Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Telenor and CP Group in $8.6 billion merger of Thai telecom units

Stock MarketsNov 22, 2021 07:36AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Telenor flag flutters next to the company's headquarters in Fornebu, Norway, June 1, 2017. REUTERS/Ints Kalnins/File Photo 2/2

By Chayut Setboonsarng, Anshuman Daga and Victoria Klesty

BANGKOK (Reuters) -Norway's Telenor and Thai conglomerate Charoen Pokphand Group (CP Group) have agreed to merge their telecom units in Thailand in an $8.6 billion deal to create a firm with just over half the mobile subscribers in the Southeast Asian country.

The deal, subject to regulatory approvals, will see Telenor and CP Group each owning a third of the combined company, with stock market investors holding the rest.

The partnership will arm the two companies better against current market leader Advanced Info Service Pcl (AIS) and give them deeper pockets to face mounting investment costs for 5G.

Telenor will merge its majority-owned Total Access Communication (Dtac) with CP Group's True Corporation at an exchange ratio of 10.221 True shares per Dtac share.

Telenor and CP Group will have equal influence over the new business, the Norwegian firm's CEO said.

"When we now do this, we give up a majority control over the company we have," Sigve Brekke told Reuters. "Therefore, it is important for us to make a company where there are equal partnerships, as in, the two big owners have the same shareholder position," he said.

The news comes months after Thai power producer Gulf Energy Development offered to buy Intouch Holdings, which controls AIS, though Gulf Energy has only managed to raise its stake in Intouch to 42.3% so far.

Telenor and CP Group's merged company will have "revenue market share in the low 40% that is similar to AIS," Brekke told media. "AIS is still a big brother when it comes to profitability so we will learn as we go."

The tie-up between True and Dtac is set to become the third biggest merger deal between Thai companies, according to Refinitiv data. The combined firm will be listed on the Thai stock exchange.

"Telenor's decision to amalgamate its Thailand holdings with True is hardly surprising, given its ASEAN subsidiary's M&As and exits," analyst Thapana Phanich said in a co-branded research report from Jefferies (NYSE:JEF) and TISCO Securities, referring to a similar deal struck in Malaysia earlier this year.

"Dtac has little hope of beating its rivals, or even surviving, in the long run".

Telenor believes regulators will view the deal favourably, Chief Financial Officer Tone Hegland Bachke told a conference call.

"We are positive that we will reach regulatory approval," she said.

The offer of 47.76 baht ($1.45) per Dtac share represents a premium of 15.8% to its Friday close and the offer of 5.09 baht ($0.1549) per True Corp share represents a premium of 17.8% to its close on the same day.

Telenor plans to inject between $300 million and $500 million into the new firm to help pay minority shareholders of Dtac and True who decide to opt for cash rather than stock.

CP Group will also inject cash, albeit a smaller amount, Telenor said, ensuring the two end up holding equal stakes.

Meanwhile, Telenor will continue to look for merger opportunities in Asia, including in Pakistan and on a regional basis, Brekke said.

Dtac and True Corp shares rose 9.1% and 10.2%, respectively, on Monday, while the benchmark Thai index was up 0.3%. Telenor was up 1.7% in Oslo at 1156 GMT.

Citi is advising Telenor and JPMorgan (NYSE:JPM) is advising CP Group.

($1 = 32.8600 baht)

Telenor and CP Group in $8.6 billion merger of Thai telecom units
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email