Brokerage houses believe PTT Plc should be able to address all the issues raised by consumer groups and convince the Supreme Administrative Court not to accept their petition to annul its listing on the stock market.

But analysts admit they have little idea what the court will rule.

Tisco Securities is convinced that the court would consider the wide-ranging implications for the economy as a whole - if it rules against the privatisation.

"A favourable ruling would be positive for the share price, which has been under pressure since the first quarter of 2006. However, some uncertainty about the court's verdict in this case is unavoidable," Tisco said in a research paper.

Asia Credit Securities expressed similar confidence.

"We believe that PTT's privatisation followed the Corporatisation Act and now the government, led by the Finance Ministry, remains the majority shareholder with a 68-per-cent stake in the company. PTT to date remains committed to contribute returns to the state in the forms of income taxes and dividend," the securities house said in its paper.

The research papers were produced after consumer groups filed a petition in the Supreme Administrative Court on Thursday, asking the court to nullify the two laws that enabled the privatisation of PTT in 2001.

The court has not yet decided if it will proceed with the case.

An analyst from a local brokerage said analysts had no idea how the court would decide on the petition.

"In the worst-case scenario, PTT will be de-listed from the exchange. That means PTT will need to buy back 2,954 million shares which are floating in the market, which could be valued more than Bt200 billion based on the current market price," he said.

He noted that such a repurchase would reduce the exchange's market capitalisation by more than Bt600 billion, from Bt5 trillion at present.

"It would not be an easy thing to de-list PTT. This dispute could end with a compromise: PTT could return the pipelines to the government and rent them instead. That would minimise damage to the government, investors and PTT," the analyst commented.

Tisco said in its paper that the government should not buy back PTT shares as it could add to the budget deficit for the 2007 fiscal year, which is currently estimated at Bt150 billion.

It also calculated that a buy-back would increase public sector debt considerably, from 44.8 per cent of gross domestic product to 47.3 per cent. If the government had to buy back the shares, this would crowd out upcoming infrastructure investment as the country's public debt level may not exceed 50 per cent of GDP.

"Not only would the government have to obtain more funds to buy PTT shares on the market, it would also have to shoulder a bigger bill for capital expenditure, as the company plans to spend Bt239 billion during 2006-2010 mainly to expand its gas business. This would also be accounted as public debt since the government would be the sole owner of the company," Tisco said.

While highlighting the costs of a buy-back, Tisco believes that PTT should be able to clarify all of the issues raised by the consumer groups and this would be sufficient to convince the Supreme Administrative Court not to accept the petition.

It said PTT remained a state-owned enterprise, but was being run more efficiently. At a time of great public suspicion of business deals undertaken by the present government, PTT management had tried to allay concerns by emphasising that the privatisation took place under applicable laws and Cabinet resolutions.

"More importantly, as a privatised company it can claim to operate in a more flexible and efficient yet transparent manner. PTT has also reaffirmed that it intends to spin off its gas transmission pipeline business as stated in the initial public offering prospectus," Tisco said.

PTT intends to complete the spin-off by the year's end or in the first quarter next year.

Contrary to the consumer groups' argument that PTT still maintained a monopoly on pipeline tariffs even though it was privatised, Tisco said, PTT had no absolute power to set the charges as it was still regulated by several government agencies, including the Energy Policy and Planning Office and the Energy Ministry.

Moreover, as a public service, PTT continued to delay increases in retail fuel prices despite rising crude oil prices and as a result was burdened with lower margins (or even losses) in its oil marketing business, Tisco said.

Despite its confidence that PTT could sail through the current challenge, Tisco admitted that PTT's share price would be under pressure until the court makes a decision.

PTT shares ended up Bt2 on Friday to close at Bt238. They stayed unchanged yesterday, reflecting investors' belief that the court would not proceed with the petition. Tisco itself has kept its target share price for PTT unchanged at Bt347.