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    Feb 19, 2014

    Temasek seeks to sell Thai telco stake

    TEMASEK Holdings is seeking to sell its US$3.1 billion (S$3.9 billion) stake in Thai telecoms company Shin Corp, according to people familiar with the matter, and has approached its SingTel unit as a possible buyer.

    Temasek, which owns 41.6 per cent of Shin Corp through a subsidiary, held talks with SingTel late last year, said sources, who declined to be identified as the information is not public. Those discussions have since stalled amid political tensions in Thailand, they said.

    The move by Temasek, which oversees US$170 billion in assets, is in line with the state investor's plans to consolidate portfolio companies in industry groupings. This would be its first move towards bringing its telecoms assets under one roof, analysts said, potentially creating a regional giant.

    The Temasek stake in Shin Corp, founded by former Thailand prime minister Thaksin Shinawatra, is worth US$3.1 billion, going by current market value.

    Shin Corp's shares now trade more than 50 per cent above the price paid in 2006 by a Temasek-led consortium that included Chinese-Thai businessman Surin Upatkoon, when it bought 96 per cent of the Thai firm for a total of US$3.8 billion.

    "At a fair price, such a deal would make sense for SingTel," said Mr Chris Lane, senior analyst at Sanford Bernstein in Hong Kong, who covers Asia-Pacific telecommunications. SingTel is 52 per cent-owned by Temasek.

    Shin Corp owns 40.5 per cent of Thailand's biggest mobile telecoms company, Advanced Info Service (AIS).

    SingTel already has a 23 per cent stake in AIS. Adding the Shin Corp stake would cement its position in a bigger market and offset sluggish growth in mature economies where it's also present, like Australia.

    "SingTel executives are involved in the day-to-day operations of the company," said Mr Lane. "Buying the stake from Temasek avoids the possibility of another telco securing a significant interest in AIS."

    Temasek's telecoms strategy mirrors that it has tried to deploy in other business segments - with varying degrees of success.

    The change in Shin Corp's ownership in 2006 triggered accusations of insider trading and tax evasion as the family of Thaksin and others involved received US$1.9 billion tax-free.

    Thaksin insisted at the time that the sale satisfied all the rules in a country where share sales conducted through the stock market are not taxed. Protests in Bangkok followed, ultimately leading to a coup that ousted him.