SINGAPORE-Singapore Telecommunications Ltd. announced it will purchase up to a 20-percent stake in Thailand’s Advanced Information Service, a cellular subsidiary of Shinawatra Computer and Communications, for approximately US$353.4 million.
“For SingTel, this investment will be the second-largest undertaken by the SingTel Group after Belgacom. It is in line with our stated aim of focusing on a few key projects in the Asia-Pacific region that will make a significant impact on the group’s bottom line,” said Lee Hsien Yang, president and chief executive officer of SingTel.
SingTel said it plans to buy into AIS in several stages. First, it will buy 14.3 million shares from Shinawatra and subscribe to 36 million new AIS shares at US$6.32 per share. SingTel further will buy 3.7 million new AIS shares from Shinawatra at US$6.32 each and give a loan of US$23.4 million to Shinawatra, which would be secured by a pledge of 5.3 million shares.
For SingTel, Thailand’s relatively low cellular penetration of 3.6 percent was one of the main catalysts for its acquiring a stake in AIS. The low penetration offers greater potential for growth, especially as the Thai economy improves.
AIS has more than 970,000 subscribers and operates both GSM 900 and NMT networks. The company also has invested in Shinawatra Paging Co. Ltd., which operates under the name Phonelink, as well as Shinawatra DataCom Co. Ltd., offering voice/data services.
“We hope that this investment underlines our confidence in the long-term prospect of the Thai economy,” said Yang. “Although there are still many challenges ahead, indications suggest that the Thai economy will bottom-out by the first quarter and resume a growth path.”
While AIS will not contribute significantly to SingTel’s earnings in the near term, the acquisition should give SingTel a significant foothold in Thailand’s telecom market, analysts said.
