Kuala Lumpur, June 23: Malaysian Internet services firm THB Asia Connect Sdn Bhd is tying its future to its biggest client, publisher Utusan Melayu (M) Bhd.

Utusan Melayu, publisher of a leading Malay language newspaper of the same name, has agreed to buy the entire 70 per cent stake of Asia Connect owned by Tongkah Holdings Bhd for 20 million ringgit.

With the switch in owners, Asia Connect moves from a diversified group with interests in manufacturing, information technology, health care and financial services, to one that is more focused on information services.

"It was a smart move on both sides," said Raymond Cheng, president and chief executive officer of Asia Connect, in an interview with Reuters on Monday.

Asia Connect designs Web pages and provides other Internet-related services.

"Tongkah has been a great shareholder and it's enabled us to be who we are today. Utusan will give us the rest of the synergy and help us deliver on all of the jobs we have on our plate," Cheng said.

Tongkah acquired the 70 per cent stake in Asia Connect for 15.75 million ringgit in cash in 1995. Its officials could not immediately be reached for comment.

For Utusan, the purchase will help it move into areas like high-technology, electronic indoor advertising panels, Azizi Meor Ngah, group executive director at the firm, told Reuters in an interview.

Besides its flagship newspapers, Utusan Malaysia and UtusanMelayu, the company also publishes magazines and books.

Having worked with Asia Connect since 1995, Utusan saw the company as a natural fit when it was searching for a technology partner, he said. Asia Connect designed Utusan's Web page and just completed a 1.8 million ringgit contract to do Intranet, or an internal Internet, for the company.

"We'll definitely let them operate as a separate company but in order to have a very lean structure, we'll split it into two -- Asia Connect local and Asia Connect international," Azizi said.

He said Cheng would continue to run Asia Connect and that he did not expect Utusan to make any drastic changes at the firm. Cheng is bringing about 40 employees to Utusan.

Newspaper publishers in Malaysia have increasingly been expanding their reach into information technology and multimedia applications.

New Straits Times Press (M) Bhd, which prints the main English language daily, has ties with private television station Sistem Televisyen Malaysia Bhd.

Azizi said the electronic billboards would be "intelligent" touch screens mounted in places like light rail transit stations and shopping malls, allowing users to surf the Internet and use E-mail.

"There's a convergence of computing, broadcasting and telecommunications," he said.

Analysts said Asia Connect should benefit from a parent company whose interests are more aligned with its own, and which may be willing to spend funds on the quickly-changing streams of technology.Tongkah had also been more focused on the medical business, analysts said.

"Their focus has been on healthcare," said an industry observer, noting its most recent offer to buy shares in Hospital Pantai Bhd.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.