Please sir, may I have my satellites back....

Rascott News, March 4, 2007



Investor beware; Gen.Sonthi Boonyaratglin, the Commander-in-Chief of the Royal Thai Army and Chairman of the Council for National Security (CNS), delivered a special lecture under the topic of “Patriotic Ideologies” last Friday, saying that he will bring back national assets, especially the Thaicom Satellite, from Singapore.
The Thaicom Satellite concession was sold by Shin Corp, the satellite’s concessionaire, to Singapore’s Temasek Corporation.

Few acquisitions have gone as spectacularly wrong for the purchaser. Singapore is nursing a $900m paper loss and, far from cementing relations between the two countries, the deal was one of the sparks that led to the coup against the Thai government.
Following the General's breast beating speech the military-appointed government vowed on Monday to reclaim satellites and possibly other assets sold by ousted Prime Minister Thaksin Shinawatra's family to Singapore, but said it was unsure how to do it. I suspect Singapore would take cash at par. Not much chance of that !
“Getting them back, that is definitely what we want to do. But the question is how?,” Communications Minister Sitthichai Pookaiyaudom told a Bangkok radio station. "I want the nation's belongings back," said Sonthi Boonyaratkalin, army chief.
Bangkok has zeroed in on five satellites controlled by Shin Corp subsidiary Shin Satellite Pcl and the General has accused Singapore of using Shin assets, including Thailand's biggest mobile phone operator AIS, to monitor military phone calls. AIS and Shin Satellite have denied eavesdropping.
The uncertainty drove Shin Corp shares down more than 7 percent on Monday, while Shin Satellite ended up 0.71 percent.
There is no indication Temasek is willing to sell any Shin assets, even though the paper value of its investment has dropped by nearly half. It is hard to marry the General's wishes with those of Temasek, which will want to avoid the loss of face and taxpayers' dollars that that would entail. Selling Shin Corp's operating assets to Bangkok – the sale of Thai Satellite in particular would please Gen Sonthi – would put Temasek in a poor negotiating position. And it would not actually address the foreign ownership issue at the holding company level.
But that may not be necessary if a Thai investigation conveniently finds that the Singaporean firm violated foreign ownership laws. Shin Satellite's operating licence could then be revoked if investigators conclude it is a foreign controlled company. The fact that the deal structure mirrors that used as custom and practice by hundreds of foreign firms operating in Thailand has been conveniently forgotten. According to Thai stock exchange data, Shin Corp (controlled by Temasek) holds 41.3 percent of Shin Satellite with the remaining shares controlled by Thai and foreign investors.
Most Thais support the government position and believe the government should reclaim Thai assets from Singapore. Where does this stop. Should everything Thai be 100% Thai owned. Should every company be nationalised? Is Thailand a part of the global economy? Should Thai's overseas assets be returned to their host countries. And who was it that was recently bidding for Liverpool football club?
But there is little understanding of big business and little information to show that Thais satellite assets are far from unique in being foreign controlled. Temasek also owns Australian satellites. Many telecoms companies the world over have foreign owners, and in many cases they also operate satellites. DTAC's majority ownership in Thailand is held by Telenor controlled by the Norwegan government. Go to the UK: the only satellite broadcaster (Sky) is owned by News Corp of the USA and major cellphone providers are owned as follows O2 (Spain), Orange (France), 3 (Hong Kong), Vodafone (UK).
The Temasek purchase was a valid and legal transaction. Advisors to Temasek on the deal were Siam Commercial Bank; there was no suggestion from them that the deal might in any way not be legal or that the sale of technology assets might be somehow inappropriate.
Yet the backlash against the Shin Corp takeover has also prompted a re-drafting of foreign ownership rules to ban multiple holding companies, historically used by foreigners to secure majority control. A combination of changes to the FBA and "patriotic ideologies" should make any potential investor into Thailand very wary indeed.