Thai telecom regulator cautions against Shin Satellite buy-back

The Straits Times, February 24, 2007


BANGKOK - THAILAND'S telecommunications industry regulator has downplayed concerns about the security of military communications.

The National Telecommunications Commission (NTC) said the satellites operated by Shin Satellite (ShinSat) were not meant for military purposes, and that most clients were foreign.

It urged the government to carefully consider both the legal issues and the effect on services of any move to buy back shares in ShinSat or revoke the concession for the country's sole satellite operator.

Among the key issues the government should take into account were the continuity and competency in the satellite concession's management given the intense competition in the satellite industry, the NTC said in a statement on Thursday.

'If state agencies take charge of the business, they might not be able to compete. It needs to rely on the strength of the private sector to take care of the business,' the commission said.

The government said this week that Thailand will try to buy back ShinSat if it fails to prove that Singapore's Temasek Holdings broke the law when it bought a controlling stake in Shin Corp last year.

Just over 41.3 per cent of ShinSat is owned by Shin Corp, the telecoms-based conglomerate previously owned by the family of Mr Thaksin Shinawatra, who was ousted as prime minister in a military coup last September.

His family sold its 49 per cent stake in Shin Corp to Temasek last January in a tax-free deal that catalysed anti-Thaksin sentiment.

The fact that Temasek, through Shin Corp, controlled ShinSat's broadcast and communications satellites Thaicom 1, 2 and 5 and iPSTAR was cited as a security risk by Mr Thaksin's critics.

Meanwhile, news reports here quoting Information and Communications Technology Minister Sitthichai Pookaiyaudom said Temasek may want to dispose of all of its shares in the Shin group, not only in ShinSat.

'Therefore, it depends on Temasek if it wants to sell only its ShinSat shares to us,' he said, adding that the government was expected to reach a conclusion within three months on the option to take back ShinSat's satellites.

Next week, the minister will meet the panel appointed to examine the satellite concession contract with ShinSat and examine whether it complies with relevant laws as part of preparing information on a ShinSat share purchase by the government.

He said the government had to proceed carefully between the two options - buying ShinSat shares or seizing control of the satellites - as part of its attempt to regain the satellites from a foreign entity.

Sources said Temasek was moving to divest Shin's 41 per cent holding in ShinSat to ease political tensions between the two countries, and it would also consider divesting Shin's 52 per cent stake in the broadcaster iTV, the Bangkok Post reported.

But sources said a total liquidation of Temasek's investment in Shin had been all but ruled out, given that a sale today would result in losses of billions of dollars at current market valuations.

Any forced nationalisation of its assets by the government would be fought in court, according to one source.

Telecoms analysts said even if the government could prove Kularb Kaew was a nominee for Temasek to take over Shin, ShinSat would not be deemed a foreign-controlled firm. This is because Shin owns only 41.34 per cent of ShinSat.

Telecoms and foreign business laws each cap the foreign shareholding in the telecoms sector at 49 per cent.

THE NATION/ASIA NEWS NETWORK