corporation Bhd’s market cap today stands at RM1.65 bil (actually this is a mistake, it is RM16.5 billion and much more dividends before this), that of YTL Power International Bhd at RM12.8 bil and  YTL Land and Development Bhd (RM578 mil).

Additionally, the YTL Group also owns YTL Cement Bhd, YTL Hospitality REIT, among others.

Investors would recall that on Sept 29, 1992, a total power blackout engulfed the nation for several days. This landmark incident sparked a privatisation of the power generation sector that broke the dawn for IPPs in Malaysia.

In the process, Tenaga Nasional Bhd’s monopoly of the power generation sector was dismantled by then-Prime Minister Tun Dr Mahathir Mohamad as YTL Power was awarded the nation’s first IPP licence in 1993.

As a result, the YTL Group has been making unprecedented amount of profit every year. Before it secured the IPP, the YTL Group was just an ordinary contractor but today, it is so different.

What is not correct in his statement?

YTL's IPP during then was the sweetest ever that nobody else would have gotten it. Tenaga was sort of forced to do an offtake. Tenaga was asked to take up YTL's generation whether Tenaga needed it or not. In another words, in layman's term, whether there is such demand for example, 80% of the generation, Tenaga has to take it - even if there is no such usage demand. Another thing which is very important in that deal is that YTL's costs is fixed - meaning the fuel generation costs are already subsidised at a fixed rate. Other parties - if not wrong Tenaga and Petronas has to consume the fluctuations.

Please read this article if you are serious into investing into JAKS.

How Malaysia's IPP was born. 
This is obviously correct, as it comes from the horses mouth - the Executive Chairman of Tenaga then, and many more people know about this.

In fact, if you walk into Tenaga and asked people whom are in the know of the deal during those days, they will say, they will never give a project to YTL anymore, NO MATTER WHAT! That was more than 20 years back and many people today will not know about it.

Think about it, if YTL can pull a deal then in a year, why does it need JAKS to pull a deal in Vietnam over 6 years. It is not that sweet. 

Another of his statement which is not true until now

Many people also ask me when will I sell my holdings. Since I know JAKS will be making a lot of profit in the next 3 years during the construction and 40% of the profit from the sales of electricity for 25 years, I intend to keep all my shares for many years.

I obviously do not know KYY's net worth - it seems it is a lot, but HE HAS BEEN BUYING ON CREDIT. His purchases if you really read is all on pledged account. He and his wife's. How do you read this? Look at the red boxes.

JAKS although it is good, it is not generating good important cashflow for it to pay dividends even for few years to come. For a person to hold it until beyond 2020, he needs to get the company to pay him back (to support his pledged accounts) - either dividend or capital appreciation! JAKS is not going to pay dividend. Does anyone know that JAKS has never paid dividend before - not in last 17 years! Unless, KYY arm-twist the company to do that it is not obliged to pay dividend. And the company has no cashflow to do that.

If dividend is not forthcoming, he has to sell to pay his interests from the sale of his shares in JAKS. Hence, he will not hold for long term, he will sell some. He is pumping and dumping along the way.

His other holdings e.g. Latitude Tree has proven that.

See below. He bought a substantial stake (more than 5%) and continue to buy more after November 2014.

However, by Nov 2015, he has ceased to be a substantial shareholder. That's a year. He IS NOT A LONG TERM INVESTOR. PERIOD. He buys in and ask you to buy so that he can buy out.

What is unsure...

The profit of about RM400 mil for JAKS will flow back into the JV company to fund JAKS’ equity portion. In other words, JAKS only needs to fork out RM203mil to own a 30% stake in the power plant. JAKS is also given an option to buy up another 10% of the JV company.

Nowhere in JAKS announcement that says it is using the profit to put back into the JV company. Unless, he has inside information, which I would like to know as well. Also, usually, deals are not done that way - unless of course the China partner is such a nice partner - could happen.

