Satellite deal interest at fever pitch

Bangkok Post, February 16, 2007
KOMSAN TORTERMVASANA WICHIT CHANTANUSORNSIRI


D-One, Loxley and Samart all interested

The Thai government's pressure on Singapore's Temasek Holdings to sell its stake in Shin Satellite has sparked a frenzy among local investment bankers and telecom operators interested in a deal. The investment holding company Dragon One, Samart and Loxley have all expressed interest in leading groups to bid for Shin Corp's 41% stake in Shin Satellite, according to sources.

All three have also contacted the Information and Communication Technology Ministry about the possibility of a deal.

The Government Pension Fund, the country's largest institutional investor, has also expressed interest in participating.

But sources said that no firm proposals have yet been tabled with Temasek, which had already been in talks with another Thai investor group to sell Shin's holdings in the satellite operator,

The talks were put abruptly on hold after public comments by government officials and armed forces leaders that Shin Satellite should be brought back under full Thai ownership.

ICT Minister Sitthichai Pookaiyaudom told the cabinet on Tuesday that state-owned TOT Corp or CAT Telecom could lead a buyout, but it would be on commercial terms and there would be no forced nationalisation of the company.

But an investigation into Shin's legal status and whether Temasek violated foreign shareholding laws could result in its existing concession contracts being voided, Dr Sitthichai added.

Temasek, which took control of Shin Corp last year, is now likely to await further signals from the government before moving forward with a deal.

A deal involving either TOT or CAT Telecom would seem a favourable choice given Temasek's aim to reduce tensions with the government, one source said.

''But getting any deal done through the state enterprises will take time. Neither wants to do any deal that could backfire in the future under a new government.''

A sale would also need approval from Shin Satellite's main creditors, including the US Export-Import Bank and France's Coface, a process that could take months.

Sources said the three Thai firms that have expressed interest informally to temasek's financial advisers all boast long experience in the telecom sector.

Dragon One is led by telecom veteran Jrarat Pingclasai, who was formerly chief operating officer of the Laotian satellite operator Asia Broadcasting and Communications Network. Loxley and Samart also have long experience in satellite services.

Shin Satellite's operating concession runs until 2021, and it currently operates four satellites, including iPSTAR, the world's largest broadband satellite. It also has a large shareholding in CSLoxinfo, a leading Internet provider, and mobile phone operations in Laos and Cambodia.

The company lost 839 million baht on revenues of 5.5 billion for the nine months ending last Sept 30, largely due to charges from decommissioning Thaicom 3.

Visit Tantisunthorn, secretary-general of the GPF, said ultimately, any decision to invest in Shin Satellite would hinge on the financial returns and risks.

He said the fund would only be a passive financial investor, and that any bid would be made with a partner that had management and operating expertise.

''Satellites are a difficult business. There are many factors involved, including what the market will look like once [Shin Satellite's] exclusion period expires and the market is liberalised,'' Mr Visit said.

''The domestic users are quite limited, so the company's future rests with iPSTAR and its regional footprint.''

Shin Satellite executives said the uncertainties over the company's fate have rattled the company's Asian customers.

Clients from Burma, Laos, Vietnam and China have all asked whether services would be affected, one executive said.

''The situation is very political and very unclear,'' he said. ''The legal issues remain outstanding [regarding Shin and Temasek], and it's uncertain what the government will do with the group.''

Anuparp Thiralarp, the president of the Thailand Telecommunication Management Academy, said public statements about seizing the satellites or forcing Temasek to sell were irresponsible, and that Shin's legal status was best resolved in the justice system.