June 11, 2014 00:00
By Usanee Mongkolporn
The competition between True Corp and its rivals both in the market and in the spectrum licence auction later this year is expected to heat up after True builds its capital base and brings aboard China Mobile.
“After the partnership deal, True will be financially stronger than ever. The financial side has long been our weakest point,” chief executive officer Suphachai Chearavanont said yesterday.
Even with a heavy debt burden, True could fight fiercely with other players, he said.
True’s debt will fall to Bt40 billion after the recapitalisation. Next year it might be able to pay dividends to shareholders, he said.
On Monday, True Corp unveiled its alliance with China Mobile to fortify its business and financial position through a private placement of 18 per cent of its shares for Bt28.6 billion, and a rights offering to existing shareholders for Bt36.4 billion.
China Mobile will pay Bt6.45 per share for the 18-per-cent stake and True will issue new shares to existing shareholders at the ratio of one new share per 2.57 old shares, also at Bt6.45 per share.
True expects to raise Bt65 billion, of which Bt52 billion will go to repaying debt.
Although China Mobile might have had a bigger say in True’s management if it had taken a bigger stake, both True and China Mobile were satisfied with the18-per-cent level.
“If China Mobile likes to increase its share ownership in the future, it has to buy from the market,” Suphachai said.
China Mobile will send two representatives to sit on True’s board, which has 18 directors, and to sit on three board committees – finance, corporate governance, and compensation and nominations.
China Mobile currently has no position in True’s management, but it will make a request for a position in the future, he added.
A telecom analyst said True’s recap will fuel competition and its healthier balance sheet will let it be more aggressive in the licence auctions for telecom bandwidth on the 1,800- and 900-megahertz spectra this year. It will also be able to accelerate network investment and subscriber acquisition.
Vichai Bencharongkakul, chairman of the Telecommunications Association of Thailand, said the new investment from China Mobile should create more competition in the industry, which would benefit customers.
“China Mobile is the one of the largest mobile operators in the world and its strong footprint should help Thais to gain from cheap and better services,” he said.
However, China Mobile may seek an opportunity to increase its stake in True in the near future, he said.
Charoen Pokphand Group owns 60 per cent of True Corp, but its holding will be diluted to 49 per cent.