What is correct in JAKS?

1. Please read my article here. JAKS in getting this project, assuming they can complete this project will be very good for the company, but one must know that JAKS has only 30% of the IPP (and option to grow to 40%, but even then the costs of buying the additional 10% is not known) - it is not even the controlling shareholder in that IPP anymore. However, the keyword is assuming they complete this project, which I think they can do - but remember it is 2020. At this moment, JAKS is sucking cashflow until 2020. 

2. JAKS would not be getting a deal as lucrative as YTL. In fact, no one gets a deal as lucrative as YTL. I again request you to read that article by Kinibiz (put it up again), as it is long and mind consuming to read it - including for me.

3. IPP (or concession like) projects with good IRR is great and I like projects like this - which is also why I bought into company like WCE but they will not get as sweet a deal as that company. It is true that the deal alone made YTL what it is today and even more that you do not see. (Such as with the cashflow, they were able to buy Starhill, Marriott and Lot10 at ridiculous low price during the 1997 crisis - in fact, 1 year profit and cashflow from the IPP enabled it to buy that entire piece of place in Bukit Bintang. That's how powerful it was. YTL Power was generating around RM500 million cashflow and they can buy these prime properties at RM323 million at worst of times, whose money - Tenaga and our rakyat's money!)

4. Despite whatever we can say good abut JAKS, all the good things that is written about JAKS, its main shareholders has not done anything to proof to me they are good directors and will share their returns with shareholders. This I am aware.

What is being speculated by me on KYY's latest article?

I am obliged to declare that I am the largest shareholder of JAKS and that I’m not asking readers to buy JAKS to support its share price. If readers decide to buy, then they are doing so at their own risk.

No, as proven again and again, he is asking us to support the share price so that he can dump onto us. Why? He seems to be in a rock and a hard place. While he has bought until 26% of JAKS, it appears that the current, controlling shareholder is not playing ball. They are calling a placement. It seems that there is no truce yet. The current shareholder can't push up (but fighting) to support KYY's sale, hence calling this placement in such a hurry.

Why I am writing this? I see writing by a so-called super investor as something that people follow a lot. It is important to write responsibly. I am not attacking him but would want to put things into right perspective. In fact, I am holding JAKS as well - not in large volume. I could have let him have his writing and I ride along as well. But investment is not for one to just pump and dump onto other shareholders. But for all to enjoy a long term ride. JAKS can still be a long term share.

I am surprised. I am half his age but yet has more responsibility when writing. (I need more money than him, but all the money in this world is not everything. Moreover, in investment, if one is careful and humble enough, we can survive and do well, better than taking a passive stand - this I believe)

Recently, obviously with the much speculation in shares (which is good), there are many more of these writers whom are just being greedy and irresponsible when writing. Some of whom, I have no intention of even countering. But it is for investors to be really careful and study.

Cronyism still key

Sometimes cronyism is important to certain business - basically see where YTL Power is now. It had done nothing much since. Government changed contracts changes. TNB is not going to give any more new projects to YTL - if yes, there are not going to be as sweet anymore.

The new project as mentioned in the below structure seems very much like JAKS in my previous article - isn't it surprising - a RM500 million company against a RM11 billion company. Both uses China's route.

YTL Power: It takes a consortium to get back into IPP business

There is no denying that YTL Power is hungry for another power IPP award after its current IPPs are ending in a year or two-s time. After losing out to several others mainly 1MDB, this time it manages to get what it wants. But only through a consortium - one tend to think that YTL will not get it if it is not a consortium?

1BestariNet and my flawed rationale

I am no telco expert. But I have enough of experience to know what makes sense, what don't. 1Bestarinet is a project awarded to YTL Communications for delivering fast enough internet experience to all 10,000 schools nationwide. It is claimed to have been an open tender and YTL came out top out of a total 19 companies which tendered.

