ShinCorp/ShinSat

[GWR]

It looks like Singapore may not be entirely lost for ideas when it comes to dealing with the Thai junta's gripes. It is probably worth remembering that they have long been accustomed to dealing with the rumbunctious likes of Malaysia's (ex-PM) Mohathir Mohamed: -

Thai push for satellites may hasten Shin Corp overhaul

Thailand's push to take over the country's satellite business controlled by Shin Corp could speed up a corporate overhaul of the conglomerate's diverse assets.

For the past three months, a Temasek Holdings-led consortium that controls Shin Corp has been mulling over a restructuring plan that will turn it into a regional mobile telecommunications player.

According to financial executives familiar with the proposed corporate makeover, Shin Corp's push to focus on telecommunications will involve the sell-off of its other assets such as its satellite operation, a television broadcasting station and finance company.

The restructuring plan, which would also feature a name change for the group, was to be set in motion after the Temasek-led consortium resolved Shin Corp's legal troubles with the government.

Now, that timetable is likely to be brought forward following Thai army chief Sonthi Boonyaratkalin's statement last week demanding that Temasek and its partners sell Shin Corp's 41 per cent interest in Shin Satellite back to the state.

Many Bangkok-based bankers, who had initially feared the possibility of nationalisation, say that the statement had the effect of helping lift the pall over Shin Corp, which has had trouble attracting suitable suitors for its assets.

'Temasek and its partners have always wanted to resolve the problems facing Shin. This is offering the shareholders a fresh opportunity,' says a Bangkok- based banker who is closely tracking developments at Shin Corp.

The sale last year by then Premier Thaksin Shinawatra's family of its stake in Shin Corp set off a political storm that led to his ouster and left Shin Corp's new owners under a cloud of political suspicion and legal problems.

But with General Sonthi's remarks about a sale, state agencies such as the Telephone Organisation of Thailand (TOT), and CAT Telecom have shown interest in buying Shin Satellite, along with Thailand's Samart Group, whose businesses include satellite-dish distribution.

Other potential suitors include investment holding companies Dragon One and Loxley, say several Bangkok-based investment analysts.

Temasek executives were unavailable for comment, but executives close to its Thai partners, which include Siam Commercial Bank and low-profile businessman Surin Upatkoon, acknowledge that the restructuring plans can now be speeded up.

Shin Satellite operates four satellites, including iPSTAR, which ranks as the world's largest broadband satellite. The company also has a large shareholding in CSLoxinfo, a leading Internet provider.

Several Bangkok-based bankers say that the sale of Shin Satellite could help Temasek and its partners find new investors for another problematic Shin investment, commercial broadcasting company iTV.

The company has been ordered by Thailand's Supreme Administrative Court to pay a concession fee of 2.12 billion baht (S$94.5 million) or risk losing its concession.

Bankers say that the Temasek-led consortium is currently holding informal talks with the Thai government to resolve the impasse over the concession fee.

Bankers close to Shin Corp say that the asset disposal plan will be capped with a change of name.

'Shin needs a re-branding, and a change of name will help shed the baggage the group is carrying,' says a financial executive close to Temasek's Thai partners.

by the Straits Times/Asia News Network

[GWR]

Thai satellite operator denies the junta's spy allegations

Thailand's Shin Satellites, under control of Singapore's Temasek Holdings, on Thursday denied the junta's allegations of spying via satellites, saying its operations are purely commercial.

Thailand's only satellite operator came under the spotlight after junta chief General Sonthi Boonyaratglin vowed to take back control of the company and accused Singapore of using ShinSat to spy on the kingdom.

ShinSat rejected Sonthi's allegations and stressed that its four satellites are only used for commercial purposes such as broadcasting and broadband Internet communication.

"Our satellites do no have any equipment to spy or do surveillance. Our operations are purely civilian," said a company official, who declined to be named.

"Our business has nothing to do with the military," she said, adding nearly 80 per cent of the company's revenue comes from international broadcasters and telecom firms.

Agence France-Presse

http://www.nationmultimedia.com/brea...ewsid=30027598

[GWR]

Temasek may want to sell all of Shin, says minister

Information and Communications Technology Minister Sitthichai Pookaiyaudom said he had heard the rumour that Temasek wants to dispose of all of its shares in Shin group, not only in Shin Satellite.

