Total Access Communication (DTAC) will float 44.4 million shares in an initial public offering on the Stock Exchange of Thailand (SET) later this year.

The country's second-largest mobile-phone operator will issue 16.4 million new shares with a par value of Bt10, and its parent company, United Communication Industry Plc (Ucom), will sell another 28 million DTAC shares.

The move has created a dilemma for Ucom, because under SET rules, it is regarded as a holding company, since it generates income mainly from holding shares in DTAC. Therefore, it must hold at least 51 per cent of DTAC's shares, because DTAC is basically a public utility. Alternatively, it must delist its shares from the stock exchange.

Ucom said in a statement that it would remedy the situation by securing a 51-per-cent interest in DTAC, finding a substantial alternative business to dilute its dependence on income from DTAC or voluntarily delisting from the exchange.

DTAC said it had submitted a draft IPO prospectus to the Securities and Exchange Commission and the SET for their approval.

It will remain listed on the Singapore Stock Exchange after listing in Thailand.

DTAC CEO Sigve Brekke said yesterday that proceeds from the IPO would be used for working capital and general affairs of the company.

"But this listing hasn't been carried out yet. We are just preparing ourselves for a potential listing by the end of this year, and this is another step forward."

He declined to comment on a final IPO share price. "It's too early to talk about this. If we decide to go ahead with the listing, we will then consider what the right price should be," he said.

The timing of the SET listing is subject to approval from the relevant authorities, market conditions and finding a solution for the status of Ucom, since Ucom must comply with SET regulations within six months of DTAC's listing.

Ucom reported to the SET yesterday that the 28 million ordinary shares it would offer in the IPO were equivalent to 6.11 per cent of DTAC's current total shareholding and are worth about Bt4.199 billion. The value is based on the average trading price of DTAC shares on the Singapore Stock Exchange for five business days prior to the company's board approving the offering.

Ucom currently owns 43.13 per cent of DTAC, while Telenor Asia holds 32.6 per cent.

DTAC had 10.62 million mobile-phone subscribers, or about 31 per cent of the market, as of the end of June. It has registered capital of Bt5.1 billion, of which Bt4.58 billion is paid up.

Listing on the SET this year would qualify DTAC for a 5-per-cent reduction in corporate tax, from 30 per cent to 25 per cent, in line with Finance Ministry incentives for encouraging Thai companies to list on the SET.

Moreover, DTAC will be able to access capital in both the Thai and the Singaporean markets.

Telecom Reporters

The Nation