Total Access Communication (DTAC) yesterday announced its plan for an initial public offering (IPO) that would raise Bt7 billion, injecting rare positive sentiment in the dull Thai bourse.

Tentatively set to list on the Stock Exchange of Thailand (SET) in the second quarter, DTAC would become the first Thai company with dual listing as it has already been traded on the Singapore Exchange since 1995.

Though it won't be the stock with the biggest market capitalisation, DTAC is expected to be the biggest stock seeking listing on the SET since 2003. It would also be one of the top 20 stocks with the highest market cap.

DTAC is awaiting approval for its listing plan from related agencies.

DTAC chief executive Sigve Brekke said he had already informed the Finance Ministry and concerned government agencies about the IPO plan, telling them this would help boost market sentiment. "This is a very significant step for DTAC. Given our improving market share, financial strength and strong growth potential, it's the right time to share ownership of our company with local investors," Brekke said.

"This transaction shows our confidence not only in the bright prospects for DTAC but also for Thailand as a whole."

The ongoing political and economic uncertainty has discouraged many Thai companies from moving ahead with their plans to trade on the SET.

Securities and Exchange Commission secretary-general Thirachai Phuvanart-naranubala said recently the number of IPO applications this year was much less than last year. He cited the capital-control measure and amendments to the Foreign Business Act as the major reasons discouraging new IPOs, besides the political situation.

Brekke believes DTAC's listing would contribute tremendously to the market capitalisation of the SET. DTAC's market capitalisation of approximately Bt70 billion would make it one of the 20 largest companies traded on the Thai exchange. The Singapore-listed firm will maintain its dual-listing policy.

DTAC shares in the Singapore stock exchange closed at US$4.24, up 2.4 per cent.

Under the listing plan in Thailand, DTAC will split the par value of its shares from Bt10 to Bt2. Then, it will offer 222 million shares in the IPO. Of the total, 88 million will be newly issued shares while a number of 140 million shares are currently held by its parent company United Communication Industry Plc (Ucom).

DTAC has yet to finalise the issue price of the IPO shares.

Once DTAC is listed on the SET, the company will launch a share-swap offer for all shares of Ucom. Ucom shareholders will receive 1.95 shares of DTAC for every share held. After the process, Ucom will become DTAC's wholly owned subsidiary and it will be delisted, tentatively in the third quarter.

Buoyed by the share-swap news, the Ucom share price rose by Bt7.50 to Bt49. It was the seventh most active stock yesterday.

Brekke said DTAC planned to spend around Bt3 billion from the proceeds on network investments this year. The company will spend a total of Bt12 billion on the network rollout and upgrade this year.

Ucom will utilise Bt4 billion from the proceeds to repay its own debt, which totalled Bt3.7 billion as of last December.

Currently, DTAC has around 12 million mobile-phone subscribers. Last year, it posted a net profit of Bt4.9 billion, up 7.1 per cent year on year.

When listed on the SET, DTAC will qualify for a 5-per-cent tax break for three years after the IPO (2008-2010).

Brekke admitted that DTAC's IPO contained some risk factors, relating to the probe of the company's cellular concession and the alleged nominee case. However, he said, DTAC had decided to go ahead with the listing.

 The Council of State is probing all private telecom concessions, including that of DTAC, to see if their concession amendments in the past complied with the relevant laws.

Thai Telco Holdings is one of several companies being investigated by the Commerce Ministry to ascertain if they are nominees for foreign shareholders in the local firms.

Thai Telco is 49 per cent owned by Telenor Asia, a major shareholder of DTAC.

Brekke said that DTAC would not postpone the listing despite such probes. Moreover, if there was a need to make a change, it would be willing to comply with the laws.

 "We will surely include these risk factors in our prospectus," he said.

Usanee Mongkolporn

The Nation