Public purposes belong in the licence, not in the shareholder's letter
Government-linked shareholders sometimes ask the operators they invest in to meet public needs directly. The needs are usually real, but a shareholder's request is the wrong instrument: it loads the cost on one company and often serves the purpose worse than a licence condition would.
Several of the largest companies in Southeast Asian telecommunications have a government, or a government-linked investor, on their share register. Seralis is one of them. A government-linked investment company holds 24 per cent of our shares and nominates two of our eleven directors. In my experience such shareholders are patient, well informed and serious about governance. They also, from time to time, write letters.
The letters are rarely improper. They ask the company to extend coverage to a list of villages, to keep a rural shop open, to support a public digital programme or to hold a price for a group of customers whose circumstances worry the government. Each request has a public purpose, and most are things I would like Seralis to do. My argument here is that the shareholder's letter is the wrong instrument for them, and that a company does its government-linked shareholders a service by saying so.
Two channels for one request
A government has two ways of influencing a telecommunications company in which it holds shares. It can act as regulator and policymaker, through licence conditions, spectrum assignments, the universal service programme and published policy. Or it can act as shareholder, through its votes, its nominee directors and its correspondence with the board.
The first channel applies to every operator equally, is published and can be challenged. The second applies only to the companies in which the state happens to hold shares, is usually private and is hard to refuse. When a public purpose travels through the second channel, three things go wrong.
The cost falls on one company's other shareholders. If Seralis extends coverage to three hundred villages because a shareholder has asked, our competitors are under no such obligation, and our institutional and individual investors pay for a policy their government has not asked anyone else to fund.
The obligation goes unpriced. A licence condition is negotiated, costed and reflected in the price of spectrum or the terms of a licence. A letter arrives without any of that, and boards tend to agree to its requests without asking what they cost, partly out of courtesy and partly because the shareholder holds a large block of votes.
And the purpose itself is served badly. A coverage request met by one operator produces one network in a village. The same request delivered through the universal service programme or a shared rural network can bring every operator's customers into coverage at a lower cost per household. A villager whose phone happens to be on a rival network gains nothing from our letter-driven mast, and the government that asked for it has spent its influence on a partial answer. Worse, the next time the regulator designs a rural programme, it does so without knowing which villages one operator has already quietly covered.
What the licence can do that a letter cannot
In 2024, soon after the merger, Seralis received a letter from our government-linked shareholder asking us to bring 4G coverage to 310 villages in Sabah and Sarawak, mostly settlements of a few hundred people. The request was sincere, and the villages genuinely lacked service. Our engineers estimated the cost at about RM240 million over three years, with revenue that would never recover it.
I did not recommend refusing. I recommended that the board answer the letter by proposing a different route. With the chair's agreement we wrote back, setting out what the coverage would cost and suggesting that the villages be brought into the universal service programme, to which licensees, Seralis included, already contribute. We offered to build and operate a share of the sites under that programme on the same terms as any other operator, and to host other operators' customers on them.
The shareholder's nominee directors were not pleased at first, and I understood why. To them the request was a modest ask from a long-standing investor, and our answer looked like bureaucracy. The discussion that followed was frank. What persuaded them, I think, was the arithmetic. Under the universal service route about 190 of the villages are now being connected on shared sites, and customers of every operator there will have service, not only ours. Seralis is building 74 of those sites. The remaining villages are still waiting, and I do not pretend that the slower route is costless to the people who live in them.
How I answer the letter now
Since then the board has adopted a simple practice. Any request from any shareholder that has a public purpose rather than a commercial one is brought to the board by the chair, with a management paper stating three things: what the request would cost, whether an existing licence obligation or public programme already addresses it, and whether the same purpose could be served for every operator's customers rather than ours alone. The practice applies to all our large shareholders, not only the government-linked one, because commercial shareholders have public causes too.
Some requests pass that test and we fund them ourselves. In 2025 we agreed to keep 40 rural Seralis shops open beyond their commercial life for two years, at a cost of about RM6 million, because no public programme covered retail presence and the shareholder's concern for elderly customers who pay their bills in cash was well founded. We recorded the decision, its cost and the date on which it ends in the board minutes. That is, I think, the right way for a company to meet a public purpose voluntarily: knowingly, at a stated price and for a stated period.
The Malaysian Code on Corporate Governance asks directors to act in the interest of the company as a whole, and it expects nominee directors to understand that duty. Most do. The difficulty is rarely bad faith. It is that the shareholder's letter offers a quick way to get something done, and quick ways are hard to resist on both sides of the table. Directors of companies with state shareholders should ask how many such requests reached the company in the last year, which channel each used and what each cost. The answers will tell them a good deal about whether their board acts for all its shareholders or only for the one that writes.