True Corp foresees profitability after recapitalisation

True placed new shares worth Bt28.6 billion to China Mobile in a deal for 18 per cent of True, while it also launched a rights offering worth Bt36.4 billion to existing shareholders. 

True and China Mobile formally signed their strategic partnership agreement yesterday.

Another factor is the expiration of the concession of its cellular arm TrueMove last September, which means it does not have to book depreciation expenses from TrueMove any more. 

 The last time True reported a full-year profit was in 2010, posting a net of around Bt1.1 billion, according to True’s chief financial officer Noppadol Dej-udom.

Chief executive officer Suphachai Chearavanont said the company’s net debt-to-EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio had fallen from 5 times to 1.5 times after the recapitalisation. It has already paid off Bt55 billion in debt and part of Bt40 billion in debentures.

Li Yue, executive director and CEO of China Mobile, said True was an ideal partner. While Suphachai regards China Mobile as a big brother, Li said, “we see True as a brother but no one is bigger than the other, because the young brother is going to be bigger in the near future”. China Mobile has no plans to send its executives to join True Corp’s management. It only sent two representatives recently to sit on its board. 

“As a strategic partner by holding 18 per cent in True, we’ve strictly complied with the Thai laws on investment and let all business operations be run by True,” he said.

Dhanin Chearavanont, chairman and CEO of Charoen Pokphand Group and chairman of True Corp, said he wanted to thank China Mobile for its confidence in True.  The recent success of the private placement and rights offering were clear indications of True group’s strong growth potential in the telecommunications industry, as well as Thailand’s long-term economic growth, he said.

China Mobile and True are ready to forge ahead with their collaborations and have outlined a comprehensive set of work protocols and procedures, as well as having established committees and working groups comprising personnel representing each company for six core businesses.

They are products/value-added service/content, international business, networks, device procurement, general procurement and human resources. 

The working groups will strive to align their strategies for the business areas to increase the benefits to both parties, Dhanin said.

China Mobile is a world-leading mobile communications service provider, with the largest mobile subscriber base of nearly 800 million and the largest mobile communications network globally. It is listed on the Hong Kong and New York stock exchanges. On the Stock Exchange of Thailand, True’s share price closed at Bt12.50 yesterday, up 4.17 per cent.