Shin Corp denies talk of takeover by SingTel

Published on December 17, 2005

Shin Corp has officially denied reports that Singapore Telecom is getting ready to take over Prime Minister Thaksin Shinawatra’s flagship company, but financial experts believe politics and expediency lend considerable weight to the rumours. Democrat MP Korn Chatikavanij said he would not be surprised to see Thaksin’s family sell its shares to SingTel because the prime minister had already achieved his goals.

He said Thaksin entered politics to protect his business empire and he had seen the overall share value triple in his five years as premier.

Thai Rath newspaper reported yesterday the Shinawatra family would sell their combined controlling stake of over 49 per cent at Bt45 apiece.

It said SingTel would buy the stock with a cash payment and a share swap with Shin. The sell-off is part of a strategy to tone down public criticism over Thaksin’s conflicts of interest, it said.

Shin Corp chief executive Boonklee Plangsiri notified the SET yesterday that the speculation was unfounded. The company’s share price closed at Bt40.25 yesterday, down from Bt41.
If SingTel takes control of Shin Corp, it will also control mobile phone operator Advanced Info Service, low-cost airline AirAsia, loan provider Capital OK, television station iTV and Shin Satellite, which is about to reap rewards from iPSTAR.

“We’ve never been approached by any foreign telecom firm and I myself have never heard of anyone trying to approach us with a deal,” Boonklee told The Nation.

SingTel is a 19.8-per-cent strategic partner of Advanced Info Service, while Shin owns 42.86 per cent. The phone operator’s share price closed at Bt102 yesterday, down from Bt104. AIS currently has over 16 million subscribers from 27 million mobile phone users in Thailand.

This is the second time that Shin has had to deny takeover reports in as many months. The first batch of rumours surfaced in October when Telenor of Norway successfully took over United Communications Industry (Ucom) in a deal worth more than Bt8 billion. The transaction marked the separation of the Bencharongkul family from its telecom flagship, a major competitor of Shin.

Later, True Corp took over UBC to create much excitement in the telecom industry. Rumours also had it that China Telecom was interested in Shin Corp, which needed fresh cash to invest in 3G broadband cellular services.

Khunying Pojaman Shinawatra, Thaksin’s wife, denied the rumours and insisted the family had no intention of selling Shin Corp.

Her insistence failed to kill speculation since the telecom market was close to saturation point and Thaksin was under growing political pressure.

Since the beginning of the year, senior executives of Shin Corp and AIS have been unloading stocks to realise capital gains.

Of Shin Corp’s shares, 14.67 per cent belong to Pinthongta Shinawatra, Thaksin’s daughter, 13.49 per cent to Bhanapot Damapong, Pojaman’s brother, 9.8 per cent to Panthongtae, Thaksin’s son, and 0.67 per cent to Yingluck, Thaksin’s sister.

SingTel is Southeast Asia’s largest phone operator with a cellular subscriber base of more than 74 million through its stakes in regional mobile phone service providers. Analysts said SingTel could take all of the Shinawatra’s shares in Shin because it does not exceed the legal limitation of 49 per cent.

An analyst at a foreign brokerage house said the sell-off news was more like a very “strong unconfirmed report”.

“Going forward, there might be growing political pressure facing the family over concessions or regulations in the telecom industry. So selling off might be one way to reduce the pressure,” he said.

“But on the other hand, the logic goes against selling off Shin Corp because the family would fetch US$4 billion [Bt160 billion] from the deal. The question is what they would use the money for, or how to make the re-investment.

“There are not many businesses out there worth making the investment. Shin Corp has been trying to diversify its investment over the past four to five years, but the investment in Air Asia or Capital OK has not been that substantial compared with that in AIS,” he said.

“Given this analysis, there is a possibility of below 50 per cent that the Shinawatra family will sell off.”

Korn said AIS, which contributes about 90 per cent of Shin Corp’s profits, does not have a bright future because the cell phone market appears to have reached saturation point.

The latest AIS report showed that the firm failed to meet its revenue target, Korn said.

With political turmoil undermining the government, Thaksin feels “insecure” because he would not be able to exploit the state to protect his assets if he was ousted as premier, he said.

Trakoon Meechai, a Chulalongkorn University political scientist, said any such sell-off could be part of Thaksin’s plan to step down with honour.

Thaksin wants to ease pressure from all sides and quell accusations of conflicts of interest, he said.

Shin Corp’s sell-off plan might also be linked to the government’s mega-projects and Thaksin’s recent declaration that foreign firms were welcome to compete for concessions. He said Thaksin might put the money into joint ventures with foreign firms.

Create Date : 17 ธันวาคม 2548 Last Update : 17 ธันวาคม 2548 20:49:48 น. Counter : 805 Pageviews.		0 comments
Share Tweet