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Saturday, December 15, 2012

Temasek Sells Down Thai Telecom Asset At Loss

Temasek Sells Down Thai Telecom Asset At Loss

Wall Street 8/19/2011 @ 4:56AM

Interesting news today that Singapore’s sovereign wealth fund has offloaded shares in Shin Corp, its major Thai asset, at a substantial loss. Temasek Holdings sold around 8% of Shin Corp for 36 baht a share, yielding $308 million, a substantial discount to the market price, according to Reuters:

"Temasek’s stake sale comes just over a month after the Puea Thai Party led by Yingluck Shinawatra, the sister of self-exiled Thaksin, won a general election in a landslide. She became the prime minister this month."

The sale of Shin Corp’s controlling stake by Thaksin’s family in 2006 triggered the events that led to his overthrow by the military in September that year.

The news of Cedar stake sale sent Shin Corp shares down more than 6 percent as investors worried that Temasek may sell more Shin shares at a discount. At 0509 GMT, the shares were at 38.25 baht, down 4.4 percent.

The 36 baht offer price is a 10 percent discount to Shin’s Wednesday close of 40 baht.

It is also a significant discount from the 49.25 baht a share that Temasek-linked units paid in 2006 to purchase a controlling stake in Shin Corp from the family of Thaksin Shinawatra.

Temasek may have decided to cut its losses as Thailand’s telecoms sector is hopelessly tangled in political and regulatory battles that have delayed the introduction of 3G, even as other Asian countries embrace 4G. Its placement of shares in the market will raise the free float of Shin, whose major asset is AIS, Thailand’s largest mobile operator. Investors don’t bother with the stock as there is so little liquidity.

But it doesn’t end the controversy over foreign ownership of Thai telecoms, which is supposed to be capped at 49%. Temasek still controls 88% of Shin Corp via two affiliates. Its largest competitor DTAC is controlled by Norway’s Telenor. Both are trying to launch full-scale 3G services, even as politicians and bureaucrats squabble over who has the regulatory authority. AIS remains hugely profitable, for all the political noise. 2Q net profit was up 26% on the year-earlier period.

SingTel ups direct stake in AIS by 2%
7 Nov 2011

Singapore Telecom (SingTel) has agreed to increase its direct stake in Thailand’s leading cellco Advanced Info Service (AIS) from 21.27% to 23.32% at a cost of up to THB7.9 billion (USD255 million). Singapore-controlled, Thai-based conglomerate Shin Corp has agreed to sell 61 million shares on the Thai stock exchange representing a 2.05% stake in AIS. The move to grab an additional 2.05% of AIS is aimed at maximising value from SingTel’s existing stakes in affiliated telecoms operators in countries including Thailand, India (Bharti Airtel), Indonesia (Telkomsel) and Pakistan (Warid Telecom). If approved by regulatory authorities and stakeholders, the shares will be acquired through a subsidiary, SingTel Strategic Investments, at a price set at THB7.3 billion-THB7.9 billion.

TeleGeography’s GlobalComms Database notes that Singapore has a much larger controlling interest in AIS than SingTel’s direct stake would suggest. AIS is currently owned by Shin Corp (42.6%) and SingTel (just under 21.3%), with 36.1% in free float, but Singapore’s government investment arm Temasek Holdings has a 42% stake in Shin Corp via Thai-registered Aspen Holdings, and also owns 55% of SingTel. Temasek’s other shares in Shin Corp are held through a nominee structure to keep direct foreign shareholdings under the 49% legal limit; when the Singaporean investor took over the Thai group it took indirect control of around 54% of Shin’s largest stakeholder Cedar Holdings, but unloaded some stock to Thai funds to meet stock exchange regulations dictating that listed companies must maintain a free float of at least 15%. AIS effectively fell into foreign hands in January 2006 when the family of Thaksin Shinawatra sold its 49.59% stake in Shin Corp to Temasek in a tax-free deal worth THB73.3 billion, and Temasek went on to gain over 96% of Shin through a mandatory share offer. The deal stoked up fierce public resentment towards the then-prime minster for offloading Thai assets to an overseas government. In the run-up to Thailand’s military coup in September 2006, political action groups urged the boycotting of AIS, causing a slowdown in its customer take-up rate lasting a number of months

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