"Therefore, it depends on Temasek if it wants to sell only its ShinSat shares to us," he said, adding the government was expected to reach a conclusion within three months on the option to take back ShinSat's satellites.

The minister will meet next week with the panel appointed to examine the satellite concession contract with ShinSat, and whether it complies with relevant laws, as part of preparing information for a ShinSat share purchase by the government.

He said the government had to proceed carefully between the two options - buying ShinSat shares or seizing control of the satellites - as part of its attempt to regain the satellites from a foreign entity.

Telecom analysts said even if the government could prove Kularb Kaew was a nominee for Temasek to take over Shin, ShinSat would not be deemed a foreign-controlled firm. That is because Shin owns only 41.34 per cent in ShinSat.

The telecom law and foreign business law each caps the foreign shareholding in the telecom sector at 49 per cent.

But Sitthichai argued that previously Shin had owned 51 per cent in ShinSat before diluting its stake to the present level when ShinSat raised capital in 2005.

Sitthichai said the dilution allegedly did not go to Cabinet for approval.

And according to the ShinSat concession, Shin had to retain its stake in ShinSat at around 50 per cent until the concession period expired.

Meanwhile, the National Telecommunications Commission urged the government to carefully consider both the legal issues and effect on services of any move to buy back shares in ShinSat or revoke the concession for the country's sole satellite operator.

"The government needs to cautiously consider whether it is worth taking back the satellite concession," the NTC said in a statement yesterday.

The telecommunications industry regulator also downplayed concerns about the security of military communications, saying the satellites operated by the company were not meant for military purposes and most clients were foreign.

Among the key issues the government should take into account were the continuity and competency in the satellite concession's management, given the intense competition in the satellite industry, the NTC said.

"If state agencies take charge of the business, they might not be able to compete. It needs to rely on the strength of the private sector to take care of the business," the commission said.

ShinSat has four satellites in orbit, two of which are about to be retired, and only a handful of domestic customers.

http://www.nationmultimedia.com/2007...s_30027664.php

[GWR]

Not much of a representative sample I suppose, But I recently mentioned the possibility of a Shinsat buyback to an initially ardent Junta supporter. I was quite surprised at the ferocity of the response. All thought of a patriotic buyback was firmly rejected on the grounds that governments "don't know how to manage such things, and I want it to remain in Singaporean hands to constantly remind people of Thaksin's actions". If Bangkok people are said by some to be easily fooled by the ways of the Junta, why is it that its popularity has distinctly waned in the capital?: -

Singapore FM says "no problem" to sell Thailand's ShinSat

SINGAPORE - There is "no problem" if Thailand's Shin Satellite is sold off by Singapore state-linked investment firm Temasek Holdings, the city-state's Foreign Minister George Yeo was quoted as saying Sunday.

"If this is a commercial transaction on the basis of both sides being willing parties, then I see no problem at all. This is for Temasek to consider and for the buyers to consider whether the price is right," The Sunday Times quoted Yeo as saying.

Temasek gained control of ShinSat, Thailand's only satellite operator, when it bought a 49 percent stake in Thai telecom giant Shin Corp from the family of then prime minister Thaksin Shinawatra early last year.

Disclosures that the family paid no taxes on its windfall gains from the deals parked a scandal which triggered mass protests against Thaksin, culminating in his ouster in a bloodless coup last September.

Junta leader General Sonthi Boonyaratglin recently vowed to take back control of ShinSat and accused Singapore of using the firm to spy on Thailand.

ShinSat rejected Sonthi's allegations

In an interview Saturday with Malaysia's official Bernama news agency, Thailand's military-installed Prime Minister Surayud Chulanot appeared to distance himself from Sonthi's comments, saying the government would not get involved and it was up to Thai companies to buy back the satellites.

The Sunday Times quoted Singapore's foreign minister as saying that Thailand wanted to make sure their economy continued to welcome foreign investment.

"I think they are very conscious that whatever they do with respect to Singapore, (it) must be something which they are prepared to do with any other country, so that all foreign investors are treated equally."

Relations between Singapore and Thailand deteriorated over the past month after Thaksin held a private meeting in the city-state with Singapore Deputy Prime Minister S. Jayakumar.

After the visit, Sonthi voiced his concerns about the satellites.

On Friday night, Yeo said Singapore's ongoing diplomatic spats with Thailand and Indonesia "are not big problems" and relations overall remain good.