Frankly, I have originally almost written off the YTL's telecommunication initiative until there are quite a number of postings which makes me wanting to rethink (thanks for the comment) - no disrespect to YTL, but I have discounted all the other telco players like Green Packet, Redtone, and even UMobile anyway. Hence, I am not putting YTL as the only one as a punching bag for my telco thoughts. Let me put it this way, among the tycoons, Ananda Krishnan has already won this war among the telcos - while the other two, Celcom and Digi are corporate owned today. Anyone wants to take a share out from Ananda, do something else. It was the same as when Vincent Tan attempted with Digi (did not go far) and now UMobile which will not go far as well - in my thoughts. In telecommunication, its either you have it or you don't. It is not like a power generation business where it is dependent on the areas served, grid etc.

Now 1BestariNet is a way for YTL to reduce its costs of deploying wireless data communication nationwide while using the government's money to help it to achieve its dreams. It is actually not wrong as schools will need to be digitally covered anyway. Anyone who can do it most cost efficiently should get the project. Now my thoughts are this - the one which probably can do it most costs efficient should be a combination of a strong wireless provider and a fiber provider. From there, where does YES stands?

A fiber provider should no doubt be Telekom Malaysia while for a wireless provider they should be any of the three telcos - Maxis, Celcom, Digi. For YTL to get this project, it must have very strong connections or may have priced them very low to beat the competition or even both. If YTL has the committed ambition to cover the entire country with YES network, then maybe it would have used this project to achieve its ambition. For Maxis, Celcom and Digi it is a given that they must cover the entire nation or at least the bigger cities and towns with 4G.

Now, why do I think it should be a combination of a strong fiber provider and wireless player. The cities - Klang Valley, Penang, Johor Bahru and ultimately to other cities as well. Ain't TM is currently laying the fiber already? If it is charging less than RM1,000 for a 20Mbps fiber internet or more ultimately, what else can beat that from among the wireless providers? Are we saying that every student will be provided a dongle for their notebooks? What the schools need to do is to cover the entire school with wifi. Isn't that a cheaper and longer term solution? Imagine every new student will be provided with a YES dongle...that does not make economic sense.

Say 50% of the schools are located in the cities or suburban areas, providing internet to these schools are hence not expensive. A one off costs of covering with wifi (should not be much) and just monthly internet bill of not more than RM1,000 to TM. Another 40% of schools in the smaller towns? (The real problem as usual is tackling the real rural areas which probably makes up the 10%) Well, they need wireless providers which is why the 4G LTE and WIMAX providers are for. Please tell me if I am wrong deploying WIMAX solution is initially supposed to be cheaper but with the need to pay for the CPE (Customer Premises Equipment) I would think 4G LTE will be ultimately used hence that's why all the telcos are getting some spectrum for the deployment of LTE.

Going back to 1BestariNet. If YTL is to deploy fully, it would be getting RM1.5 billion in 5 years - that's what the press statement says. What the press statement does not say is whether it includes costs of accessing internet. I would think so as it does not make sense to just cover and do not provide access for it. Again, I would think the government would not ask the students to pay for access, am I right? The project is RM1.5 billion in 5 years. That comes to

RM1.5 billion / 5 years / 10,000 schools / 12 months = RM2,500 per school per month

and we are still not getting the fiber speed which can be deployed to many of the urban schools as at now.

Every student is supposed to be provided with a dongle from YES or could it be a CPE in every classroom or something like that?

Now, comes YTL's grand plan...Its objectives of doing the 1BestariNet is to grab hold of the student's market - 5 million of them altogether. It is trying to get a market share out of it to achieve its initial target of 1 million subscribers that pay so that it can breakeven. To do that it has to achieve something like 15% from the student market assuming YES already has about 300,000 subscribers currently. Hence, the students will have to be provided with a dongle so that they can access the network from anywhere, anytime - either in school, home or any public area. In school, it is free but anywhere out of school it will not be free anymore.

