CG/LA Infrastructure's InfraBlog
By Khettiya Jittapong and Manunphattr Dhanananphorn
Tue Jul 23, 2013 4:57am EDT
Thai telecommunications group True Corp Pcl TRUE.BK said it aims to raise at least $2.25 billion by listing an infrastructure fund to help pay down debt, in what would be Asia-Pacific’s biggest initial public offering so far this year.
True Corp, majority-owned by Thai billionaire Dhanin Chearavanont’s CP Group, also plans to sell noncore assets as it seeks to slash its debt burden by around 70 percent, its chief financial officer told Reuters on Tuesday.
The loss-making company has been grappling with a growing debt burden as it invests in the expansion of its mobile networks to compete with market leader Advanced Info Service Pcl ADVA.BK and second-ranked Total Access Communication Pcl DTAC.BK. It is the only carrier among the three that does not have a foreign partner. Last month, Moody’s cut its outlook on True Corp’s credit ratings to “negative”.
“We plan to raise at least 70 billion baht ($2.25 billion) from the fund and sell noncore businesses for about 5 billion baht. Most of the proceeds will be used to repay debt,” Chief Financial Officer Noppadol Dej-Udom said, adding that the listing should be completed by the end of this year.
“This will help improve our financial position. After that, we will go ahead with plans to seek a business partner,” he said.
The IPO of the infrastructure fund would help reduce True’s debt burden to around 30 billion baht from 100 billion baht ($3.2 billion) now, Noppadol said, adding that the new debt level would be reasonable for financial management.
True Corp is the second most indebted telecoms firm in Southeast Asia after Singapore Telecommunications Ltd (STEL.SI), which has net debt of $5.67 billion, according to Thomson Reuters StarMine.
The planned fundraising comes after BTS Group BTS.BK earlier this year raised $2.13 billion via the initial public offering of a similar-styled infrastructure fund. The success of that IPO, Asia-Pacific’s biggest so far in 2013, has encouraged other firms to tap equity capital markets.
True Corp shares jumped 5.7 percent to their highest in more than a month on the news, outperforming a 1.6 percent rise in the Thailand’s benchmark share index .SETI.
True Corp said in a statement earlier on Tuesday that it would establish an infrastructure fund worth at least 70 billion baht.
True Corp will sell assets including towers and fiber optic cable networks to the fund and then lease them back, providing steady revenue for the fund.
True Corp will buy one-third of the fund’s units and the remaining two-thirds will be offered to the public.
The company said the exact amount to be raised would depend on market conditions and investor interest. It did not say when it plans to list the fund, although a listing could not take place before Sept 12., when the sale of assets to the fund must be approved at a shareholders meeting.
True Corp has hired Credit Suisse CGSN.VX and UBS (UBSN.VX) to advise on the listing, IFR reported last month.
The company posted a net loss of 1.1 billion baht for the January-March quarter, more than double a loss of 456 million baht a year earlier, mainly due to higher expenses to expand its mobile networks.
True Corp is Thailand’s only fully integrated telecoms firm with operations in mobile, fixed-line phone, broadband Internet and cable television businesses.
It plans to spend 15 billion baht this year to expand its third- and fourth-generation mobile networks as operators launch high-speed mobile services to gain market share from fast growing mobile data.
True Corp has had no foreign partner since 2004 when France’s Orange SA left to focus on markets at home. Advanced Info Service is part-owned by Singapore Telecommunications and Total Access Communication is majority owned by Norway’s Telenor (TEL.OL).