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China Mobile to buy $881mln stake in Thai billionaire's True Corp

By Khettiya Jittapong

BANGKOK (Reuters) - State-owned China Mobile Ltd has agreed to buy an 18 percent stake in Thai telecoms group True Corp for $881 million, in Thailand's first major corporate deal since the military coup last month.

True Corp, backed by billionaire Dhanin Chearavanont's Charoen Pokphand Group, said it was raising $2 billion through a rights share issue to boost its financial position. As part of the fund raising, True Corp will sell 4.4 billion shares to China Mobile, the world's biggest carrier by subscribers, at 6.45 baht each, a 13.4 percent discount to True's last traded price.

The deal is part of the Thai group's long-term plan to secure a foreign partner and underscores Dhanin's strong political connections in mainland China, sources familiar with the matter said.

In 2013 Dhanin's CP Group emerged as a surprise buyer for global bank HSBC Plc's $9.4 billion stake in Ping An Insurance Group Co of China Ltd. CP Group was the first multinational to invest in China's agri-business in 1979 and it was tasked with helping to modernise China's farm sector. It also operates Lotus super markets in Shanghai, according to the company's website.

"Through the proposed strategic investment in True Corp, China Mobile is expected to access new customers, international business opportunities and new earnings growth drivers, which is of great significance to the telecom business of the company," China Mobile's chief executive Li Yue said in a statement.

The proposed deal comes less than three weeks since the military seized power in Thailand. The two companies made no mention of the coup or preceding political crisis, which weighed on corporate dealmaking. New mergers and acquisitions in the country have slumped by 72 percent by value from a year ago to $648 million by end May, according to Thomson Reuters data.

"The deal is unusual given the country is having a political situation like this, " said Mintra Ratayapas, an analyst at KK Trade Securities,

"Some foreign investors voice concerns about the situation in Thailand. But for True, it seems like the buyer is confident about the company thanks to strong connections with Dhanin."

STRUGGLING AT HOME

True has been grappling with rising debt as it invests in the expansion of its network to compete with market leader Advanced Info Service and second-ranked Total Access Communication.

True is the only Thai mobile company without a foreign partner and the new investment is expected to help with its planned regional expansion, a source with knowledge of the deal said on Monday.

True shares were suspended earlier on Monday pending an announcement and last traded up 2.8 percent at 7.45 baht.

Like True, China Mobile has been struggling in its home market, reporting in April its lowest quarterly profit in five years as it invests heavily to catch up with rivals in providing 4G mobile broadband services.

China Mobile, which had $69.4 billion in cash and short-term investments at the end of 2013, also faces challengers in the shape of newly-licensed mobile virtual network operators, who lease capacity from the network operators like China Mobile and sell their own packages to subscribers. If successful, the Thai deal would mark China Mobile's first transaction outside of China, Hong Kong and Taiwan in seven years, according to Thomson Reuters data.

China Mobile is being advised by CICC, while Deutsche Bank is advising True Corp, a source familiar with the matter said. Deutsche Bank declined to comment, while no one at CICC could be reached for immediate comment.

(Additional reporting by Manunphattr Dhanananphorn in Bangkok, Saeed Azhar in Singapore and Paul Carsten in Beijing; Writing by Denny Thomas; Editing by Jeremy Laurence and Greg Mahlich)

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