True Corp announces alliance with China Mobile

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True Corp announces alliance with China Mobile
Usanee Mongkolporn
The Nation


Suphachai

BANGKOK: -- True Corp group has announced an alliance with China Mobile to strengthen its business and recapitalise its financial position through a private placement of about Bt28.6 billion, equivalent to 18 per cent of total shares, and a rights offering to existing shareholders amounting to approximately Bt36.4 billion.

Currently Charoen Pokphand group owns around 60 per cent of True Corp, whose businesses range from mobile- and fixed-telephone services to broadband Internet and pay television.

After the deal with China Mobile, CP's stake will be diluted to around 49 per cent. China Mobile will become the second-largest shareholder at 18 per cent.

Noppadol Dej-Udom, group chief financial officer of True Corporation, said the company would seek approval from its shareholders on July 25 for its recapitalisation, which amounts to about Bt65 billion.

The recapitalisation plan involves the sale of new shares worth around Bt28.6 billion in a private placement to China Mobile.

At the same time, True will make a rights offering of about Bt36.4 billion comprising 5,648,285,818 shares to existing shareholders in the ratio of 2.5725 existing shares to 1 new share.

The price of the rights issue will be set at Bt6.45 per share, which is the same price paid by China Mobile through the private placement.

According to True, this recapitalisation will create investment opportunities for the company in new technologies, which will help elevate the country to the forefront of the global telecom industry.

Dhanin Chearavanont, chairman and chief executive of CP Group and chairman of True Corp, said True Group was honoured to welcome China Mobile as a strategic partner.

In the event that there are unsubscribed shares from the rights offering, CP Group, as True's principal shareholder, will readily purchase the unsubscribed shares to complete the total amount of the rights offering by considering various means that are suitable to support this.

Li Yue, CEO of China Mobile, said: "China Mobile has been expanding internationally and is seeking overseas strategic investment opportunities to further develop its international operations.

Thailand and China enjoy strong economic and trade connections, and the investment environment in Thailand is very friendly. "True Group is the ideal partner in Thailand as evidenced by its leadership in the broadband and cable TV industry as well as its leading position in the 3G and 4G mobile business amidst the fierce competition in the Thai telecommunications sector."

China Mobile says it views True Group's unique convergence business strategy and long-term vision as having strong potential to bring about long-term growth in profitability.

Through the proposed strategic investment in True Corp, China Mobile expects to access new customers, international business opportunities and new earnings growth drivers, which is of great significance to the telecom business of the company. It also represents a major initiative by the company in enhancing its international presence, achieving strategic transformation and promoting reform and innovation, it says.

A telecom analyst said the partnership would help True with its financing, since its net gearing has reached 1,051 per cent.

The new partner and new capital would help True with new investment projects, including its plan to enter the upcoming licence auctions for the 1,800-megahertz spectrum in August and for 900MHz in November.

True group has 23.1 million subscribers to its mobile-phone service.

Supachai Chearavanont, president and CEO of True, said the group had achieved another important milestone via a strategic partnership with China Mobile to enhance its competitiveness as well as strengthen its financial standing, paving the way to sustainable growth.

"The strategic partnership will help reduce True's overall debt burden as well as strengthen its financial status, which will lead to a significant change that will transform us into a profitable company."

China Mobile has a subscriber base of nearly 800 million and the largest mobile-communications network globally. It has been listed on the Hong Kong and New York stock exchanges.

The True board of directors discussed the recapitalisation plan yesterday at a special meeting.

The company requested that the Stock Exchange of Thailand order a halt to trading of its securities on a temporary basis for the afternoon period.

It said a board meeting was going to be held to make decisions on significant matters that would affect the decisions of investors trading the company's shares.

The board yesterday resolved to propose to the shareholders' meeting that they approve the company's recapitalisation plan.


-- The Nation 2014-06-10

[lee b]

Good luck to China, the only thing True isn't is true...............

[Thai at Heart]

Oh wowsers.

A coup goes off, and CP liquidates its phone company to a foreign entity.

Is this taking the mickey or what? U can't make this stuff up. All in the best interests of Thailand and all. I mean, at least they didn't sell to falangs.

Edited June 9, 2014 by Thai at Heart

[englishoak]

Or Singapore

[Tatsujin]

Oh wowsers.

A coup goes off, and CP liquidates its phone company to a foreign entity.

