Total Access Communication

Total Access Communication Plc (DTAC)

What’s new? On Friday, the market was awash in rumors that DTAC plans to delist its shares from the Singapore Stock Exchange (SGX). Its stock price on the SET rose about 3% in response. 
Analysis: We called Investor Relations for clarification and were told that management has been mulling over the possibility of delisting from Singapore for about a year. However, DTAC does not currently plan to do so. IR said the primary reason for delisting from the SGX would be to avoid having to report to two different sets of regulatory authorities with somewhat different rules, which is something of an administrative burden.
We, however, think the primary motivation would be the fact that DTAC now trades only a negligible volume on the Singapore exchange. Last month, its daily trading turnover on the SGX was just 10,000-30,000 shares. IR told us that the free float in Singapore is only 11.8m shares, about 0.5% of its paid-up capital.  
Action: The rumors gave a psychological boost to DTAC’s stock price on Friday, possibly because the market speculated that in the event of delisting from the SGX, the firm would make a tender offer in excess of the current market price (based on previous tender offers on the SET). We are skeptical that such a scenario would play out for a tender offer on the SGX of a dual-listed, which has no clear precedent (we don’t even know whether DTAC would make a tender offer for its shares or whether it would recruit a third party, such as a fund manager, to make the offer).
Regardless, we think the stock has recently been oversold following concerns about network quality issues. We recommend looking beyond those issues and focusing on 3G developments over the next 6-9 months, which will catalyze the share price. Of the telecoms stocks we cover, DTAC would have the greatest scope for bottom-line upside from a 3G license. We reiterate our BUY rating, premised on 51% upside to our YE12 3G-license-in-hand DCF valuation of Bt105 and a generous dividend yield of 7% in the meantime.