Analysis: Temasek and Thaksin lost in space

Temasek was known to have purchased Shin Corp from company founder and then Thai premier Thaksin Shinawatra for its exposure to Thailand's fast-growing mobile telecom market.

The politically charged transaction came just months before Thaksin was ousted in a military coup. After Temasek's purchase, a military appointed government de facto nationalized Shin Corp's iTV on charges the television subsidiary had violated its state operating concession. Now, Shin Satellite is indirectly embroiled in a closely watched court case that threatens to seize permanently US$2.3 billion of the now exiled Thaksin's frozen assets on corruption charges.

The charges include allegations that Thaksin's government illegally granted Shin Satellite a preferential eight-year tax holiday on its foreign operations, a policy that prosecutors have claimed cost the state over 16 billion baht in lost revenues. The decision in the case is due on finances and state concession agreement. February 26, and according to analysts it's unclear what legal implications a guilty verdict would have on the Temasek-owned company's finances and state concession agreement.

Temasek's investment in Shin Corp's mobile telecom arm, Advanced Info Services, has been profitable and promises new revenue streams with the belated launch of third-generation, or 3G, services in Thailand. Yet as political risks rise, there have been reports in the Thai media suggesting that Temasek may try to unload its 41% majority stake in Shin Satellite, which it recently re-branded as Thaicom, apparently to disassociate the company from its past links to Thaksin. Market analysts have suggested that Thailand's Samart might be interested in the stake, but there is no indication that a transaction is either feasible or imminent.

While revenues have grown, Thaicom has not turned a profit in years and its regional outlook dimmed substantially amid the global economic downturn. According to Thomson Reuters, the sale of bonds worth 7 billion baht in November will help Thaicom repay debts and issue a dividend to shareholders this year - the first paid out since 2004. While official figures have not been released, analysts estimate the company's net loss was around 349 million baht in 2009.


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