NEW YORK-Total Access Communications Public Co. Ltd., the second-largest wireless carrier in Thailand, plans the private sale of $400 million in debt securities to fund capital expenses and reduce short-term debt.
TAC intends to sell, under Rule 144A, $300 million in bonds due 2006 and $100 million in notes due 2001, both senior unsecured obligations of the company. Securities and Exchange Commission Rule 144A waives the formal registration and disclosure requirements for securities sold in this country, provided they are sold to large brokerage firms and other institutional investors. The rule also imposes limits on how soon such investors may resell these securities and what proportion of their purchase they may resell at any given time.
Duff & Phelps Credit Rating Co. assigned an investment-grade rating of BBB- to the proposed debt issuance. The rating agency said, “Underlying TAC’s rating fundamentals is its relatively strong financial performance, the heavy demand for telecommunications services in Thailand, low rates of wired and wireless service penetration, its improving position as the second-largest operator in terms of subscribers served, and the long lead times necessary for incremental landline or wireless service competition.”
TAC has more than 655,000 wireless customers, or a market share of 41 percent, and the rights to serve all of Thailand’s approximately 60 million people. “In 1996, TAC made significant gains against its only major competitor to date, Advance Information Service (AIS),” Duff & Phelps’ rating report said. “TAC’s coverage in areas outside Bangkok is now more comparable to that of AIS, and [TAC] has made improvements in (its) system to accommodate growth. Importantly, capital spending is forecasted to decline substantially over the next few years as TAC nears completion of an aggressive network expansion program.”
Several major developments are on the horizon in Thailand that could affect TAC in both positive and negative ways, according to the rating agency. First, several new competitors will enter the Thai market during the next few years. Second, privatization is in the works for the two state-owned wireline telephone carriers, which now serve as regulators for TAC and AIS. Revenue sharing arrangements, access charges and limits on licensing pacts have had to be renegotiated periodically.
TAC is the largest subsidiary of United Communications Industry Public Co., in which the Bancharongakul family owns a 45 percent stake. Another 42 percent of TAC is publicly owned and includes an indirect minority holding by Motorola Inc.
