True Telecommunications Growth Infrastructure Fund (TRUEIF) is likely to buy additional assets from its major shareholder True Corporation and other telecom operators after a second batch of asset purchases worth 14 billion baht as it looks to raise its asset size to 100 billion this year.
Smith: Aiming for 100 billion baht
TRUEIF will acquire the 14 billion baht worth of assets from True, which owns one-third of the infrastructure fund, by the end of March to raise its asset size to 87 billion.
"To increase our asset size to 100 billion baht, TRUEIF is studying buying more assets from telecommunication firms, including other operators such as Total Access Communication (DTAC) and CAT," said Smith Banomyong, TRUEIF's fund manager and president of SCB Asset Management.
The second batch asset purchase from True will see the infrastructure fund buy 8,000 kilometres of fibre-optic cable and 350 telecom towers from True subsidiary Asia Wireless Communication.
He said TRUEIF would borrow a five-year syndicated loan from commercial banks, with an interest rate of 5.5%. After the loan, the infrastructure fund's debt-to-equity ratio would remain below one, while the fund's debt would be limited at three times its capital.
The fund turned to borrowing rather than recapitalisation as it wants to maintain its dividend yield of 8%, he said, adding that borrowing to fund asset purchases could add half a satang more to dividends.
TRUEIF paid dividends four times in 2014 for a combined 91 satang per unit, higher than its prospectus estimate of 88 satang.
True is the biggest tenant of TRUEIF with 60-70% of assets. The fund has tried to increase its number of tenants, especially internet providers, to use leftover capacity.
"This new investment will give TRUEIF an opportunity to grow as the network can cover more areas, increasing the number of available customers," said Mr Smith.
TRUEIF has a dividend policy of no less than 90%, and has had a total return (capital gains and dividends) of 26% since listing on the Stock Exchange of Thailand on Dec 23, 2013.
TRUEIF shares closed on the SET Friday at 11.80 baht, unchanged, in trade worth 9.56 million baht.