Is this taking the mickey or what? U can't make this stuff up. All in the best interests of Thailand and all. I mean, at least they didn't sell to falangs.

18% shareholding is hardly liquidating the company to a foreign entity . . . they have a stake, they don't control or own it outright . . . unlike other telecoms sales in the last 15 years . . .

[chainarong]

What a easy way for the Chinese Government to carry out activities without anybody knowing or am I being Paranoid. l

[Chao Lao Beach]

Is this likely to bring a better service to Thailand and more realistic prices ?

Many equivalent packages are much cheaper in expensive western countries.

[Publicus]

Birds of a feather flock together so these two losers have made a deal to share the misery.

As if things weren't bad enough already, China Mobile's humble annual profit is off this year by almost 6%, last year it lost 40 million subscribers, its I-Phone made with China technology is the most expensive on the market, RMB 5,488 ($907) and its shallow reputation wasn't helped by selling a bunch of I-Phones with fake ID numbers.

The deal China Mobile reached last year with Apple, after 7 years of negotiations, left it far behind its competitors China Unicom and China Telecom which have a lock on the China I-Phone market. Apple finally sealed the China Mobile deal on highly favorable terms and only to have a total presence in the PRChina I-Phone market as Unicom and Telecom each had signed Apple I-Phone deals several years ago. Still, the Apple deal has given CM an uptick in I-Phone orders.

True is investing in technologies and offering services that are listed as number 1 by MarketWatch as among the top ten "dying technologies" not to invest in. Fixed line phone services are fading fast as Skype continues to expand, and also as the privately owned Chinese Tencent QQ broadband internet free video or text messaging system begins to expand in to Thailand (Thai language only in Thailand only) .

Cable tv technologies and services globally are dropping like a stone in favor of subscriptions to the USA's Netflix and Hula and to the recent proliferation of services like them, to include Korea's Samsung and China's Lenovo and Huawei respectively (Huawei is shut out of the United States due to national security spying and thefts).

Based on my own experience in the PRChina, I frankly share with many market analysis the disbelief China Mobile is a profitable corporation period.

For instance, China Mobile dreamed up a numb nuts promotion several years ago that has exploded in its face to become a loss leader of the entire industry there, the Group Rate Scheme. People organize a group consisting of family and friends and each pays RMB 5 a month ($25) to make unlimited calls and unlimited texting to all their family and friends.

A stinging example of the way the system works, or doesn't work is that if someone in your Group goes to Beijing in the North for a week or two and you are in Guangzhou in the far South, they can't call you on Group Rates but you can call them on Group Rates. I called friends travelling everywhere in the PRC and talked for hours and hours each week, thank you.

China Mobile long ago tried to cancel what it had planned as a temporary promotion scheme, but with the PRChinese used to a free lunch across the board, CM was unable to cancel the white elephant and remains indefinitely stuck with this huge loss leader, a promotional idea unforeseeably (to them) gone uncontrollably off the charts.

China Mobile's Average Revenue Per User data has been long term severely retarded by its nutcake Group Rate Scheme, which for years has chased away investors and which accounts for CM collapsing into Apple's arms late last year. It's anyone's guess what True may think it's doing.

Meanwhile, China Unicom's profits are up 47% and China Telecom's profits are up 17%. Nobody believes PRChinese data anyway. GDP data are believed to be overstated by 20% annually.

Edited June 10, 2014 by Publicus

[Thai at Heart]

Oh wowsers.

A coup goes off, and CP liquidates its phone company to a foreign entity.

Is this taking the mickey or what? U can't make this stuff up. All in the best interests of Thailand and all. I mean, at least they didn't sell to falangs.

18% shareholding is hardly liquidating the company to a foreign entity . . . they have a stake, they don't control or own it outright . . . unlike other telecoms sales in the last 15 years . . .

Who says they won't control it. It will take eventually the same structure as DTAC or Tesco Lotus.

Of course those deals were made by approved members who didn't end up getting their ass in trouble for foreign ownership unlike AIS.

I wish people would read a little more to realise that it is CP who is the big boy in this country busy monopolising, exploiting and doing as it pleases, whilst all this political infighting goes on.

There isn't a single pie that causes problems.where CP isn't somewhere in the middle of it, least of all the rice and agribusiness. Retailing, telephones, media all highly sensitive issues.