Agence France-Presse

http://www.nationmultimedia.com/2007...s_30027845.php

[Wisarut]

Well, Singaporean GHovernment said

You have to buy the whole package at the price of 80 Billion Baht or we REFUSE to sell any price lower than this!

[GWR]

Thaksin got out while he was still ahead, and while he still had enough assets to weather the current storm. So if he had the foresight and advisors to figure the right time to quit, why didn't he have the political savvy to deal with the waiverers in a more constructive manner? That surely is the mark of a truly-inspired politician?: -

Shin Corp profits sink by 60 per cent in 2006

Shin Corp, Thailand's top telecom firm that is at the centre of a political firestorm, said Tuesday its net profits fell by 60 per cent in 2006 due to huge drops in its mobile phone and satellite operations.


Shin Corp was founded by deposed prime minister Thaksin Shinawatra, but his family sold the company to Singapore's state-linked Temasek Holdings last year.

The politically explosive deal sparked months of street protests that eventually led to a coup against Thaksin in September. The deal is now the subject of a slate of criminal probes and remains a thorn in Thai-Singapore relations.

Shin Corp posted a net profit of 3.4 billion baht (95.5 million dollars) in 2006, compared to 8.6 billion baht (241 million dollars) one year earlier.

"The drop in Shin's earnings was mainly caused by a slump in the net profit of our subsidiaries," a company official said.

Profits of the group's flagship mobile firm, Advanced Info Service (AIS), dropped by 13.2 per cent to 16.25 billion baht because of lower service revenue as well as higher cost for sales and expenses.

AIS, Thailand's biggest mobile operator, saw its total revenue drop by 1.2 per cent amid a tough competitive environment, while handset sales rose 28 per cent to 15.3 billion baht.

The number of subscribers rose by 19 per cent, representing 3.1 million new subscribers, it said in a filing to the Stock Exchange of Thailand.

The group's satellite unit Shin Satellite Plc recorded a loss of 46 million baht last year, compared to a net profit of 1.33 billion baht in 2005 resulting from heavy losses due to write-off costs.

In October 2006, ShinSat took its Thaicom3 satellite out of service after it experienced a power failure and could no longer function.

Revenue at the satellite business, however, rose by 22.5 per cent to 6.85 billion baht.

Shin's broadcasting business, operated by ITV Plc, reported a loss of 1.78 billion baht in 2006 versus profits of 679 million baht in the previous year as a result of drop in revenue and rising costs and concession fees.

Concession fees for the independent television channel soared to 2.5 billion baht compared to 230 million baht in 2005, after it lost a court battle with the new military-backed government and was ordered to pay a mountain of back fees.

ITV's total revenue also dropped by about eight per cent to 2.15 billion baht due to intensified competition, political uncertainties and a general economic slowdown, the statement said.

Agence France Presse

[Scuba22]

He must have had his advisors, but I wouldn't place a lot of value on his "foresight". I mean, consider the buyer; Temasek created Singapore Airlines, SingTel, the Port of Singapore, and DBS - all highly competitive businesses in global markets with strong players, and in some cases, industry leaders. Not to mention the job that Singapore has done in developing its own country - the public housing system, mass transit, infrastructure, airport, education etc. (Singapore's PM, remember, is Temasek's head's husband; and the country was built by the PM's dad)

Now, consider Thaksin's track record in every single one of these areas - is there anything anywhere that might lead anyone to believe that Thaksin could possibly be more business savvy and astute than Temasek and the Singapore government? To belive that Thaksin has such amazing foresight, you must believe that Temsek is full of fools, and the empirical evidence is firmly against that.

IMHO, this points to two conclusions. First, Thaksin defrauded Temasek. Shin Corp values were artificially inflated through preferencial policy treatment that Thaksin knew could not be sustained once he didn't direct that policy (I suppose you could call that "foresight", insofar as knowing what you're going to do next is foresight). Second, Temasek was advised by idiots who couldn't figure any of this out. Goldman Sachs may have bright folks in major markets, but they clearly have no clue what's going on in Thailand.

Of course I can't prove any of this, but it's far more sensible than the idea that Thaksin is somehow a far better business strategist than Temasek - that's just absurd.

