By Saeed Azhar and Denny Thomas
SINGAPORE/HONG KONG (Reuters) - Singapore state investor Temasek Holdings Pvt Ltd
Heralding an overhaul of its telecom assets, Temasek held talks with SingTel late last year about selling the 41.6 percent of Shin Corp it owns through a subsidiary, the people said. They declined to be identified as the information is not public.
Talks over a stake in the company that controls the biggest Thai mobile telecoms operator and was bought from the family of ousted former prime minister Thaksin Shinawatra have since stalled amid political tensions in Thailand, the people said. SingTel, formally known as Singapore Telecommunications Co, is 52 percent-owned by Temasek.
The move by Temasek, which oversees $170 billion in assets, is in line with its plans to consolidate portfolio companies in industry groupings. This would be its first move toward bringing its telecoms assets under one roof, analysts said, potentially creating a regional giant.
The Temasek stake in Shin Corp is worth $3.1 billion by current market value. Shin Corp's shares now trade more than 50 percent above the price paid in 2006 by a Temasek-led consortium, that included Chinese-Thai businessman Surin Upatkoon, when it bought 96 percent of the Thai firm for a total of $3.8 billion.
"At a fair price such a deal would make sense for SingTel," Chris Lane, senior analyst at Sanford C. Bernstein in Hong Kong who covers Asia-Pacific telecommunications.
THAI MARKET LEADER
Shin Corp owns 40.5 percent of Thailand's biggest mobile telecoms company, Advanced Info Service Pcl
"SingTel executives are involved in the day-to-day operations of the company
Other Temasek telecoms holdings apart from SingTel include an indirectly owned stake of about 3 percent in Indian mobile carrier Bharti Airtel Ltd
It also controls the wholly owned Singapore Technologies Telemedia - a communications business that houses assets like broadband networks in Malaysia and the Philippines and is valued by Temasek at $2.7 billion as of last March.
Temasek's telecoms strategy mirrors what it has tried to do in other business segments - with varying degrees of success.
Last year its financial services portfolio company DBS Group Holdings Ltd
The slowdown in Shin Corp deal talks makes it the second potential transaction in Thailand to be put on the back burner due to political stalemate. ING Groep's
Shin Corp occupies a position of symbolic importance in Thailand. Along with Thai investors, Temasek and Surin Upatkoon bought the 96 percent Shin Corp holding in 2006 through a vehicle known as Cedar Holdings Ltd. While Cedar has since sold most of its ownership, Temasek remains a Shin Corp shareholder through a subsidiary called Aspen.
The change in its ownership triggered accusations of insider trading and tax evasion as the family of then Prime Minister Thaksin Shinawatra and others involved received $1.9 billion tax-free.
Thaksin insisted at the time that the sale satisfied all the rules in a country where share sales conducted through the stock market are not taxed. Protests in Bangkok followed, ultimately leading to a coup that ousted Thaksin.
Thailand is one of 25 countries in which SingTel operates, with more than 500 million subscribers in total and more than three-quarters of its core earnings coming from outside Singapore. The company had a cash flow of S$2.5 billion at the end of December.
SingTel has been seeking to overhaul a portfolio of telecoms investments that include stakes in Bharti Airtel - help separately form Temasek's - Australia's Optus, Globe Telecom Inc
A spokesman for Temasek declined to comment on the talks, but added, "We are a long-term investor in Asia including in
A Shin Corp official in Bangkok declined to comment, while a SingTel spokeswoman also declined comment.
SingTel shares closed 0.6 percent lower on Tuesday, while the benchmark Strait Times index <.FTSTI> ended little changed. Shin Corp shares fell nearly 2 percent, while the Bangkok index was 0.5 percent lower.
(Additional reporting by Khettiya Jittapong in Bangkok and Rujun Shen in Singapore; Editing by Kenneth Maxwell)