State-owned Telekom Malaysia Bhd said there may be room for more mergers in Malaysia's cellular sector but an analyst Sunday ruled out any immediate merger activities.

"Telekom and Maxis will have to digest the acquisition that they have done. It is unlikely they will fork out more cash until they can extract profitability. We are unlikely to see any mergers in the next 12 months," a telecommunication analyst said on condition of anonymity.

Mohamad Khir Abdul Rahman, Telekom's chief executive said Saturday competition in the mobile industry had narrowed to three players.

"But we don't know what is going to happen next. It may even go down to two. Eventually, in any country, there should be two strong cellular operations, each with its own niche profile," he was quoted as saying by the Star newspaper.

Telekom Malaysia, Malaysia's fixed line leader, merged its mobile unit with former rival Celcom, Malaysia's second largest cellular operator.

To be de-listed

Telekom Malaysia now holds 93.29 percent of Celcom Malaysia after a general offer for shares and expects the unit to be de-listed from the Kuala Lumpur Stock Exchange.

Malaysia's top mobile operator, Maxis Communications Bhd, had also secured shareholders nod to buy cellular assets of rival Time dot.Com. Malaysia's third and smallest mobile company is DiGi.Com.

The analyst said DiGi had said that it wants to play a marginal role and Norwegian telco Telenor SA, which owns 61 percent of the company, had not indicated that it wants to sell its stake.

"But I think when they are unable to compete with the other two giants and the pricing is good, they may then sell out," he said. - AFP