Foreign Ownership Cost DiGi.Com Malaysia 3G License-Paper

KUALA LUMPUR (AP)--Malaysia's No. 3 mobile phone operator, DiGi.Com, failed to win a lucrative third-generation mobile phone license because it is foreign-owned, a newspaper reported Sunday, citing the country's communications minister.

The March 3 decision to bypass DiGi and hand two 3G licenses to non-mobile phone companies sparked surprise and controversy in the industry.

DiGi's two larger rivals, Maxis Communications and Telekom Malaysia, received their licenses last year and have already launched third-generation, or 3G, services, which allow high-speed transmission of text, voice and multimedia.

Communications Minister Lim Keng Yaik said DiGi, which is majority-owned by Norway's Telenor, missed out because the government gave preference to local companies, The Sunday Star reported.

The government is not against foreigners investing in Malaysia, but "3G spectrum is a scare national resource," Lim said, according to the newspaper.

While admitting that the decision was controversial, Lim rejected criticism from analysts that the government had been unfair to DiGi.

"If I had given it to an unqualified company, then it is not fair," he was quoted as saying. The companies were evaluated based on their technical capability, financial management and business plans, he said.

The Communications Ministry could not be reached Sunday to comment on the report.

The two 3G licenses were awarded to fiber-optic operator TIME DotCom and unlisted pay-TV operator MiTV Corp.

The government has not said why these two companies - which do not own or operate traditional mobile phone networks - were chosen. It did order them to work with DiGi so that it could offer services on their networks.

After the decision, DiGi said it was surprised because it has a strong position in the industry. Company officials were not immediately available for comment Sunday.

Malaysia has more than 16 million mobile phone users, giving it a penetration rate of more than 60% among its 26 million people.

(END) Dow Jones Newswires"

Posted to the site on 12th March 2006