Nora-Sakari ( A proposed JV in Malaysia)
Since the proposal negotiation started in 2001, it has been continuing almost two and half years, around 20 meetings held, but no decision made yet. The main issue was agreed both sides that establish JV Company in Malaysia, but rest of the issues still not compromised.
For Nora, establishing JV Company is important issue to obtain of sharing “five-year project worth RM 2 billion” with another 4 companies. Secondly in acquiring the knowledge of Sakari’s digital switching system will bring high technology to Nora, also Nora would have chance to go further to bigger South-east Asia market with high technology system and experienced management team. Plus Nora will able to develop and improve own digital system based on western technology further.
On the other hand, for Sakari, there are many advantages including entering Malaysian market that has 4.5 times more population then Finland( In telephone business population is major issue) , and establishing JV is a way to enter high growth Asia Pacific market with local knowledge and experience with Asian business culture. Regarding to figure, the large potential for telecom facilities was also evidenced in the low telephone penetration rates for most of the South-east Asian countries. For example- 20 phone lines per 100 people in Malaysia comparing to developed country such as Germany 55 lines per 100.
Secondly, even this investment considered long-term agreement, Sakari was very careful about raising powerful competitor in the future that developed based on Sakari’s technology. But they have possibility to secure this mutter by adding some regulation or issue an agreement such as no technology adopting to another Malaysian company or …
In conclusion, formation of the JV is the best option instead of the considering licensee or FDI for both Nora and Sakari, so following suggestion should be given to two sides.
Nora- it seems they don’t have time to start over again...