Temasek-owned stocks fall after Thai Thaksin ruling

March 2, 2010
Singapore Democrats

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Daniel Ten Kate & Anuchit Nguyen

Stocks majority-owned by Singapore’s Temasek Holdings Pte fell in Bangkok trading after a Thai court ruled Feb. 26 that ex-leader Thaksin Shinawatra abused his power to benefit those companies.

Shin Corp., 42 percent owned by Temasek, fell 3.5 percent as of 11:50 a.m. local time. Advanced Info Service Pcl, the nation’s biggest mobile-phone company, dropped 3.1 percent. Thaicom Pcl, a satellite monopoly, declined 8.3 percent. Shin controls Advanced Info and Thaicom.

Thai Prime Minister Abhisit Vejjajiva said on Feb. 27 the government would follow up on the court’s ruling to “protect the nation’s interests.” The Cabinet is meeting today.

A government review of Shin’s contracts with state agencies may further cloud the regulatory environment as Thailand struggles to liberalize its telecommunications sector. The country’s three mobile-phone operators have all amended their concessions with the state-owned telecoms operator.

The Supreme Court seized 46.4 billion baht ($1.5 billion), or about 60 percent of the amount Thaksin’s family gained from its 2006 sale of Shin to Temasek, Singapore’s state-owned investment company. About 30.2 billion baht will be returned to Thaksin’s family, the judges said Feb. 26.

In separate statements to the stock exchange today, Shin, Advanced Info and Thaicom said they operated “with good faith in compliance with laws” and were prepared to clarify any past actions. Temasek declined to comment in an e-mailed statement.

Seeking compensation

The judges agreed that changes to Advanced Info’s royalty payments to a state-owned telecoms operator while Thaksin was prime minister from 2001 to 2006 benefited the company. They also said changes to rules governing satellite concessions and approval of a loan to Myanmar benefited Thaicom.

Seeking compensation from Shin-related companies “is going to be messy,” Adithep Vanabriksha, who oversees more than $2 billion as Aberdeen Asset Management Co.’s head of Thai equities, said in an interview today.

“There are more investors impacted than just Thaksin,” he said. “There were other companies in the industry that benefited as well. Investors are worried.”

Total Access Communication Pcl, Advanced Info’s biggest rival, fell 2.2 percent in Bangkok trading. True Corp., Thailand’s third-biggest mobile phone operator, dropped 0.7 percent. The benchmark SET index climbed 1.1 percent.

‘Wait and see’

“Investors should wait and see what will happen next,” Solaya Na Songkhla, an analyst at Kim Eng Securities (Thailand) Pcl, the nation’s biggest brokerage by trading volume, wrote in a report today. She sees “a small possibility” that Advanced Info or Thaicom will have to pay a penalty or have their concessions changed.

Under a scenario in which Advanced Info’s concession is changed to retroactively pay the state-run operator 30 percent of revenue on pre-paid calls instead of 20 percent, a fair price would be 73.7 baht, or 16 percent below its closing price on Feb. 26, Solaya wrote.

Temasek directly owns 41.7 percent of Shin, while a group of investors, including a Temasek unit, holds 54.6 percent, according to Thai stock exchange data.