On October 20, 2005 press conference, Norway’s telecom giant Telenor ASA (TELN), which has a telecom business in 12 countries around the world, have bought additional 39.9 percent stake in United Communication Industry Plc (UCOM) from the Bencharongkul family that founded and was major shareholder of UCOM recently.
The big-lot purchase was over 173 million shares at 53 baht per each. This cost 9.2 billion baht or a total of 1.46 billion kroner. This deal is one of the largest corporate takeovers in Thailand.
In 2000, Telenor invested US$720 million in UCOM and has been sharing the management with the Bencharongkuls ever since and holds 25 percent stake in UCOM and 30 percent in DTAC, UCOM’s mobile phone subsidiary and the second largest mobile operator in Thailand with more than 8.2 million subscribers.
When the transaction is completed, Telenor can effectively take control of the financial statements of both UCOM and DTAC as the biggest shareholder holding 61 percent directly and 48 percent indirectly in these two firms, respectively.
As part of the transaction, Boonchai Bencharongkul resigned as president and chief executive of UCOM.This makes Sigve Brekke becomes CEO. Earlier, he was only co-CEO of DTAC. He said there would be no major changes in business strategy or policy for the company.
The Bencharongkul family still maintains an indirect holding in both companies through a 16 percent in Thai Telco Holding. Other shareholders of Thai Telco include Finansa, a local financial services group, holds 9.9 percent stake.
According to Telenor’s press release, this transaction will fulfil the longstanding goal to assume a greater responsibility in DTAC’s operations and management in a rapidly changing technological field.
Boonchai claimed the change in share structure enables the group to better deal with tougher telecommunications competition because the telecom industry is now exclusively reserved for global players. All along, it has been tough for UCOM to compete against Advanced Info Services (AIS), an affiliated business of Shin Corp controlled by the Shinawatra family which is the market leader with 15 million subscribers.
He also said UCOM could now focus on the broadband Internet business, while DTAC will focus on mobile phone services.
DTAC has also plans to apply for a third-generation mobile phone (3G) licence. But the amount it can invest depends on the national telecom regulator, which is drawing up a 3G plan.
