THAILAND: True Corp set to take over UBC

Telecom True Corp will take over Thailand cable TV operator United Broadcasting Corporation in a 11.8 billion baht deal

Bangkok Post
Tuesday, November 8, 2005

By Bamrung Amnatcharoenrit Komsan Tortermvasana

Telecom giant True Corp yesterday announced it will take over cable TV operator United Broadcasting Corp (UBC) in a deal worth up to 11.8 billion baht. True will buy a 30.59% stake in UBC from MIH Holdings for US$150 million, or around six billion baht.

The transaction will boost True's holding in UBC to around 70%. True will also launch a tender offer for the 221 million shares outstanding at 26.5 baht per share, the same as the purchase price for the MIH transaction.

The tender offer, priced at a 16.5% premium to UBC's current market price, will cost True 5.8 billion baht if it goes through. True will then delist UBC from the Stock Exchange of Thailand (SET).

MIH also will sell its stake holding in internet service provider KSC Internet in a separate deal valued at 425 million baht. South African company MIH has cable TV, internet and technology-related businesses in 50 countries, and is a unit of the media company Naspers.

Supachai Cheavaranont, the chief executive of True, said the deal would give the company greater control of its business lines and pave the way for the future convergence of voice, data and multimedia services to customers.

True now controls a full array of fixed-line, wireless, internet and television services, with only gateway and third-generation (3G) cellular licences missing from its line-up.

"This deal makes us the first telecom player with nearly all the telecom licenses offered in hand," Mr Supachai said.

True will finance the transactions through a US$290 million loan from Deutsche Bank, with another US$40 million coming from internal cash flow.

The transaction comes at a period of rapid change within the telecom sector. Last month, Norwegian giant Telenor announced it was taking control of United Communications Industry (Ucom) and mobile phone operator Dtac from the founding Bencharongkul family in a deal worth 9.2 billion baht.

The National Telecommunications Commission (NTC), meanwhile, is preparing to issue new 3G cellular licences sometime next year, a development that will eventually lead to broadband services on cellular phones.

True said the UBC transaction is expected to be completed in March. Both True and UBC will hold extraordinary shareholders' meetings to approve the transaction on Dec 13.

Mr Supachai said the takeover would help further the group's vision for "convergence," where different communication channels could offer a combination of voice, data and multimedia content.

True will also be able to achieve cost-savings and synergies by consolidating its broadcasting and internet operations.

The company's broadband internet offerings compete directly with KSC Internet. True's plans to offer broadband TV services also had the potential to compete with UBC's pay-TV offerings.

"UBC will play a key role in producing programmes for [True] and, at the same time, sharing content with other media channels. Particularly in broadband service, the business today faces slower growth due to content shortage," Mr Supachai said.

He said the acquisition would not have any effect on UBC's daily operations, its 1,200 employees or expansion plans. UBC currently has around 470,000 subscribers.

UBC last month cut its share par value to three baht from 10 baht, an accounting move that allowed the company to write off 6.68 billion baht in accumulated losses. The company reported a first-half net profit of 543.3 million baht on revenues of 3.9 billion baht.

True, which has more than two million fixed-line subscribers, over 250,000 broadband internet subscribers and nearly four million mobile phone subscribers through subsidiary TA Orange, reported first-half losses of 818 million baht on revenues of 23.9 billion.

Shares of both True and UBC were suspended from trading yesterday on the SET pending the announcement.