Why Tenaga should be delisted!

Tenaga Nasional Bhd (TNB) was ranked the highest turnover of public listed on Bursa Malaysia for the past few years. Only in year 2005, it position has been taken by Sime Darby. TNB still rank second in year 2005.

Science, Technology and Innovation Minister Datuk Jamaludin Jarjis was made second Finance Minister after become chairman of TNB. Political analyst said that he is close to Deputy Prime Minister Datuk Seri Najib Tun Razak, thus, as a balance of power, he has to transfer out from Finance Ministry.

Ex-Finance Mininster, late Tun Tan Siew Sin and Tun Daim was at one point control Sime Darby before.

Tenaga, Maybank and Telekom (TMT)was the top three market capitalize company in Bursa Malaysia before MISC rise to second spot last month. TMT's price move has significant influence on KLSE composite index.

Thus, everytime when the government want to move the stock market or KLSE composite index. the simplest way was to make a tariff hike so the TNB profit would increase potentially and shares prices of TNB would increase and composite index would rise cause by rise in shares price of TNB.

However, when tariff hike was announced. Economist would view that Malaysia inflation rate would increase and thus recommend to sell Malaysia's shares. KLSE composite index might not move up but down instead.

TNB was a monopoly and people do not have alternative way to get their power supply. We do not have alternative shares for TNB either. However, we have a number of Independent Power Producer (IPP)to choose from. You can buy Malakoff or YTL power but you have only one Tenaga. Similarly, you have Digi, Maxis for wireless telecommunication but you only have Telekom for fixed line. Thus, I feel we should remain Celcom on Stock Exchange but delisted Telekom.

This is because Telekom and Tenaga can opt for price increase or tariff hike to increase their profitability. However, such price increase is not tested in free market as they is no competitor. However, senior management of the company get their stock Option and smiling their way to the bank when they announced price increase and value of their shares and stock option increase.

Similarly, Pos Malaysia Bhd announced increase in postage rate and some report saying that a number of the senior management of the company become millionaire after the announcement. Shares prices keep on inceasing last week when index is coming down.

Last week, a columnist of Oriental Daily stated that a post office in a small town in Johor has only two staff. One at the counter and one become postmen. This clearly is under staff as the queues is usually long and people usually have to wait long hours to have counter services. Postal delivery at remote area usually delay in receiving their mail. Numerous complaint has been send to HQ but no action was seen to be taken.

In a free market when there is a competitor. People usually would go to competitors' shop and profit of Pos Malaysia Bhd would reduce. However, Pos Malaysia Bhd is monopoly. People have to used their service despite unsatisfied with the services. Senior Management still can become millionaire despite not serve their customer well.

Thus, I feel that TNB, Pos Malaysia Bhd should be delisted from stock exchange. Whereas Telekom should be replace by Celcom.

Remuneration of senior management should not be base on financial performance alone. A Balaced Scorecard system should be included in Key Performance Indicators (KPI) where Customer Waiting Time, Number of Complaint Received, Number of compliment letter received should be included in the KPI.

I also support the new IFRS to recognized Employee Stock Option (ESOS)as a cost of the company rather than merely an increase in capital.

Update: If Tenaga has been delisted, theere would be no pressure of tariff hike to increase share price. Government would have more option in controlling inflation. Major power consumer like steel industry would be more competitive. Few year ago, our steel industry face serious threat from steel from Russia. Which give electricity rebate to their steel industry. Thus, I feel all steel industry in Malaysia should be givena IPP licence like recently give to Lion Goup to make our steel industry more competitive.


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