Never does CP get discussed or criticised. Beyond that they are a massive player in China with massive political pull there, yet this goes unmentioned in the news here. They are slowly consuming Thailand and no one notifes. Why?Because they are Thai. Lol

[lomatopo]

Not much choice here, they've been losing money forever and they desperately need capital both to build out their 2100 MHz 3G network, and to bid on the upcoming 1800 MHz auction. They tried to raise some capital through a questionable GIF, rather unsuccessfully, so selling a portion of the company was really the only option. They've been borrowing money at high rates to cover cash-flow "problems" which put them even further in the hole.

Net, net this is good news as it is better to have three providers lending a bit more competition. Not sure about management though? Based on their past performance it may be time to bring in professionals?

Edited June 10, 2014 by lomatopo

[HUAHIN62]

Birds of a feather flock together so these two losers have made a deal to share the misery.

As if things weren't bad enough already, China Mobile's humble annual profit is off this year by almost 6%, last year it lost 40 million subscribers, its I-Phone made with China technology is the most expensive on the market, RMB 5,488 ($907) and its shallow reputation wasn't helped by selling a bunch of I-Phones with fake ID numbers.

The deal China Mobile reached last year with Apple, after 7 years of negotiations, left it far behind its competitors China Unicom and China Telecom which have a lock on the China I-Phone market. Apple finally sealed the China Mobile deal on highly favorable terms and only to have a total presence in the PRChina I-Phone market as Unicom and Telecom each had signed Apple I-Phone deals several years ago. Still, the Apple deal has given CM an uptick in I-Phone orders.

True is investing in technologies and offering services that are listed as number 1 by MarketWatch as among the top ten "dying technologies" not to invest in. Fixed line phone services are fading fast as Skype continues to expand, and also as the privately owned Chinese Tencent QQ broadband internet free video or text messaging system begins to expand in to Thailand (Thai language only in Thailand only) .

Cable tv technologies and services globally are dropping like a stone in favor of subscriptions to the USA's Netflix and Hula and to the recent proliferation of services like them, to include Korea's Samsung and China's Lenovo and Huawei respectively (Huawei is shut out of the United States due to national security spying and thefts).

Based on my own experience in the PRChina, I frankly share with many market analysis the disbelief China Mobile is a profitable corporation period.

For instance, China Mobile dreamed up a numb nuts promotion several years ago that has exploded in its face to become a loss leader of the entire industry there, the Group Rate Scheme. People organize a group consisting of family and friends and each pays RMB 5 a month ($25) to make unlimited calls and unlimited texting to all their family and friends.

A stinging example of the way the system works, or doesn't work is that if someone in your Group goes to Beijing in the North for a week or two and you are in Guangzhou in the far South, they can't call you on Group Rates but you can call them on Group Rates. I called friends travelling everywhere in the PRC and talked for hours and hours each week, thank you.

China Mobile long ago tried to cancel what it had planned as a temporary promotion scheme, but with the PRChinese used to a free lunch across the board, CM was unable to cancel the white elephant and remains indefinitely stuck with this huge loss leader, a promotional idea unforeseeably (to them) gone uncontrollably off the charts.

China Mobile's Average Revenue Per User data has been long term severely retarded by its nutcake Group Rate Scheme, which for years has chased away investors and which accounts for CM collapsing into Apple's arms late last year. It's anyone's guess what True may think it's doing.

Meanwhile, China Unicom's profits are up 47% and China Telecom's profits are up 17%. Nobody believes PRChinese data anyway. GDP data are believed to be overstated by 20% annually.

Agree with you. Further more Dhanin fell from the richest Thai to number 2. He is heavily leveraged, he bought shares in the Chinese insurance company as well as Siam macro, if I remember correctly these 2 deals was +- $ 13 bn and most of it was financed. True move have been running at a loss from day one and was the reason why CP groups debt rating was downgraded recently. A house of cards ?

As to your statement about the Chinese stats, you are correct but unfortunately its the same for most countries including the US. The US have changed the way they calculate CPI/inflation 14 times since 1978. If you however use the original formula to calculate inflation the US GDP would have been negative in real terms (after deducting inflation from the GDP figure) for the last decade.

[build6]

"A telecom analyst said the partnership would help True with its financing, since its net gearing has reached 1,051 per cent."

--- 1051% net gearing!

[taony]

Ack!! Didn't know about the true / CPU relationship . Time to change phone companies . Cable next

-*I typed this myself*-