HOWEVER, for those students whose houses are in the more urban areas, most of them would have access at home anyway - in fact many homes today and most in future will be wirelessly connected - either from 4G LTE, Unifi (fiber to the home) or Streamyx (old ADSL technology). They do not want to pay the extra.

As for the more rural students, chances are they do not want (or could not afford) to pay anyway and if they are, their homes may also be connected with Telekom's Streamyx. And if there are no Streamyx, chances are there's no YES access as well. Hence, how is the 1BestariNet going to turn YTL into a serious enough contender in Malaysian telecommunication sector?

Anyone care to comment as I think this speculation may not run too far although may sound simplistic...as I still could not get the rationale.


Note that these are my thoughts and it may be flawed.

YTL Power - value share or value trap?

YTL Power's share price has never been so cheap PE wise more recently. It is trading at potentially below 10x both historical and prospective PE based on its earnings potential.

A blogger friend who has been one of the early reader of my blog has written a well researched piece titled YTL Power - value share or value trap? (please read it)

Detailed information have been provided on the company but what many investors could not explain on YTL Power is how is it that the dividend return from the company is on the decline.

I looked back at my one post entitled Is YTL Power running out of ideas? and reconsider back whether the same situation still applies. As in many investors, I am not sure what are the decisions as I can only speculate. However, looking at the situation the company is in, I have mentioned of the challenges YTP Power is facing with the impending renegotiation of the sweet IPP contract (if any) come 2015 and the net cash position of the group. My own prediction is that the group is preserving cash to meet the coming situation in the near future.

At this moment, YTL Power is cheap valuation wise. I do not think it is a value trap but neither is it exciting as there are some uncertainties facing the group with regards to future income stream. Certainly Seraya Power is the main income generator but competition is getting strong as well which is why we are seeing lowering of margin despite the rise in revenue. To me, YTL Power is certainly preparing for the future with some of its future income becoming more uncertain while necessarily hoping to see a turn for its telecommunication business.

However, I certainly am not so sure of its privatisation as in some of the rumours that are circulating - to me the immediate challenge faced by the management is moving the company forward - i.e. to turn it into a growth company again.

It's really hard to envision YTL's 4G to work

Standing on the sideline, Tan Sri Francis Yeoh's statement may be more hopeful than real. He is a businessman where his role is to convince and execute. First convince yourself, then your investors, employees and then only execution. You would not be able to execute if you yourself are not convinced, which is why he has plowed a huge sum of money into the YES network. He believed in it, I should say.

YES has kept harping on its 4G network. What is 4G? I do not have to explain much but to point you to wikipedia. Basically it is an acronym for 4th generation network which is still grey-ish in terms of its qualifying claims - that is which network provider stands to qualify to claim that it has the real 4G deployment. For the sake of this blog-piece, there are 2 standards which are commercially deployed - Mobile WIMAX and LTE. I am not going to go technical here but if you really look at the success of deployment commercially, 3G has been a success. And that success has been partly to do with Iphone and Blackberry's in making them a success and about 1 to 2 years later, Android. I remember at one point of time before Blackberry (was huge) and Iphone, the mobile players were struggling to make 3G a success. They were really struggling, and  turned around, now there are not enough bandwidth. See how fast things have changed. To claim that network providers do have the solution is not true. The devices makers like Apple, Google and RIM are the ones that have the solutions.

3G and 4G

What type of devices where the mobile networks are used often? Smartphones (Iphone, Samsung Galaxy, HTC etc) and Tablets (Ipad, Galaxy, Kindle). Now, the latest version of all these smart devices - the Iphone 5, Samsung Galaxy 3, latest Kindle Fire etc. - all of them support LTE, but none (as I see it) support Mobile WIMAX.

YTL's YES 4G technology is a version which runs under the Mobile WIMAX. Hence, for these devices to run on the YES platform, additional device has to be plugged onto the smartphones or tablets. So far, I have yet to see Apple or Samsung or even Microsoft's Surface came out supporting WIMAX, and that is a problem for WIMAX network providers.

