Jasmine International Public Company Limited (SET: JAS) announced the Board of Directors’ view on the publication of its Independent Financial Advisor (IFA) regarding the sales of its subsidiaries to Advanced Info Service Public Company Limited (SET: ADVANC) by pointing out advantages and disadvantages of the deal as follows;
Advantage
1) After the completion of the Share Disposal Transaction and the Investment Unit Disposal Transaction, JAS shall receive cash amounting to THB 32,420 million; TTTBB Group’s debts of THB 74,007 million shall also no longer be recorded in JAS’s consolidated financial statements (this amount is as of 30 June 2022 ; after the completion of the transactions, it may be different, expectedly with the similar level of significance) ; and any obligations of TTTBB Group shall no longer be recorded in the consolidated financial statements (Details of debt burden of TTTBB Group as shown in IM 2 Topic 4, regarding Liabilities).
Thus, the profit from the asset disposal transactions shall be recognized in the statements of comprehensive income, significantly strengthening the financial position of JAS and its subsidiaries. In addition, Debt to Equity Ratio shall be decreased from 20 times to 0.5 times; hence, greater potential for the whole JAS Group.
2) In the future, the telecommunications industry will enter the “New Telcom Market” era in which a lot of changes in the competitive environment will certainly occur due to the Fixed-Mobile Convergence (the “FMC)” trends. Such changes may cause JAS Group (which operates only the broadband Internet business and does not engage in mobile phone service offering) to encounter difficulties in competition.
In order to compete with mobile phone service providers in the future, a broadband Internet service operator has to take several actions, including approaching joint ventures and/or seeking for sources of financing with appropriate financial cost. With regard to the seeking of joint ventures, it is barely possible for it to approach a joint venture or a telecommunications operator from abroad to hold a significant number of its shares owing to the restrictions and regulations posted by the regulatory agencies such as the NBTC. As regards the seeking of a source of funds, economic recession worldwide and in Thailand causes the seeking of a long-term financing with appropriate financial cost to also become more difficult.
Taking all the challenges as stated above into consideration, the Board of Directors has deemed it appropriate to propose to the shareholders of JAS to consider and approve disposing of the business that is exposed to challenges all around as a chance has come together with an appropriate offering price at the same time. As for cash received from the transactions, JAS shall utilize it for the investments that have continuous potential growth and appropriate returns.
Disadvantage
1) The completion of the Share Disposal Transaction and the Investment Unit Disposal Transaction will result in JAS Group’s cessation of the provision of the broadband Internet service for the entire residential customers. In this connection, JAS will receive consideration from these transactions in cash. Nevertheless, after the foregoing disposal transactions, although JAS still has other business operations carried out by its other subsidiaries such as the provision of current services via the subsidiary which has a platform and an access to contents; the lease of immovable properties and the provision, design and installation of telecommunication systems, JAS Group has to face with challenges in seeking a new core business or investing in any business, especially when taking into account the business size that is of the same as or similar to the size of the broadband Internet business that it used to operate. Thus, it will take some period of time for JAS to study and start a new business project development plan.
JAS stated that the outcome of the shareholders’ meeting’s consideration—whether to approve or not to approve the transactions — may have a significant impact on JAS’s future financial position and business operation, particularly regarding the ability in debt repayment and application for additional loans from banks.
JAS will hold an Extraordinary General Meeting of Shareholders on September 22, 2022.
