Singapore signals move on Temasek Thai stake

John Burton
Financial Times
25 Feb 07

Singapore has said it will not object if Temasek Holdings, the state investment company, decides to sell its holding in Thailand’s Shin Satellite to resolve a diplomatic dispute between the two countries.

The comment by George Yeo, Singapore foreign minister, is a sign that a face-saving compromise may soon be concluded in which Temasek disposes of Shin Satellite in a deal that would be portrayed as a commercial decision made without political interference.

Tensions have risen after Sonthi Boonyaratkalin, the Thai army chief who led last year’s military coup, this month called for the return of Shin Satellite to Thai ownership, accusing Singapore of using the satellite operator to spy on Thailand’s communications.

“If this is a commercial transaction on the basis of both sides being willing parties, then I see no problem at all. This is for Temasek to consider and for the buyers to consider whether the price is right,” Mr Yeo said.

Surayud Chulanont, Thailand’s prime minister, expressed similar views, saying his government would not intervene in the dispute and instead allow the Thai private sector to decide whether to buy Shin Satellite.

“If they want to buy, let them buy,” he told Bernama, the Malaysian news agency. “We are not going to get involved.”

The portrayal of the sale of Shin Satellite as a commercial decision would benefit both sides. Singapore would avoid being seen as bowing to political pressure, while Thailand could assure foreign investors their businesses in Thailand are safe from political intervention.

“I think [the Thais] are very conscious that whatever they do with respect to Singapore, [it] must be something which they are prepared to do with any other country, so that all foreign investors are treated equally,” Mr Yeo said.

Temasek, which bought Shin Satellite as part of a $3.8bn (€2.9bn, ₤1.9bn) take-over of parent Shin Corp last year, has refused to comment on whether it would be willing to dispose of the satellite unit. But analysts believe that it might allow a sale to focus on the growth of AIS, Shin Corp’s main asset and Thailand’s biggest mobile phone operator.

Three Thai companies – Dragon One, Samart and Loxley – and Thailand’s government pension fund have reportedly expressed interest in buying Shin Corp’s 41 per cent stake in Shin Satellite.

Temasek’s purchase of Shin Corp from the family of Thaksin Shinawatra, the former Thai prime minister, led to protests over the tax-free sale and helped trigger the military coup in September. The share price of Shin Corp and its listed affiliates have slumped sharply, causing a $2bn paper loss for Temasek.

Temasek may also sell Shin Corp’s iTV, a television broadcasting station that was recently ordered by a Thai court to pay a concession fee or risk losing its licence, as part of a restructuring of Shin Corp’s assets, analysts say.