True Corp, backed by billionaire Dhanin Chearavanont's Charoen
Pokphand Group, also plans to offer new shares via a rights issue on
the basis of seven new shares for 10 existing shares, one of the
The deal is part of the Thai group's long-term plan to secure a
foreign partner, sources familiar with the matter told Reuters, and
underscores Dhanin's strong political connections in mainland China,
the people added.
In 2013, Dhanin's CP Group emerged as a surprise buyer for HSBC
plc'c $9.4 billion stake in Ping An Insurance Group Co of China Ltd.
CP Group was the first multinational to invest in China's
agri-business in 1979 and it was tasked with helping to modernize
China's farm sector. It also operates Lotus super markets in
Shanghai, according to the company's website.
True Corp and China Mobile declined comment.
The proposed deal comes in the midst of political turmoil in
Thailand, which saw the imposition of military rule in May. The
crisis has weighed on corporate deal making, with volumes slumping
72 percent from a year ago to $648 million by end May, according to
Thomson Reuters data.
"The deal is unusual given the country is having a political
situation like this, " said Mintra Ratayapas, an analyst at KK Trade
"Some foreign investors voice concerns about the situation in
Thailand. But for True, it seems like the buyer is confident about
the company thanks to strong connections with Dhanin."
STRUGGLING AT HOME
True has been grappling with a rising debt burden as it invests in
the expansion of its mobile networks to compete with market leader
Advanced Info Service and second-ranked Total Access Communication.
True is the only Thailand mobile company without a foreign partner
and the new investment is expected to help the company with its
planned regional expansion, a source with knowledge of the deal said
The plans are subject to True Corp's board approval, one of the
sources said. True shares were suspended earlier on Monday pending
[to top of second column]
Like True, China Mobile been struggling in its domestic market. In
April, the world's biggest carrier by subscribers booked its lowest
quarterly profit in five years, as it faced a range of headwinds in
its home market.
China Mobile, which had $69.4 billion in cash and short-term
investments at the end of 2013, is fighting a multi-front battle, as
China's government trials new value-added taxes which will eat into
its profits and reduced connection fees China Mobile charges for
other carriers to use its networks.
If successful, the deal would mark China Mobile's first transaction
outside of China, Hong Kong and Taiwan in seven years, according to
Thomson Reuters data.
China Mobile also faces challengers in the shape of newly-licensed
mobile virtual network operators, who lease network capacity from
carriers like China Mobile and sell their own packages to
China Mobile is being advised by CICC, while Deutsche Bank is
advising True Corp, one of the sources said.
(Additional reporting by Manunphattr Dhanananphorn in BANGKOK, Saeed
Azhar in SINGAPORE and Paul Carsten in BEIJING; Writing by Denny
Thomas; Editing by Alan Raybould and Jeremy Laurence)
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