Not only would Singapore's investment arm Temasek Holdings suffer if yesterday's ruling by the Supreme Administrative Court eventually leads to the revocation of concessions or licences held by Shin Corp's subsidiaries, but so would all minor shareholders who hold Shin and its subsidiaries' shares.

Investors, however, seemed to have a different view of the court's decision to hear a case against the telecom giant for alleged violation of foreign-ownership rules.

Despite the uncertainty, Shin's share price edged up Bt0.25 to end at Bt29.25. Its three listed subsidiaries had mixed fortunes. While Advanced Info Service (AIS) lost Bt1 to end at Bt87.50, Shin Satellite (ShinSat) gained Bt0.05 to Bt7.20 and iTV rose Bt0.02 to Bt2.84.

A possible explanation could be the case of Thai AirAsia Co Ltd. Operating in the aviation business on a licence from the Transport Ministry, Thai AirAsia earlier narrowly escaped a harsh judgement against it.

Following Temasek's takeover in January, Shin Corp sold half its share in the company to a joint venture called Asia Aviation Co Ltd, set up by the company and a logistics businessman. By doing so, Thai AirAsia's foreign shareholding was kept at the statutory limit of 49 per cent and it is allowed to continue to operate in the aviation business.

However, amid all the political change - with the Thai Rak Thai Party on the brink of collapse and the departure from the scene of its former leader Thaksin Shinawatra - it is important to look at the issue from a different angle. The Transport Ministry allowed Thai AirAsia to hold on to the licence when Thai Rak Thai were still in power, but given the political upheaval, will AIS, ShinSat and iTV escape the fallout?

If they are stripped of their concessions or licences, Temasek would suffer the most. Through Cedar Holdings and Aspen Holdings, which it directly and indirectly owns, Temasek now owns 96.12 per cent in Shin Corp. In January and March, the investment group bought a combined 2.9 billion shares at Bt49.25 apiece.

Therefore, since wrapping up the tender offer for Shin shares in March, Temasek to date has lost Bt58 billion in accounting value from the investment, based on Shin's closing price of Bt29.25 yesterday.

If the three companies' concessions or licences were to be revoked, Shin would be a skeleton company. As a holding company, Shin earns mostly from its investment in AIS, the mobile-phone company which operates under a licence from TOT Plc.

In the second quarter, for example, when Shin recorded a net profit of Bt1.59 billion, the holding company took into account the contribution of Bt1.76 billion from AIS. In the quarter, it also booked Bt70 million from iTV.

However, Shin had to book a loss of Bt13 million from ShinSat during the same period.

Aside from the financial loss, because of the deal, Temasek has also encountered negative sentiment from the Thai public. Since the organisation - which has been making major investments in many countries - bought Shin shares from the Shinawatra and Damapong families, the Thai public has looked at it with a suspicious eye.

It has been drawn into the Thai authorities' nominee investigation, which is centred around Kularb Kaew Co Ltd. According to a preliminary finding of the Commerce Ministry, Pong Sarasin and Supadej Poonpipat were likely to have been its nominees when they founded Kularb Kaew. Kularb Kaew is a major shareholder of Cedar, which now holds more than 50 per cent in Shin Corp.

Market observers are unsure whether Temasek will pull all its investments from Thailand, if this investment - which it claims was legally executed under the Thai law - were to capsize.

If so, it could lead to the eroding of confidence among foreign investors, given that Temasek has faced no such resistance in any other country in which it has been investing. Lawyers and multinational companies are now keeping a close watch on the matter, looking for clues that Thailand is turning its back on foreign investment or whether the situation is born entirely from resentment against Thaksin.

Aside from Temasek, other shareholders of AIS, ShinSat and iTV would also suffer greatly if the three companies were stripped of their concessions or licences.

These investors were seen to have been taken advantage of when Temasek was waived from the mandatory tender offer for shares of ShinSat and iTV. Meanwhile, AIS's minor shareholders did not enjoy any benefits from the transaction, given that Temasek opted to offer only Bt72.31 for each AIS share, while the market price was then above Bt100.

If the concessions or licences are taken away, these shareholders will be punished twice. This must be a scenario they do not want to think about.

Business Desk

The Nation