Cheers,

Scuba

[jpatokal]

Now, consider Thaksin's track record in every single one of these areas - is there anything anywhere that might lead anyone to believe that Thaksin could possibly be more business savvy and astute than Temasek and the Singapore government? To belive that Thaksin has such amazing foresight, you must believe that Temsek is full of fools, and the empirical evidence is firmly against that.

No, it isn't. Temasek's rate of return averaged out over the 30 years it's been in existence is 3%, which is miserable.

[Scuba22]

jpatokal, can you point me to the source of that 3% return figure? One thing to consider is that Temasek's original purpose was not to be a profit maximizing vehicle for Singapore, but to build strategically critical domestic industries that may not have been developed by the private sector since the market is so small. Therefore, you had a bank (DBS), a port (PSA), an airline (SQ), a utility (Sing Power), a defense contractor (Sing Tech), telecoms (SingTel), waste management (Sembcorp) and so on- in short, a complete set of municipal and national services.

The correct comparison for that would not be an investment fund, it would be a municipal or national government. On that score, having a set of public services or state-owned enterprises that returns 3% is phenomenal, wouldn't you say?

Cheers,

Scuba

[jpatokal]

jpatokal, can you point me to the source of that 3% return figure? One thing to consider is that Temasek's original purpose was not to be a profit maximizing vehicle for Singapore, but to build strategically critical domestic industries that may not have been developed by the private sector since the market is so small. Therefore, you had a bank (DBS), a port (PSA), an airline (SQ), a utility (Sing Power), a defense contractor (Sing Tech), telecoms (SingTel), waste management (Sembcorp) and so on- in short, a complete set of municipal and national services.

The correct comparison for that would not be an investment fund, it would be a municipal or national government. On that score, having a set of public services or state-owned enterprises that returns 3% is phenomenal, wouldn't you say?

Sorry, had my figure assigned to the wrong years: according to CFO Asia, the 30-year RR is 18% (!), but the past decade has only managed 3%:

A second performance metric is total shareholder return (TSR) - the compounded annual return to Temasek's owner. Over the past 30 years, the group's TSR has been a healthy 18 percent per annum, a result that Temasek says is "mainly due to the small base and strong growth in the early years". More recently, TSR over the past decade has been a less impressive 3 percent, a figure heavily influenced by "the Asian financial crisis, global economic downturn, as well as external shocks from the 9/11 attacks in the US and Severe Acute Respiratory Syndrome (Sars) outbreak in Asia", says the report.

Temasek doesn't reveal what benchmarks it uses to rate this performance, but by some yardsticks the results over the past ten years have been poor. Research from CLSA shows that, while Temasek has recorded an annual TSR of 3 percent, Singapore's Straits Times Index produced 3.2 percent and the 50 biggest firms by market capitalization in Asia ex-Japan turned in an annual TSR of 8 percent. In Temasek's defence, the MSCI Asia ex-Japan Index dropped by an annual average of 2.5 percent over the past decade.

Commenting on the results, CLSA's Goyal notes that: "Eighteen percent annually over 30 years is very good for an organization which didn't set out with the objective of delivering shareholder returns. Its objective was to turn a swamp into a first-world city and in that it has succeeded handsomely." However, he adds: "Over ten years, the 3 percent return is quite low, particularly when you look at the risk-free rate of return on US government debt which was about 6 percent annually over the same period."

Remember that many of Temasek's companies -- Singapore Power (which also runs water and gas), SingTel, SingPost, Sembcorp etc -- had and, in some cases, still have government-granted monopolies. With total power to set rates, it's little surprise that they could thus generate a profit, and having that 3% (or 18%) profit just means that Singapore's people are paying at least 3% (or 18%) more than the market rate for these services!

[Scuba22]

In a tiny startup country, it's not unreasonable to have pulic services like power, post, communications, garbage collection, water, gas, etc. to be awarded monopolies at least at the beginning. These are all critical services, and you can have two problems with immediate free marketization - first, with such a small market, no one might enter, leaving the population without essential services; second, if entrants go bankrupt, again, the population is left without essential services. For that reason, you often have state-owned companies in these sectors. There's been some economics work that finds rational jusification for temporary monopolies in small developing countries in non-essential industries as well for similar reasons (if you're interested I can dig up those references, just let me know).

Whether Singaporeans were paying "too much" or over market rates is open to debate. One may argue what a "market rate" is for a service the market doesn't provide and has to be taken over by the state (and one may argue whether this in fact is the case). And since Temasek is owned by the state, the profits go back to the people, ideally to maintain and build the state which serves consumers ultimately - though this is usually not the case in most corrupt developing countries, I'd say Singapore overall did a pretty good job for its citizens with the surplus.