Remember the Sony Betamax vs VHS war! History will repeat. WIMAX will not win. YTL will claim that it is going to be awarded LTE a spectrum. Where are the advantage then when the network is not to your favour (as all the rest are to be given LTE as well) and definitely money is not in YTL's favour.

No network advantage and no cash advantage = NO WIN.

YTL Corp offering YTLP - WB shares to its shareholders - any catch?

I received a question on the potential rationale for YTL to offer YTLP - WB shares to its shareholders at a ratio of 1 warrant share for every 15 shares held. The offered price is RM0.20 per warrant which is a substantial discount from its current traded price of RM0.415.

My opinion:

1. Subscribe as it is a discount to the traded price anyway. You have 2 options after the subscription - sell it or exercise it. The warrant is in the money. Or about there, depends on timing.
2. As in my earlier opinion, YTL selling the warrants are due to they are not interested to exercise the shares as doing so would increase the debt of the parent anyway. As it is, the Group is already heavily geared with around RM24 billion in debt. It does not mean that the company is in trouble but they are more interested to reduce their debt at this moment of time rather than increase the gearing.
3. The cheaper offering may not mean that YTLP-WB current share price will be largely affected as YTL Power's current price is decently attractive. My take is that since they are to announce the warrant offer (shareholders will not know this until they announced), the slow drop in YTL Power's shares are probably due to this as it is the intention of YTL Corp to dispose off the warrants. They want to have a low and attractive price to allow shareholders to take up. If the price is not low, nobody would care to take up anyway.
4. Disposing off the market would look bad on the group, much more difficult and almost impossible. Hence, it looks good by doing a one off exercise such as this. At least on paper.
5. By offering the warrants, they are obviously asking you to exercise the shares as they need more cash. YTL Corp is not going to do the exercise.
6. This exercise as below, will allow YTL Corp to realise immediate gain of RM55.6 - RM60.2 million as announced below. YTL Corp's original costs was RM0.1185 per share. Why Not for them?

As published in the announcement:

RATIONALE FOR THE PROPOSED ROS

The Proposed ROS is undertaken by YTL Corp with the intention of rewarding its shareholders by offering YTL Power Warrants to the Entitled Shareholders at a discount to its prevailing market price. Further, the repayment of borrowings from the proceeds of the Proposed ROS is expected to give rise to interest savings to the YTL Corp Group.

UTILISATION OF PROCEEDS FROM THE PROPOSED ROS
1 The total cash proceeds to be raised under the Proposed ROS cannot be determined at this juncture as it will be based on the actual number of Offer Warrants subscribed for by the Entitled Shareholders and/or their renouncees.

2 Based on the Offer Price and assuming full subscription of the Offer Warrants by the Entitled Shareholders and/or their renouncees, YTL Corp expects to raise cash proceeds from the Proposed ROS of approximately RM136.5 million and RM147.7 million under the Minimum Scenario and Maximum Scenario, respectively.

3 The proceeds from the Proposed ROS, after deducting expenses in relation to the Proposed ROS (the quantum of which have yet to be determined at this juncture), will be used to repay bank borrowings of the YTL Corp Group and is expected to be fully utilised within 12 months from the completion of the Proposed ROS.

EFFECTS OF THE PROPOSED ROS
1 Share capital and substantial shareholders’ shareholdings
The Proposed ROS will not have any effect on the issued and paid-up share capital of YTL Corp and the shareholdings of its substantial shareholders in YTL Corp.

