BANGKOK: Thai telecom firm Jasmine International PCL will find it tough to quickly recoup the $2.1 billion it needs to pay for a licence to offer faster 4G mobile data, analysts said, as the company seeks a foreign partner to help shoulder the cost.
Broadband operator Jasmine, a relative newcomer to mobile telecoms, outbid market leaders Advanced Info Service Pcl and Total Access Communication Pcl (TAC) last year to win the licence, forking out 75.65 billion baht ($2.1 billion), or more than three times its 21 billion baht market value.
CEO Pete Bodharamik has said Jasmine wants to sell an up to 30 percent stake in the mobile unit, a decision analysts said was too hasty. A Jasmine executive declined to comment further about the company’s financing plans, saying: “There is nothing to add at this moment”.
Jasmine’s share price has fallen about 40 percent since it won the licence and analysts expect it to report losses for the next five years due to 4G network costs.
“It will make more sense for Jasmine to wait for three years to seek a foreign partner. If they do it now, the price will not be good and the company will not have bargaining power,” said Pisut Ngamvijitvong, telecoms analyst at CIMB Securities.
Jasmine has said it had secured financing from domestic banks including Bangkok Bank and is due to pay the first instalment of licensing costs on March 21.
Financing is also a priority for True Corporation PCL , which last week said it plans to sell $1.7 billion worth of shares to invest in its mobile business and for debt repayment. Its stock has also fallen due to investor concerns about the cost of the 4G licence.
Thailand’s data usage is growing at one of the fastest rates in Southeast Asia, making the $6.7 billion telecom market very attractive, but also extremely competitive. At the end of last year, the mobile penetration rate was 123 percent, which means many customers already own more than one mobile device.
The Thai telecom sector’s net profit is expected to fall 21 percent this year, the steepest decline in Southeast Asia, versus average growth of 4.7 percent in the broader Asia Pacific region, according to Thomson Reuters Starmine.
“Risk from huge investment requirement and fierce competition will definitely put pressure on margin and profit growth outlook will be weaker than the previous years,” said Piyawat Thammanant, fund manager at Asset Plus Asset Management.
