Singapore Telecommunications (ST SP)
In Talks To Buy "A Portion" Of Temasek's InTouch Stake
- According to press reports, Singtel has started discussion to acquire "a portion" of Temasek's 41% stake in InTouch Holdings, which is worth US$2.4b based on current market price of Bt62.25.
- InTouch owns 40.6% of Thailand's largest mobile operator Advanced Info Service (AIS), Separately, Singtel also owns 23.3% of AIS.
- The move, if it materialises, is in line with Singtel's intention to increase its stakes in its Regional Mobile Associates.
- The deal faces two regulatory hurdles: a) Singtel would have to mount a general offer if its stake in AIS reach 25% of voting rights, and b) limit on foreign ownership of 49%.
- Assuming that Singtel does not get waiver from general offer and keeps within the threshold of 25%, we estimate that Singtel could acquire a 4% stake in InTouch without triggering a general offer for AIS. This would, however, make the shareholding structure for AIS rather unwieldy.
- If it does get a waiver from general offer for AIS, Singtel would still have to limit the size of the stake its acquires to within 25% of InTouch.
- This is a politically sensitive deal given InTouch's link to deposed ex-Prime Minister Thaksin Shinawatra in the past. The deal also faces various regulatory hurdles. Thus, we would await further clarification and announcement from Singtel before making a judgement on the development.
