True shares rise on plan for infrastructure fund

True intends to set up the fund this year. It will be the second infrastructure fund set up this year after the BTS Rail Mass Transit Growth Infrastructure Fund, which raised Bt62.5 billion in April.

True reported to the Stock Exchange of Thailand yesterday that its board last Friday approved the company and/or its subsidiaries entering transactions for an infrastructure fund, and that it was preparing to apply to the Office of the Securities and Exchange Commission for the fund’s establishment. 

The company plans to sell telecom towers, its core fibre-optic cable network, broadband networks, and the rights to revenue from equipment rental to the fund. It will also acquire a 33-per-cent stake in the fund. 

Assets to be sold to the fund include infrastructure components that can be shared with other operators. The company and/or its subsidiaries will lease back or lease/sub-lease assets for a term of no more than 15 years, having a transaction size not exceeding Bt55 billion. True intends to lease only those assets that it or its subsidiaries require for utilisation. 

The major benefit to True Corp will be the improvement in gearing from the asset sales to the new fund, Chirasit Vuttigrai, an analyst at DBS Vickers Securities (Thailand) Co, told Bloomberg. There is still a question whether there will be incremental value from the rental of those telecom facilities to other competitors.

True has Bt6.5 billion in debt to service this year, Bt13 billion next year, and Bt16 billion in 2015, according to a telecom analyst.

According to its filing, the company will use proceeds from the sale of assets, revenue and/or lease of assets in the partial payment of debt including loans, which will significantly improve capital structure and enhance investment capacity. In addition, it may use part of the proceeds for investment in future projects.

The board also approved the sale of ordinary shares in eight non-core business subsidiaries to Thana Telecom Corp, which is wholly owned by True parent Charoen Pokphand, for Bt5.4 billion. This is to allow the True group to focus on core business, and the proceeds from the sales will be for repaying some debt. 

The eight subsidiaries are True Leasing, Wire & Wireless, True Money, True Internet Data Centre, True Lifestyle Retail, True Properties, True Digital Plus, and True Digital Content and Media Company.

The company will propose the infrastructure fund and the sale of shares in non-core subsidiaries to a shareholder’s meeting on September 12.