True Corp Set To Take Over Ubc

[george]

True Corp set to take over UBC

Deal could be worth up to B11.8 billion

BANGKOK: -- 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.

--Bangkok Post 2005-11-08

[george]

True bets its future on convergence

BANGKOK: -- True Corporation's takeover of United Broadcasting Corp, the country's largest pay-television operator, and KSC Internet, a leading Internet service provider, will give the company an expanded foothold in the market as it bets its future on the convergence of telecommunications and content over the next several years.

The takeover, potentially costing 12.4 billion baht, was structured as a buyout of UBC and KSC shares owned by Myriad International Holdings (MIH), itself a unit of the multinational media company Naspers, a firm listed on the Nasdaq and Johannesburg stock exchanges.

True will spend $150 million to purchase MIH's 231.1 million shares in UBC, or around 30.5%, raising True's total holdings in the cable operator to about 70%. The company will launch a tender offer for the 221 million shares not controlled at 26.5 baht per share, which if fully accepted, will cost another 5.8 billion baht.

True Multimedia, a subsidiary of True Corp, will take a 100% stake in MKSC World Dot Com from M-Web Thailand Holdings and MWEB (Thailand), both units of MIH. True will also take over creditor rights of MKSC, with a total deal value of $10.6 million or 425.1 million baht.

MKSC in turn holds 63% in KSCI, with the telecom firm Jasmine holding the remainder. KSCI effectively controls KSC Internet with a 65% stake, with the remainder held by CAT Telecom.

Supachai Chearavanont, the True chief executive, said the KSC deal was essentially an "add-on" to the group's actual target.

"We were really focusing on taking control of UBC, but MIH asked, 'Why not take KSC as well?' When we looked at the deal, we saw the potential on hand."

True is already a leading Internet service provider, with 80% of the broadband market at nearly 250,000 subscribers, mostly in Bangkok, at the end of June.

Mr Supachai said KSC had a nationwide subscriber base, in corporate and retail, offering strong potential for synergies with True's broadband offerings.

He said it was uncertain on whether True would propose a buyout of Jasmine's 37% in KSCI, the parent of KSC Internet, or whether True Multimedia would eventually merge operations with KSC.

Regardless, True would consolidate its business lines across the group to cut operating costs and duplication. KSC's licence as an Internet service provider, for instance, duplicated that of True and would likely be divested or sold.

Mr Supachai said the deal would give True an advantage as telecommunications services and content converge.

True cannot offer a "triple play" of voice, data and multimedia services through a single channel. With the fixed-line, wireless and TV channels in hand, the company says it is well positioned to dominate the future market.

True has two million fixed-line subscribers in Bangkok and nearly four million cellular users through TA Orange, the third largest mobile operator behind market leader Advanced Info Service and DTAC.

Mr Supachai said that with True moving into broadband TV, potentially conflicting with UBC's services, the deal would achieve true synergy for the group.

"There was great chance of duplications of service and competition and therefore it was necessary to sit down to jointly fix business direction and give customers more options," he said.

Now True can negotiate with content providers for both its own broadband TV offerings as well as for UBC.

"If UBC negotiates alone, business conflict will emerge because there will be services that will compete with each other in the future and therefore service rates will go up unnecessarily," he said.

Anand Kaewruamwong, managing director of CS Loxinfo, the country's largest Internet service provider, said the deal would benefit the market overall.

"I don't think we will be affected. Actually, there will be a benefit, as the number of players in the market will fall," he said.

CS Loxinfo, a unit of Shin Corp, claims 280,000 dialup and 10,000 broadband customers. The company posted revenues of 1.4 billion baht last year. KSC, the first private ISP in the market, had revenues of around 600 million baht last year.

Shares of True and UBC on the Stock Exchange of Thailand were both suspended at the request of the companies yesterday. True on Friday closed at 7.95 baht, with UBC last trading at 22.90 baht.

Analysts said the deal did offer long-term benefits for True, but cost was high.

True will finance the deal through a $291-million, short-term loan from Deutsche Bank, a significant add-on to the company's existing debt load.

Soraya Sakiyaluck, a telecom analyst at Kim Eng Securities, said True had indicated it would use $100 million from UBC to repay the debt once the takeover was completed.

"True says it will borrow the rest to repay the loan. The question is whether the deal was worth it, and whether the UBC price was too high," she said.

Eakpittaya Iemkongaek, an assistant managing director at BFIT Securities, agreed the deal would significantly boost True's debt burden _ consolidated debt at the end of June was 85 billion baht.

"Long-term, the deal does offer synergies and benefits for [uBC and True]. The only real uncertainty is the debt True will take on," he said.

True reported second-quarter operating losses of 1.1 billion baht and net losses of 964 million, with service revenues down 5.9% for the quarter to 10.3 billion baht. Cash and short-term investments at the end of June were 9.2 billion baht.

--Bangkok Post 2005-11-08

[Lourens]

"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."

"The takeover, potentially costing 12.4 billion baht, was structured as a buyout of UBC and KSC shares owned by Myriad International Holdings (MIH), itself a unit of the multinational media company Naspers, a firm listed on the Nasdaq and Johannesburg stock exchanges."

And history shows that Thailand has never been colonized. But we are working on that . . . GO SOUTH AFRICA!

Perhaps now we will get to see cricket and rugby. One can only hope.

[Greer]

Ummm...Lourens, MIH is SELLING it's stake in UBC and KSC, not increasing it.

Shame really in a way, but I can see that True is becoming a very important player in the telecoms market, and extending that to broadcasting is I suppose a logical move...######!

You might detect a note of discomfort there - I am never happy to see my beloved broadcast industry being infiltrated by the telecoms sector - I am a broadcast systems engineer, and in fact I wrote the specifications for IBC when they relocated their facilities from the dreadful old apartment building they used to occupy to their current home at Tipco Tower. It was at the time of the relocation, prompted by the need to expand services brought about by the requirements of the new partners, MIH, that they also merged with UTV to become UBC.

Don't know if it will make a lot of difference to the day to day running of the programming department, but I guess we may see more of a push to implement newer technologies and hopefully expanded services - may be a project in the wind...but not likely for a little while I suppose...