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True Corp puts partner hunt on hold to reduce debt

Thai fixed and mobile operator True Corp has postponed its attempts to procure a business partner due to an ongoing dispute with the state operator CAT Telecom. Unless the dispute is resolved, True’s planned infrastructure fund – through which it aims to raise THB70 billion ($2.25 billion) – could be thwarted.

In order to raise this sum from its forthcoming listing, True Corp intends to establish a fund to which it will then sell off its infrastructure, such as network towers and fibre optic networks. By then leasing these assets back to itself, it will provide the fund with revenue.

Subsequently, True Corp would buy back one third of the fund’s assets, then launching an IPO on the remainder to help reduce its debts, which total around THB100 billion. It aims to raise a further THB5 billion by selling non-core assets.

According to the operator’s chief financial officer Noppadol Dej-udom, once True Corp has taken these steps towards reducing its debt it will resume its search for a strategic partner.

However, plans to establish the infrastructure fund have stalled due to an ownership dispute over 4500 telecom towers between True Corp subsidiary TrueMove and state operator CAT telecom. True Corp has earmarked these assets for its fund.

TrueMove is now believed to be in the early stages of agreeing to sign over 4500 of the 7000 towers that it uses as part of an arrangement with CAT. It is believed that True Corp has also offered to buy the towers from CAT in order to provide them to the infrastructure fund.

The Information and Communications Technology Minister Anudith Nakornthap, who was unofficially informed about the buy-back proposal by CAT, noted that any such proposal would require the infrastructure to be valued. In addition, the regulation governing state enterprises would be in effect.

This could prove problematic for True Corp, which needs to raise money quickly if it is to keep up with its planned spending – a planned 3G and 4G network expansion this year would set it back THB15 million.

The company also aims to follow its main rivals Advanced Info Service and Total Access Communication by acquiring foreign partners; it would need to reduce its debt before it can continue its search.

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