2 Earnings per share (“EPS”)
The Company’s average cost of investment for each YTL Power Warrant is RM0.1185. Based on the Offer Price and assuming full subscription of the Offer Warrants by the Entitled Shareholders and/or their renouncees, YTL Corp expects to realise a gross gain from the Proposed ROS of RM55.6 million and RM60.2 million under the Minimum Scenario and Maximum Scenario, respectively. The gross gain will increase the EPS of YTL Corp by approximately 0.54 sen under both the Minimum Scenario and Maximum Scenario. Upon the exercise of the YTL Power Warrants by Entitled Shareholders and their renouncees who have subscribed for the Offer Warrants, the earnings contribution from YTL Power to YTL Corp will be diluted. Nevertheless, this dilution will not have any impact on the earnings of the YTL Corp Group for the financial year ending 30 June 2012 as the Proposed ROS is expected to be completed after 30 June 2012. Upon completion of the Proposed ROS, the dilution is not expected to have a material effect on the earnings of the YTL Corp Group.

What could be the reason for YTL selling YTLPower's warrants?

YTL Corporation, the holding company for Yeoh Tiong Lay and family has been selling some 110.9 million warrant B shares of YTL Power over the last 2 months. At the same time, YTL Power's shares has dropped from around RM1.88 to its current price of RM1.57, around 16% drop. During the same period, the warrant, YTL-WB dropped from RM0.65 to RM0.40, a 38% drop. It is quite unusual for shareholders to continue to throw a utility company like YTL Power as usually it is regarded as a defensive stock - unless they are having the feeling that insiders are selling. What could possibly be the reasons for the disposal of the warrants?

YTL Power shares / warrant held directly or indirectly by YTL family

 Based on the above table, YTL's family control of YTL Power is safely at 55%. This is without assuming all the current YTL-WB warrants are exercised. If all the warrants are exercised, their control would have increased to 59%. Why? They are still holding a whopping 84% of the outstanding warrants mostly held via YTL Corporation. To exercise all the warrants (RM1.21 per warrant), it would have to use up RM1.2 billion of YTL Corporation's cash. As at 2011, YTL Corp has RM2.1 billion cash at company level. At the same time, it has RM1.65 billion debt.

Note, the family controls YTL Corp through a 47.92% shareholding.

So what do I see in this?

1. YTL Corporation - the entity that has been selling the Warrants for the last 2 months is not looking at holding that many warrants - that's for sure. This is because it does not see itself injecting so much of YTL Corporation's cash into YTL Power. Over the years, both companies (especially YTL Corp) have been buying back stocks. By doing that, and with the current share holding, they are definitely not worried of their stakes diminishing.
2. At company level, you would have noticed that YTL Corp does not hold that much cash. Its cash is only at net RM500 million. Yes, they would be able to raise more cash from future dividends as the warrant is not due until 2018 but again, they would prefer the minority shareholders to fork out the cash for exercising the warrants rather than them.
3. By selling, YTL Corp can at least maintain or sustain the dividend payment ratio of the group assuming the income will be consistently improving. This will also preserve its cash ratio. By selling the warrants, YTL Corp gains cash whereas by exercising the warrants, YTL Corp will need to put in more cash into YTL Power.
4. The recent MGO for YTL Cement was an all share deal which does not involve cash at all. So, we probably can see that they have tried to use as little cash as possible in their deals.
5. The YTL Cement deal has also caused the Yeoh's family holdings in YTL Corp to reduce from 52.72% to 47.92%. They have 2 ways to increase their holdings back to 50% or more (if its any important) - share buyback or YTL Corp and / or more acquisitions of the shares via the family vihicel. To do that, YTL Corp will need more cash - either by issuing more dividends off the holdings or buying back shares. They can and may do both. I however foresee, YTL Corp to be more active in buying back its shares, as what they are doing currently.
6. Hence, the selling of the warrants does not depict that the family is perceiving its share price to be expensive. It is just an insider action which is more strategic for the family than anything.

Note: If insider is selling / buying (especially in Malaysia), there could be a reason that they want you to know that they are selling or buying. What more for a company such as YTL Power which has been listed for so long. Note that the selling is done by another listed co, YTL Corp - not its private entity.

