The money will also be used to develop an Internet calling service.

M Link's disposal of its interest in Portalnet follows a decision by its co-founders, Yaowapa Wongsawat and Monthatip Kovitcharoenkul, sisters of caretaker Prime Minister Thaksin Shinawatra, to pull out of the business of bidding for state IT projects.Samart Telcoms told the Stock Exchange of Thailand yesterday that its board had approved an increase in the company's registered capital, from Bt600 million to Bt720 million, through the sale of 120 million new ordinary shares.

All the new shares will be offered on a private placement basis at Bt10 each, totalling Bt1.2 billion.

The funds will be used to buy all the shares in Portalnet as well as creating a reserve for the company's working capital.

Samart Telcoms and Portalnet are in the same business of bidding for state IT projects. Samart Telcoms is 68-per-cent owned by Samart Corp Plc.

Watchai Vilailuck, Samart Corp's president, said the takeover meant that Samart Telecoms would secure Portalnet's revenue stream.

A Samart Telecoms source said the company would also spend around Bt500 million of the new funds to set up a joint venture with a US firm to develop a voice-over Internet protocol business, which is expected to be up and running in the fourth quarter of this year.

"The VoIP business is expected to generate around Bt2 billion in revenue to the company within the next three years," the source said.

Samart Telcoms will acquire 999,940 ordinary shares of Portalnet held by M Link, representing a 99.99-per-cent stake in the company, for a price of Bt140 million.

It will also purchase from M Link the right of claim over the debt, or repay the debt of Portalnet, worth about Bt628.67 million. The combined value of the two transactions is more than Bt768 million.

Portalnet, which has paid up capital of Bt100 million, is part of a consortium that won a deal to lease computer software to the Provincial Electricity Authority, with a total contract value at Bt3.2 billion. The company expects the system to be fully installed within three years and the company will receive income from it from the middle of next year through 2012.

The Samart Telcoms source said M Link earlier proposed that the total value of the deal should be Bt800 million to Bt900 million, adding that M Link approached many companies besides Samart Telcoms about buying Portalnet.

M Link also reported to the Stock Exchange yesterday that the deal with Samart Telcoms would give it more financial liquidity and help it focus on its main business of mobile-phone sales.

An industry source said M Link's disposal of shares in Portalnet reflected its move to stay away from state-related projects to avoid possible ill-effects from the current political crisis.

M-Link has been under close public scrutiny over allegedly capitalising on political ties to bag state projects. Its management has insisted it had nothing to do with the Thaksin government.

Samart Telcoms shares closed at Bt10.60 each yesterday, up from Bt10.50 on Friday, while M-Link's share price remained unchanged at Bt2.38. Samart Corp's share price dropped a hair from Bt9.80 to Bt9.75.

Usanee Mongkolporn

The Nation