Shin Corp expects that the plans of its subsidiary, mobile operator Advanced Info Service (AIS), to invest in 3G technology will not affect its dividend income.
Shin's senior manager for group investor relations, Tomyantee Kongpoolsilpa, said yesterday that the corporation had already paid out Bt10.5 billion in dividends for its operations in the first half of this year. Its dividend policy remains stable, despite the potentially huge cost of AIS's 3G plans.
Tomyantee was speaking yesterday at an "opportunity day" event held at the Stock Exchange of Thailand offices. Shin Corp's dividend policy provides for the passing on to its shareholders of the entire amount of dividends received from its subsidiaries
She said that for the first half of this year, Shin Corp had received a total of Bt10.5 billion in dividends from subsidiaries.
The company's board has approved the payment of a dividend of Bt1.15 per share for the operational period from April 9 to August 10, amounting to a pay-out of Bt3.681 billion. If this is combined with dividends paid earlier in the year and extra dividend payments, the total dividend already paid this year is Bt4.4 per share, translating into a return for shareholders of about 15 to 16 per cent, she said.
"Although AIS will invest in 3G mobile-phone technology, it should not affect Shin Corp's dividend policy because AIS had a cash flow of Bt23 billion and earnings before interest, taxes, depreciation and amortisation of Bt40 billion in the first half," Tomyantee said.
If AIS invests Bt50 billion in 3G, it will still have cash-flow sufficient to secure more loans. As at the end of June, AIS had a debt-to-equity ratio of 0.5 times.
For the second quarter, Shin Corp had income of Bt1.94 billion contributed by its subsidiaries, a year-on-year increase of 5.5 per cent. The income contributions were from AIS, whose earnings grew by 12 per cent in the second quarter, and Thaicom, which recorded a net loss in the second quarter because of lower income from overseas business.
Tomyantee said Shin Corp would continue its existing policy of investing in the telecom and media businesses. The company has a team studying the feasibility of new projects and will invest when the business environment permits.
Thaicom's chief financial officer Tanadit Charoenchan said the company's legal dispute and news reports of a share buy-back by the government from its Singapore-based shareholder Temasek Holdings would have no impact on its operations. However, its share price will fluctuate groundlessly.
In the first six months of this year, Thaicom posted a net loss of Bt308 million. However, the company expects to generate more income from overseas markets, including Japan, Cambodia, and Laos.