Is YTL Power running out of ideas?

Buying into YTL Power feels like playing into the game of monopoly. Playing monopoly, you will want to own all the utilities and railroads. YTL Power owns a multitude of utilities businesses except for railroads. Well, YTL, the group does have rail ambitions in connecting Singapore and Malaysia with high-speed train besides partly owning ERL.

Although YTL Power has RM7.5 billion cash in its books, it should not be considered cash rich. Why?

Just look at the 4 segments of businesses under YTL Power:

• Power generation - mainly under YTL Power Corporation in Malaysia, Jawa Power in Indonesia and a 33.5% stake in Electranet, a 200 years concession in Australia.
• Water Utilities - under Wessex Water which it purchased from Enron.
  
• Multi Utilities business under Power Seraya which YTL Power bought from Temasek in 2009. Power Seraya is involved in wholesaling, retailing and also into trading of fuel oil;
• Telecommunication - under the 60% owned YTL Communications which operates the YES wimax business.

Problem of venturing into these businesses is that they are capex heavy. A lot of times, the businesses require heavy initial investments. You can see that all the above businesses require heavy reinvestments one way or another. Its Malaysian IPP concession will end in 2015. So is the Wessex Water's concession - by 2014 (see below note on the water concession). Ending of the concessions may not mean the end of the business, but it probably signals the end of its monopolistic benefits.

YTL Power's multitude of revenue and profit contribution

 
You would expect YTL to be buying assets in times like this due to opportunities arises from crisis. Look at the opportunity it took when buying Wessex Water from Enron in 2002. The purchase of Power Seraya in 2009 for SGD3.8 billion and its venture into the punitive Wimax business in Malaysia however probably halted YTL Power's continuous big M&A ambitions as those ventures probably drained out the group's liquidity. Although the group may have some RM7.5 billion in cash, it is also heavily geared with RM13 billion debt.

If you look at the above segmental information, it has a decent 20% contribution from the power generation business where substantially is contributed from the generous Malaysian IPP concession. YTL Power however cannot rely on that much longer as the concession is ending in 2015. Whether it is to be continued, I am sure the pricing would not be as generous as the current rates and terms it enjoys. With that, YTL Power has to build its cash position. As a result, we continuously see it lowering its dividends as per below chart.

In telecommunication, I expect the "YES" business will not carry YTL Power anywhere as the business it is trying to build on is very very tough with much bigger competitors. Although they did try to introduce a different business model, I do not see much can be done with having that different model. A communication highway is a communication highway. Whoever wins will be from those that can either own both the downstream and upstream business (TM) or those that have scale (TM, Axiata, Maxis, Digi). I do not see YES having that scale. On top of that, with LTE coming on stream, WIMAX does not carry any advantage anymore for YTL as a wireless broadband player.
 

YTL Power's 5 years performance - notice the reducing dividend per share which shows that the company is shoring up its liquid assets to compete in anticipation of ending concessions and tougher competition

On the other hand, if you look at the businesses that YTL Power already owns, its Wessex Water and Power Seraya are the more efficient utilities players. With those, it may not look at expansion via acquisitions but more so into project bidding, pitching on being a more efficient player with know-how and technologies.

Would you however bet on it?

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Note: On Wessex Water

 Water Act 1989 (England and Wales)

In 1989, the Regional Water Authorities were sold by issuing shares on the stock market, with special discounts being offered to the public to ensure political success. Under the Water Act 1989, the newly-floated water-and-sewerage companies (WaSCs) became owners of the entire water infrastructure and properties of the RWAs. The Act gave them 25-year concessions for sanitation and water supply, protected against any possibility of competition. The concessions covered the whole of England and Wales, with the exception that 25% of the population continued to have their water (but not sewerage) supplied by the existing small private companies, now known as water-only companies or WoCs.

Concessions may be terminated by the government,but only by giving 25 years’ notice (extended from 10 years in 2002).