Gulf's B10.8bn Thaicom buyout raises eyebrows

Gulf's B10.8bn Thaicom buyout raises eyebrows

Gulf Energy Development Plc, Thailand's biggest private power producer by market value, is pushing for the acquisition of satellite service provider Thaicom Plc for 10.8 billion baht as it explores new business opportunities in the space economy.

The move, however, has fuelled scepticism among industry analysts and observers as Gulf had never expressed interest in investing in the satellite business, and its strategic plan for the move remains unclear.

The planned acquisition was communicated to the Stock Exchange of Thailand on Monday night.

Gulf, led by energy tycoon Sarath Ratanavadi, will buy a 41.1% stake in Thaicom from its biggest shareholder, InTouch Holdings Plc, for 4.4 billion baht.

The purchase involves 450 million shares at a price of 9.92 baht per share.

Gulf, which owns 46% of InTouch, has also set some conditions for the share purchase, including approval from InTouch shareholders and required counterparties of Thaicom.

InTouch will hold a shareholder meeting to consider the sale of Thaicom shares to Gulf on Jan 9, 2023.

Gulf said all the conditions are expected to be completed within the first quarter of next year.

Afterwards, the energy giant will propose a tender offer to acquire the remaining shares of Thaicom, amounting to 645 million shares, from other shareholders for 6.4 billion baht. They will also be purchased at 9.92 baht per share.

The purchase of Thaicom's shares will be made by either Gulf or its subsidiary Gulf Ventures Co, or both.

According to Gulf's exchange filing, the investment in Thaicom is aligned with Gulf's strategic direction, and regarded as a growth driver for the development into related business domestically and internationally.

This will also provide the firm with "an opportunity to explore future growth businesses in the new space economy".


Pisut Ngamvijitvong, senior equity research analyst at Kasikorn Securities (KS), said the purchase of Thaicom stock for 9.92 baht per share is 19.3% below the market price of 12.3 baht, although it is still 7.6% higher than KS's previous target price of 9.22 baht.

The move still has an unclear strategic direction of pushing Thaicom from a regional satellite operator to a key player in the new space ecosystem, he said.

There is no clarity about the listing status of Thaicom following the tender offer, Mr Pisut said.

On the positive side, Gulf and its deep pockets could become the right sponsor for Thaicom, driving it to have a broader ecosystem in the new space economy.

However, without a clear strategy regarding new space business, Gulf may find it too risky to pay more than the tender offer price.

"This deal may lead to a share price correction, at least in the near term," said Mr Pisut.


The planned acquisition of Thaicom comes as the National Broadcasting and Telecommunications Commission (NBTC) plans to organise a satellite orbital slot auction, expected to take place in January next year.

Thaicom will certainly participate in the auction, Mr Pisut said.

A telecom veteran who requested anonymity said Thaicom has made no major investments over the past few years, so it now has sufficient cashflow and is able to pay a dividend of 6 baht per share.

The planned acquisition was spelled out shortly before the auction is due to be held.

Last year the NBTC decided to scrap an auction slated for Aug 28, 2021, as Thaicom, through its wholly owned company TC Space Connect, was the only bidder.

Also in August 2021, Gulf completed its 25-day tender offer for a stake in InTouch, becoming the largest shareholder in the tech and telecom-oriented holding firm.

Before the tender offer, InTouch's major shareholdings were controlled by foreign entities.

Now Gulf holds a 46.7% stake in InTouch and 20% indirectly in Thaicom.


An industry source who requested anonymity said the planned acquisition of Thaicom by Gulf may be driven by business and political reasons.

Thaicom's satellite operating concession expired in September last year, which saw the Thaicom 4 and 6 satellites handed over to the Ministry of Digital Economy and Society (DES).

NT was then assigned by the DES Ministry to manage and control the Thaicom 4 and 6 satellites. Thaicom's subsidiary has purchased some of the two satellites' bandwidth capacity from NT to provide services to customers.

Before Gulf pursued the tender offer of a stake in InTouch last year, DES Minister Chaiwut Thanakhamanusorn revealed the ministry would hold talks with InTouch and Thaicom about the proportion of the latter's shareholdings held by foreign entities.

When the satellite concession contract was awarded by the government in 1991, Shin Corporation, the former name of InTouch, agreed to set up a new firm to run the service, with Shin holding a stake of at least 51%. The new company was named Shinawatra Satellite, which later changed its name to Thaicom.

In 2003, under the government of former prime minister Thaksin Shinawatra, Thaicom asked the Information and Communication Technology Ministry -- the former name of the DES Ministry -- to adjust the concession by letting InTouch reduce its stake in Thaicom to 40%, from at least 51%, as it wanted more partners. This proposal was later approved.

While the National Anti-Corruption Commission later ruled against the approval, InTouch's stake in Thaicom never returned to the 51% as stipulated in the contract.

Previously, Mr Chaiwut said that as InTouch's share proportion in Thaicom should be at least 51%, and with Singapore's Singtel holding a 21% stake in InTouch, efforts must be made to ensure the proportion of foreign entities' shareholdings in Thaicom was not more than Thai entities.

The buyout of Thaicom by a Thai entity meets the government's wishes as it is concerned about national security through digital networks and satellite businesses, the industry source added.

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