Thaicom Plc, Thailand's sole satellite service provider, has reached a framework agreement to sell its iPSTAR's bandwidth in China.
The agreement outlines the structure of the deal and the main elements of the agreement as well as related deals. Details are to be finalised in the following months, Thaicom said in a filing to the Stock Exchange of Thailand (SET) yesterday.
Under the agreement, Thaicom will cooperate with China Telecom Satellite (CTS), its official partner on the mainland, to sell all of the satellite's capacity set aside for China to Synertone Communication Corporation.
In return, Thaicom and CTS will share the bandwidth sales revenue with Synertone.
Thaicom will also buy a stake in Synertone to strengthen the business partnership in the Chinese market.
The deal will open up opportunities for iPSTAR bandwidth to be used for a variety of services in both the private and government sectors, including for mobile backhaul (the portion of a wireless network that connects information travelling from a wireless tower to a mobile switching centre), educational projects and other universal service obligation projects.
The capacity allocated to the Chinese market is 24% of iPSTAR's total capacity.
"China is an important market for Thaicom, and I am pleased that Thaicom and our partners have achieved this key milestone of iPSTAR business in China together," said Suphajee Suthumpun, Thaicom's CEO and chairman of the executive committee.
"The sale of IPSTAR bandwidth in China will provide a wide range of benefits for all parties. For our partner in China, the deal will provide a valuable asset to expand communications infrastructure throughout the country, and the ability to rapidly provide services to unserved and underserved areas using IPSTAR services and solutions."
"The announcement is very positive for Thaicom because iPSTAR sales in China have been very disappointing," Chirasit Vuttigrai, an analyst at DBS Vickers Securities (Thailand) Co, said. "This raises optimism that the iPSTAR business in China will significantly improve with the new partner."
Thaicom posted annual losses between 2008 and 2011, according to the SET's data. It turned a profit of 49.95 million baht in the first nine months of 2012, compared with a net loss of 175.6 million baht year-on-year.
Shares of Thaicom (THCOM) closed on the SET at 25.25 baht, up 2.15 baht, in trade worth 1.11 billion baht.
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