Singapore Telecommunications Ltd announced its endorsement of the amalgamation of Intouch and Gulf in a move to streamline the holding structure of its Thai associate, Advanced Info Service Public Company Limited (SET: ADVANC), according to a filing on the Singapore Stock Exchange.
The restructuring aims to enhance Singtel’s direct stake in AIS through a voluntary tender offer, with an estimated gain of S$0.4 billion expected from the consolidation. Upon completion, Singtel will hold an approximate 9% stake in the newly formed company, NewCo.
As of now, Singtel holds a 24.99% stake in Intouch, while Intouch possesses a 40.44% interest in Advanced Info Service Plc. The restructuring process is projected to finalize in the second quarter of 2025 pending regulatory approvals.
Under Thai law, since NewCo will hold 40% of AIS after the amalgamation, a mandatory tender offer is obligatory for the remaining 36% publicly owned AIS shares at THB216.30 per share, a 2% discount from the closing price on Tuesday. This move is not intended to privatize AIS, as per CGS International.
Singtel is set to partake in the tender offer, aiming to acquire a maximum of 10% of the public AIS stake, potentially raising their AIS holding to 33% with a total consideration of S$2.4 billion. The transaction is expected to have a mildly accretive impact on CGSI’s SOP target price based on the AIS TP of THB259. The anticipated increase in AIS stake to 33% could result in around a 4% enhancement to CGSI’s FY25-27F EPS estimates.
Nevertheless, there are concerns regarding the FY25F dividends due to the anticipated S$2.4 billion cash outflow. To fund these dividends, Singtel will need to divest approximately S$4 billion in assets, with proceeds from Comcentre (around S$1 billion) and a potential 2.3% Bharti stake sale (around S$3 billion) assisting in bridging the gap.
It is anticipated that the market may react positively to the news, considering the potential earnings enhancement resulting from the transaction.
