True Corp announces buy back

Today is the due date when True has to exercise the option to buy Bitco's 6 billion shares worth Bt0.59 each, totalling Bt3.54 billion, back from CP, which is True's parent company.

A source at True said that the company would exercise the option to buy back the shares.

The source also said the company would use its operating cash flow for the purchase, which will raise True's shareholding in True Move via Bitco to 98 per cent from the present 80 per cent.

The buy-back would make True have over 90 per cent share control over True Move. This will facilitate its plan to seek a foreign strategic partner for True Move to help fund its plan to invest in a 3G wireless broadband service, using the 2.1 GHz spectrum.

The National Telecommunications Commission (NTC) has said it intends to auction four of the 3G-2.1 GHz spectrum licences within this year for the telecom operators to develop 3G services.

True has reportedly been approached by overseas telecom operators, including some from China, for a possible strategic partnership with True Move.

True Move is the only private cellular operator in Thailand without a foreign strategic partner, which makes it an attractive proposition to foreign suitors.

The largest cellular operator, Advanced Info Service has Singapore Telecom as its foreign strategic partner, while Total Access Communications has Norway's telecom giant Telenor as its overseas strategic partner.

But True chief executive officer Supachai Chearavanont has insisted that True Move would not offer more than a 25-per-cent stake to the any foreign strategic partner in order for True to maintain the biggest say in True Move.

In December 2007, the CP Group provided a Bt3 billion capital injection in additional support forTrue Move on behalf of True by through the subscription of Bitco's rights offer of six billion shares at 50 satang apiece.

The move resulted an increase of CP's shareholding in Bitco from 0.76 per cent to around 20 per cent and a reduction of True's consolidated shareholding in Bitco from 98.17 per cent to around 75 per cent and that of Wirefree Services Belgium from 1.07 per cent to 0.82 per cent.

True retains the right to buy back the shares. The funding from CP is for True Move to rapidly expand its network coverage.

In February 2008, True's board approved a plan to buy back shares of Bitco from CP and also accepted CP's offer to extend the buy-back period from 180 days to 546 days after CP's Bt3 billion of fresh equity into Bitco in 2007.

CP's intention in purchasing Bitco shares was only to fulfil its obligation under the so-called Sponsor Support Agreement with the creditors of True Move, because CP does not wish to hold this amount of Bitco shares permanently.