The operative word though is "temporary". I personally feel that Temasek has fulfilled its mission and at this point ought to be disbanded. Many of its companies are now publicly traded, they should gradually selltheir shares on the open market and return the money to Singapore's treasury. A governnment entity has no business investing in private assets in other countries - that's a path for conflict of interest.

Cheers and thanks for the references!

Scuba

[jpatokal]

In a tiny startup country, it's not unreasonable to have pulic services like power, post, communications, garbage collection, water, gas, etc. to be awarded monopolies at least at the beginning. These are all critical services, and you can have two problems with immediate free marketization - first, with such a small market, no one might enter, leaving the population without essential services; second, if entrants go bankrupt, again, the population is left without essential services. For that reason, you often have state-owned companies in these sectors. There's been some economics work that finds rational jusification for temporary monopolies in small developing countries in non-essential industries as well for similar reasons (if you're interested I can dig up those references, just let me know).

I'm not disputing that state-owned companies may have been the best solution, although I do have to point out that (despite PAP propaganda to the contrary) Singapore was not just a festering swamp at independence -- the British had already built up the basic infrastructure. What I find disturbing is the odd hybrid role of Temasek: it enjoys the benefits of being state-owned (monopolies in fields where it operates, guaranteed backing for anything it does, effectively limitless funds) with the benefits of being a fully private company (no financial disclosure or transparency until very recently, wealth accumulates only to the owners).

The operative word though is "temporary". I personally feel that Temasek has fulfilled its mission and at this point ought to be disbanded. Many of its companies are now publicly traded, they should gradually selltheir shares on the open market and return the money to Singapore's treasury. A governnment entity has no business investing in private assets in other countries - that's a path for conflict of interest.

Exactly. Temasek and other GLCs have had a few highly publicized flops (well, outside Singapore) like the Suzhou Industrial Park and now Shin, but how many more don't we hear about?

[Scuba22]

Just for a lark, I've been tooling around the Temasek Website, and on the whole it seems pretty transparent to me. The annual report is there and downloadable, investment positions are pretty clearly laid out, and the bulk of the portfolio is in liquid large cap listed assets.

BUTTTT... they do go quite out of their way to disassociate themselves with their government ownership! the home page idetifies the company as "a private Asia investment firm headquartered in Singapore" - but makes no mention of being government owned. To find that out, you need to go to their "Investor relations" section (funny since they have one one investor, so why bothr with investor relations on a website?), and then to the #7 bullet point "Our institution" - this gets you to a pdf of pages 56-79 of their annual report, "Temasek Review 2006", which then launches into how diverse the employees of Temasek are (27% non Singaporean!).

A section on "Corporate Governance" starts on p. 62, and its first subheading "Relationship with our shareholder" states, in paragraph 2: "We are a limited liability exempt* private company incorporated 25 June, 1974 to hold and manage investments previously held by our shareholder, the Minister for Finance (Incorporated)."

The rest of the section goes on to point out the laws that Temasek operates under. The * next to "exempt" point to a footnote that explains that they're not under any obligation to tell you anything at all. But due to their kind kind hearts, they publish this annual report that you are privileged to read at that very moment.

Other than that, no mention of any association with the Singaporean government. That's Singaporean transparency for you. Overall though, I bet its clearer than the Crown Property Bureau! (their site is in Thai, so if anyone can report of whether there's anything interesting on it, I'd be much obliged).

Cheers,

Scuba22

[Naphat]

From what I understand, Temasek started to publish annual reports to earn a rating from the credit-rating agencies. They plan to issues bonds to raise funds for expansion regionally, as the article below expands on. I don't think we would see such transparency otherwise.

http://www.cfoasia.com/archives/200411-05.htm

I think the Singapore government would still like to keep control over Temasak and its GLCs to further their policy turning their local national champions into regional and even global ones. Temasek's decision to acquire Shin was, I think, mainly for Singtel's ambitions to become a regional player in the mobile telecoms market.

[Wisarut]

Karmic Retribution to Temasek: They are starting to sell out their porfolitio including Bangkok Hospital, Shin Sattelite and so on.

http://www.manager.co.th/StockMarket...=9540000007980