CAT casts doubt on True fund plan

Infrastructure assets tied up in arbitration

State-owned CAT Telecom has questioned True Corporation's plan to set up a 70-billion-baht infrastructure fund, as the two are still locked in a dispute over the ownership of some of True's network assets.

The companies have yet to reach an agreement on whether True should return some of its assets to CAT, as True operates second-generation (2G) service under a build-transfer-operate (BTO) concession.

The doubtful assets are part of the 2G mobile service concession granted by CAT to True.

The dispute is now under consideration by an arbitration panel.

"The case should be settled before the 2G concession expires in September," said CAT president Kittisak Sriprasert, adding that the state telecom has assigned a legal team to study the details of True's fund-raising plan and its impact on the negotiations over disputed assets.

True on Tuesday said its board approved its fund-raising plan through an infrastructure fund. It has prepared a filing to seek approval from the Securities and Exchange Commission to set up the country's second infrastructure fund, after BTS's.

Under the plan, True would sell telecom towers, fibre-optic cable networks, broadband networks and the rights to gain revenue from equipment rental to the fund. True would also acquire 33% of the fund.

The company would then lease the assets back from the fund for a maximum term of 15 years, with a transaction size not exceeding 55 billion baht.

But some of those assets including the telecom towers are still tied up in arbitration.

Mr Kittisak said CAT has asked True to transfer some assets in compliance with the BTO model of the concession.

True vice-chairman Athueck Asvanont was unavailable for comment, but previously he said True Move, a subsidiary of True Corporation, is not required by the concession to transfer any assets to CAT.

Capital Nomura Securities said the disputed assets are a minor risk for True's plan.

"In the worst case, True will have 6,000 telecom towers out of 13,000 total left to sell to the fund, and that does not really matter to the fund-raising plan," said a Capital Nomura report.

The assets to be sold to the fund are worth 52.3 billion baht and would help half True's debt to 50 billion baht.

True would also gain 15 billion baht from debt restructuring and wipe out its accrued debt.

Its equity would rise to 28 billion baht from 12 billion baht, while its debt-to-equity ratio would drop to 1.6 times from 7.6 times. True's revenue would be reduced by 5.3 billion baht a year or two baht a share.

Thawatchai Pittayasophon, the SEC's director for corporate affairs, said a filing has yet to be submitted, as True is seeking advice from regulators on the details of setting up the fund.

Shares of TRUE closed yesterday on the SET at 9.40 baht, up five satang, in heavy trade worth 2.91 billion baht.

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Writer: Komsan Tortermvasana & Nuntawun Polkuamdee