Thaicom's Mfone files for insolvency
Rivalry, failed share sale force closure
Cambodia-based telecommunication operator Mfone, part of the Thaicom group, on Wednesday petitioned for insolvency proceedings in Phnom Penh after facing difficulties in an intensely competitive market and after failing to complete the sale of its shares to INT Management Service Company.
"Mfone has been through a very difficult time over the past two years," said Thaicom chief executive officer Suphajee Suthumpun. "We were informed by Shenington Investments [Mfone parent] that despite all efforts to rescue and continue the business, the latest setback had required it to make the extremely difficult decision to file a petition to enter an insolvency proceeding.
"In discussions with Shenington and Mfone, we have been informed that Mfone will continue to operate and provide services to its customers while the court is considering Mfone's petition, and before the court announces a decision. At the same time, Mfone will continue to uphold its responsibilities towards its employees in accordance with the laws and regulations of the Kingdom of Cambodia."
In a filing to the Stock Exchange of Thailand yesterday, Thaicom referred to previous information to the SET on November 13, 15 and 19 about the plan of its 51-per-cent-owned subsidiary Shenington to dispose of all of Shen's 24 million ordinary shares of Mfone to INT Management Service Co. This transaction had conditions precedent that both parties had to complete for the transaction to become effective. The conditions precedent had to be completed by this month.
However, Shen recently informed Thaicom that the conditions precedent pertaining to Mfone's debt restructuring with creditors could not be completed by the stated deadline, with the result that Shen could not complete the share sale. Therefore, Shen management proposed that the best option was for Mfone to enter insolvency proceedings.
The Thaicom board of directors on Monday passed a resolution to acknowledge and accept Shen management's proposal to allow Mfone to enter insolvency proceedings. Shen informed Thaicom that the insolvency petition was filed with the court in Phnom Penh on Wednesday.
According to a separate news release from Thaicom yesterday, Mfone is now working to ensure that the insolvency process goes ahead smoothly and to mitigate any adverse effects the process may cause, as best as possible.
"Shenington's decision for Mfone to file for insolvency will have no significant adverse financial impacts on Thaicom's consolidated results because we provisioned for this eventuality in the first nine months of 2012," Suphajee said.
"Nor will it affect Thaicom's standalone performance, which showed robust profits in the first nine months of 2012 of Bt609 million," she added.
"Our core satellite business is expanding rapidly, and already more than 80 per cent of our revenue is generated by this segment. With the recent signing of a framework agreement for the sale of iPSTAR broadband satellite's bandwidth in China, and the expected additional capacity to be sold to TOT and a contract under negotiation in India, we expect that our satellite business revenues will grow quite rapidly in 2013."
The company will launch its Thaicom 6 broadcasting satellite this year, and confirmed orders for transponders on this satellite have already exceeded the 30-per-cent pre-launch goal set last year.
A further satellite, Thaicom 7, will be launched in early 2014. The two satellites will provide the company with additional capacity to meet the pent-up demand in the company's coverage area, it says.
"With pre-launch orders for Thaicom 6 going beyond 34 per cent, we have more than surpassed our initial goal and our break-even point for Thaicom 6," Suphajee added. "This adds further momentum to our satellite-business growth, and in 2014 we will add further capacity when we launch Thaicom 7."