The Thai WayWith a NOK

Telenor Xpress 2 - 2000
The Thai WayWith a NOK 6.5 billion investment in Thailand's second-largest mobile operator, Telenor re-emphasises its ambitions in South East Asia's telecommunications market. Telenor Buys Way Into Thai Mobile Market
At a Telenor press conference on May 15, Telenor CEO Tormod Hermansen announced the formalisation of a relationship that has been in development for years. Telenor AS has entered into an agreement to purchase up to 30 per cent of Total Access Communication Public Company Limited ("TAC") and up to 24.9 percent of TAC's parent company, United Communication Industry Public Company Limited ("UCOM"), a major telecommunications group in Thailand.
"This is the biggest single external investment in the history of Telenor to date. It clearly demonstrates our interest in the South East Asian telecommunications market. Along with Telenor's mobile telephony investments in Malaysia (DiGi.com) and Bangladesh (GrameenPhone), this acquisition of shares in Thailand and Singapore makes Telenor one of the biggest mobile operators in the region", said Hermansen at the press conference.
Mired in financial troubles since the Asian economic crisis last year, TAC had been on the lookout for a strong international partner to bolster its operations financially and technologically. And TAC had an alluring sales pitch for prospective investors: 1 million mobile subscribers and a solid market position in a country due for growth. Says Telenor's Morten Karlsen Sørby: "We have been building relationships in Thailand for over three years. The combination of Thailand's underdeveloped fixed net infrastructure and tremendous growth potential makes it a very promising market."
Although the transaction is subject to conditions such as the approval of authorities in both Thailand and Singapore, the acquisition of shares could amount to as much as USD $530 million in TAC and USD $189 million in UCOM. If all goes as planned, Telenor will have combined direct/indirect ownership of 40 per cent of TAC. TAC is listed on the Stock Exchange of Singapore and UCOM is listed on the Stock Exchange of Thailand.
With a market share of 45 per cent as of March 31, 2000, TAC is second only to AIS (partially owned by Singapore Telecom) in the Thai mobile telephony market. TAC operates a nation-wide GSM 1800 and AMPS 800 network with roughly 1,100,000 subscribers. Hermansen stated that Telenor plans to take its accustomed active role in ownership, sharing its capital, competence and experience in mobile operations.
According to Hermansen, Telenor has had an informal relationship with TAC, UCOM and the Bencharongkul Family (one of UCOM's primary owners) for three to four years. After the transaction, Telenor will share ownership of TAC with UCOM (40 per cent) and other parties (30 per cent) and ownership of UCOM with the Bencharongkul Family (22.4 per cent), Somers UK (22.6 per cent) and other parties (30.1 per cent). Most of the shares acquired by Telenor will be from the Bencharongkul Family and Somers UK.
As part of the agreement, Telenor will also be able to choose two of TAC's operational leaders (Chief Financial Officer and Chief Operational Officer) and three board members.
Sørby explains that TAC's immediate tasks include building up the capacity and quality of its GSM network, undertaking distribution and marketing drives, and grabbing as large a portion of the growing mobile market as possible. "Telenor's goals for TAC are in line with the intentions of the other majority owners."
Hermansen characterised the South East Asian market and the Thai mobile market, specifically, as strong growth areas. "Telenor believes that Thailand represents one of the most attractive telecom growth markets in Asia, with TAC and UCOM as the two companies best positioned to capitalise on this growth potential."