An uncertain broadband job

FOR a telecommunications contract worth RM1.9bil, there is very little information available for investors to make a rationale investment decision.

Mesiniaga Bhd’s first announcement that it had won a RM1.9bil contract related to broadband services was brief. It did not go into the details of the financial strength of the client – Xiddig Cellular Communications Sdn Bhd.

The only risk factors pointed out by the company were that Mesiniaga has to meet deadlines imposed by customers and keep up the service levels that it has committed to.

What about the assurance of getting paid for the job done?

This is important, as Xiddig is a private company and undertaking a job worth RM1.9bil is a lot for an unlisted entity. There is not much information on Xiddig in the public space except for its chairman, Datuk Seri Abdul Rashid Abdul Rahim.

Exacerbating the situation is the fact that the government is distancing itself from the broadband project that Xiddig is part of.

Initially, it was reported that the project – the Enhanced Malaysia Internet Gateway (EM-IIG) broadband worth a total of RM5.45bil – had the support of the government.

The government’s support was supposedly in the speech at the launch of the project that was read out by Parliament deputy speaker Datuk Mohd Rashid Hasnon on behalf of Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail.

However, the Deputy Prime Minister’s office denied approving such a speech later.

Communications and Multimedia Minister Gobind Singh Deo added to the government’s stance by stating that the government had never promised its support for the EM-IIG project.

Following these developments, shareholders of Mesiniaga cannot be faulted if they are left wondering if the RM1.9bil job the company has bagged from Xiddig is real.

Securing a job is important for listed companies. More important is securing payments from their clients.