TV station takeover adds to Thai investment risks

By Nareerat Wiriyapong BANGKOK, AFP

Thailand’s takeover of a private TV station could be the first step in
dismantling the business empire founded by ousted premier Thaksin
Shinawatra, highlighting the political risks of investing here,
analysts said.

The government’s seizure of iTV was widely seen as a
politically motivated move against companies controlled by Shin Corp,
which Thaksin sold last year to Singapore’s state-linked Temasek

The Shin Corp sale sparked a political uproar, leading to street protests that precipitated the military takeover in September.

iTV represented a small but highly visible slice of Shin Corp’s empire,
and its takeover has raised fears that other companies could find
themselves in the crosshairs of the military-installed government.

The takeover came after a long-running court battle, which began under
Thaksin’s government, over how much news iTV was required to broadcast
under the terms of its concession. The station lost its last appeal in
December, and was ordered to pay a massive US$2.8 billion in fines and
back fees — effectively forcing it into bankruptcy.

When iTV
failed to pay by a March 6 deadline, the government took over its
operations and the stock exchange suspended trading in iTV’s shares.

“We are disappointed with the government’s decision regarding iTV. The
issue was too politicized,” said Vorapak Tanyawong, managing director
of JP Morgan Securities (Thailand).

The government rejected less
disruptive options, and could have simply negotiated changes to iTV’s
concession without seizing control of the station, he noted.

“The decision has negatively affected the government’s image,
highlighting its unclear regulatory issues and policies. There are so
many risks for investing in Thailand,” Vorapak said.

Sujiravorakul, a telecoms analyst at Capital Nomura Securities, said
the government planned to continue with bankruptcy proceedings for iTV,
which would lead to the company being delisted from the bourse.

That has raised questions about the fate of other listed companies that
have been granted contracts or concessions from the government,
especially in telecoms, transportation and media.

Junta leader
General Sonthi Boonyaratglin has already set his sights on Shin
Satellite, a company acquired by Singapore’s Temasek in the Shin Corp
deal which operates four commercial telecom satellites owned by the
Thai government.

His comments about reclaiming the company
sparked a diplomatic row with Singapore, forcing the government to back
down from his threat to seize the company while floating ideas on ways
of buying it back.

Thai AirAsia, a discount carrier linked with
Malaysia’s AirAsia, is also looking to buy out Shin Corp’s 50 percent
stake in the airline, according to industry sources.

AirAsia’s management now holds one percent in the low-cost carrier,
with Malaysia’s AirAsia holding 49 percent, the maximum allowed under
Thailand’s foreign ownership laws. But analysts fear the government
could target Shin Corp’s biggest and most profitable unit, mobile
operator Advanced Info Service (AIS), which also operates on a
government concession.

A slate of investigations are underway
into the legality of the Shin-Temasek deal. If the sale were found
illegal, the government would have a host of options for taking action
against the company.

“Investors are losing confidence and
raising doubts about whether contracts or concessions they have
received from the government are firm,” Prasit said.

was already badly shaken by the Bank of Thailand’s tough capital
controls imposed mid-December, and a proposed overhaul of a law
governing foreign ownership of companies.

The latter in particular was viewed as a political remedy to alleged wrongdoing in the Temasek-Shin Corp deal.

The capital controls have largely been removed, but not before they
battered the stock market and dealt a blow to investor confidence —
neither of which has fully recovered.

“It seems that every
current issue in Thailand is politicized, and that has seriously
damaged the overall investment climate,” Supong Limtanakul, an
economics professor at Bangkok University, told AFP.

Uncertainties about government policies have scared away foreign investors from Thailand to neighboring countries, he added.

“Inconsistency has become a major obstacle to foreign direct investment in Thailand,” he said.

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