With 1BestariNet, YTL eyes return to concessions scene

KUALA LUMPUR, Nov 9 — The once-connected YTL Corp is using the multi-billion 1BestariNet e-learning project to anchor its return to the government concession scene after years out in the cold, according to a report in The Edge financial weekly.

The Edge also pointed to various lucrative projects - including power production, a high-speed railway between Kuala Lumpur and Selangor and a redevelopment project - as signs that YTL was again venturing into federal jobs.

“For years, the YTL group has not put in strong bids for regulated assets such as power plant concessions in Malaysia because of the political backlash.

“But the recent change in tack suggests that the Yeoh family is comfortable with today’s environment and confident in its partners to take on concession assets,” The Edge said in its report.

YTL Corp and its managing director, Tan Sri Francis Yeoh, were often linked to the Mahathir administration. Despite repeated denials, the association drew allegations of cronyism in deals involving the corporation and the government.

Its return to the federal contract arena has also not been without controversy.

Amid attacks on the 1BestariNet project aiming to connect 10,000 schools nationwide to the internet to enable online learning, The Edge reported YTL as saying that the project had been “politicised” despite other countries being eager to study the Malaysian model for possible adoption.

“Malaysia is the only country outside the US with a nationwide 4G network. When Google found out about this, they were very excited to get on board with this project.

“It will replace the school labs of the past and transform the country’s education [system]. Unfortunately, it has become politicised,” YTL Power International Bhd executive director Datuk Yeoh Seok Hong was quoted as saying.

He also pointed out that YTL Power had won the project through a competitive tender, beating other companies like Telekom Malaysia Berhad.

The government will fork out a total of RM3 billion over 15 years to pay for the 4G network infrastructure and the maintenance of the Frog Virtual Learning Environment (VLE), while 10 million students, The Edge reported.

But the federal opposition, particularly Bukit Bendera MP Zairil Khir Johari had voiced his doubts, saying that the total bill that Putrajaya would have to foot for the 4G network, VLE as well as Chromebooks would come up to a whopping RM9 billion instead.

Zairil had also claimed that the Chromebook laptops supplied by YTL to the government were overpriced at an estimated RM 1,255 each, instead of the market price of RM988 offered here by manufacturer Samsung.

Amid claims that the 1BestariNet project was too expensive, Yeoh said it would have been more expensive to build computer labs and pay for the supporting infrastructure and maintenance costs.

At the moment, the 1BestariNet project has yet to turn a profit although the company does not need to pay substantially more to connect schools in rural areas to the internet, Yeoh was reported as saying.

“Currently, it is losing money. That is because the cost of 1BestariNet is RM3 billion, the cost of the whole network. It can’t be segregated from the whole network. It isn’t just a contract, it’s an investment.

“Of course, in the long run, it will generate returns. Our network is amortised over five to six years compared with a 15-year contract. However, I can’t share those numbers,” Yeoh said.

The Edge also said 10 million students, parents and teachers are expected to get IDs, which would enable them to use the VLE and get free internet with broadband quota of 200MB for a year.

The Edge suggested that YTL stands to double the number of subscribers paying for its 4G services, if 5 per cent of the 10 million users take on the service.

Zairil previously alleged that taxpayers and public schools could be funding the commercial expansion of YTL’s YES 4G network in the name of promoting the Education Ministry’s e-learning scheme.

According to Yeoh, YTL is nearing the 500,000 figure of paying subscribers for its 4G service, with the group expected to break even on the RM3 billion investment by next year.

When commenting on the return of YTL to the regulated assets scene, The Edge also noted that YTL Power had recently tendered the lowest price for a project to build and operate a 2,000 MW coal-powered energy plant.

According to industry sources, YTL had bid for RM25.12 sen per kilowatt hour (kWh) against 1Malaysia Development Bhd (1MDB)’s relatively higher RM25.33 sen per kWh and Tenaga Nasional Bhd (TNB)’s RM28.07 sen per kWh.

The tender for the project is expected to be awarded next year, sources told The Edge.

YTL already has a concession to the 1,212 MW independent power plants (IPP) it owns, but the power purchase agreements with the government - which was not renewed - will end by September 2015.

YTL — which had constructed the Kuala Lumpur International Airport-Kuala Lumpur railway track — would be an industry player to watch in the bid for the proposed lucrative high-speed rail link connecting Kuala Lumpur and Singapore.

YTL is also poised to get a contract to redevelop the old Customs, Immigration and Quarantine (CIQ) building in Johor, The Edge cited sources as saying.