Prime Minister Dr Mahathir Mohamad today said state-controlled communications giant Telekom Malaysia is keen to take over Technology Resources Industries Bhd (TRI).

"Telekom Malaysia is obviously interested (in taking over TRI), that's why it has bought a stake," Mahathir told reporters.

Mahathir, who is also finance minister, said Malaysia did not need many telecommunications players. "We need three companies only."

There are currently five telecoms firms in the country.

The Star newspaper cited dealers Friday as saying they believe Telekom has been snapping up more TRI shares on the market and via off-market deals over the past few days to boost its stake to 25 percent, making it the biggest shareholder in TRI.

On Thursday 137.7 million TRI shares, or a 6.9 percent stake, changed hands in off-market deals for about RM373 million, it said.

Consolidation obvious

Mahathir said with the advent of third-generation (3G) mobile services and the huge capital investment required, it was obvious the industry had to consolidate.

The premier gave his assurance Telekom would give a "fair deal" to the public when the mobile operations of TRI and Telekom are merged.

Analysts recently described Telekom Malaysia's desire to take over TRI as a wise corporate strategy but said it would hurt consumers.

Before Telekom's on market purchases over the past few days, held direct and indirect stakes in TRI totalling 15.6 percent.

It had previously purchased a 13.14-percent stake at RM2.75 ringgit a share from state asset manager, Pengurusan Danaharta Nasional Bhd's foreclosure on Tajudin Ramli's loan collateral.

Telekom chief executive Mohamad Khir Abdul Rahman has hinted his firm may raise its present stake in TRI to a controlling interest as a means of facilitiating the merger of the mobile phone operations of the two companies.

"We are always looking at opportunities to increase our stake (in TRI) and it can be done in many ways.

"There are various options and possibilities and levels of opportunities. It can be through the purchase of a block of shares, via on-market and off-market deals," Mohamad Khir was quoted as saying by The Star newspaper.

"But whatever the mode, it should be commercially viable," he added.

Strengthening cellular business

Mohamad Khir said it would be ideal for Telekom to gain a controlling stake in TRI, but Telekom's immediate focus was "to get all parties to agree to a process of consolidation."

Mohamad Khir said Telekom was not forced by the government to take up Tajudin's pledged TRI shares from Danaharta.

"No, we were not forced by the government to buy TRI. There was no nudging. To us, we look at TRI as a good opportunity to strengthen our cellular business. It was purely a business transaction," he said.

Mohamad Khir declined to comment on whether TRI's strategic allegiance with DiGi.com to jointly apply for one of three 3G licences will continue.

"We do not know if it (the memorandum of understanding) is binding and we cannot comment of it," he added.