Without addind any comment to the current discussions I just want to share this article from The Economist with you. Nothing really new, just a condense of the sell. It was published one week ago already - sorry for being late, but I lay down with a flu since 2 weeks :-(

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Thaksin helps himself

Jan 26th 2006 | From The Economist print edition

A politically and economically astute asset sale by the prime minister

ACCORDING to Thaksin Shinawatra, Thailand's prime minister, his relatives' decision to sell their stake in Shin Corporation, the conglomerate he transferred to them on taking office, was an act of patriotic self-sacrifice. They hope their deal with a consortium led by Temasek, an investment arm of the Singaporean government, will put an end to the constant complaints about Mr Thaksin's conflicts of interests, and allow him to concentrate on running the country. But this noble deed also netted the family 73 billion baht ($1.85 billion), and allowed it to dispose of its telecoms empire just as the sector enters a period of regulatory uncertainty. In his explanation of the sale, at any rate, Mr Thaksin seems guilty of what his critics always accuse him of: confusing the national interest with his family's.

Mr Thaksin's business empire has caused him plenty of political headaches over the years. He almost lost the top job just after taking it up in 2001, when the constitutional court demanded to know how shares belonging to him had shown up in the hands of his gardener and driver, rather than on the mandatory statement of assets he had made during a prior stint as a minister. After that, every time his government made a decision affecting telecom firms, airlines, television channels, finance companies or any of the other industries in which Shin Corp had invested, critics would cry foul. By removing the Shinawatras from all these businesses, the deal should stem such carping.

But the potential for conflicts of interests has only been reduced, not eliminated. Mr Thaksin's cabinet includes several other prominent businessmen, and has no formal procedures to guard against self-serving decisions. The Shinawatras themselves still hold stakes in an advertising agency. The press is already speculating about where they will invest the proceeds from the sale of Shin Corp. But wherever the money ends up, the family's unnerving combination of immense political and economic power will remain.

Moreover, Mr Thaksin has endured accusations of impropriety with little apparent discomfort over the past few years. Although the subject has the pundits of Bangkok up in arms, it does not seem to move the voters very much. They returned his party to office last February by the biggest margin in Thai electoral history. Admittedly, city-dwellers have cooled to him dramatically since then. But his populist flair still seems to sway his vast numbers of rural supporters. Just last week, he starred in his own reality TV show, in which cameras accompanied him around an impoverished village, as he dispensed advice, cash and plots of land to grateful peasants.

But whatever the political ramifications of the deal, the commercial logic is unimpeachable. The Shinawatras sold out with the share price of Shin Corp at an 11-year high. Tougher times lie ahead for Advanced Info Service (AIS), the mobile-phone offshoot that accounts for around 90% of Shin Corp's value. Growth in Thailand's mobile market has slowed from more than 100% a year in 2002 to 11% last year, with Nomura, a Japanese investment bank, forecasting future expansion of only 5% a year. Other providers are chipping away at AIS's market share.

Probably the biggest spur to a sale, however, is the uncertainty inherent in Thailand's strangely structured telecommunications industry. In most countries, telecom firms build networks under licences. In Thailand, the private-sector players?two fixed-line and five mobile ones?have merely been granted operating concessions of between 15 and 27 years by the state-owned telecoms duopoly, Telephone Organisation of Thailand and CAT Telecom. Thailand's constitution, enacted in 1997, mandates an independent regulator to reform this odd set-up. Various procedural problems have held the process up?something that did not appear to worry Mr Thaksin's government very much?but the National Telecommunications Commission is now at last up and running. It should soon rule on vexed issues such as interconnection fees between rival networks, and will eventually decide what becomes of the private concessions. Faced with such an upheaval, the Bencharongkul family, which owned a stake in TAC, the number-two mobile provider, sold out to Norway's Telenor last year. Now the Shinawatras are following suit.

It is into this regulatory minefield that Temasek is venturing. To its credit, Singapore's government investment agency has deep pockets and experience of telecoms and technology, which along with transport and financial services is one of its main areas of expansion. Temasek controls Singapore Telecom, the city-state's main telecoms firm, which already owns a separate 21.4% stake in AIS. At just 45%, Thailand's cellular penetration is far below Singapore's 90%-plus, offering prospects for growth. Having said that, Temasek is paying a fairly expensive 15 times prospective 2006 earnings for Shin Corp.

Temasek's total annual shareholder return has dropped to only 6% for the past ten years. As a result, the agency is under pressure to diversify its investment portfolio outside its home city. The Shin Corp deal takes the foreign portion to 55% of the total. The Shinawatras' patriotic urges, it seems, coincided neatly with their and Temasek's business interests.

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i wish i would understand it more than i do now... might read it again later. thanks for posting!!

Nice piece of journalism, hope all Thais get to read somthing along these lines in the local papers.

Expose the real Toxin.