Bangkok – Shares of telecom firms in Thailand tumbled on Tuesday as last week’s court ruling against ousted prime minister Thaksin Shinawatra spooked investors.
Telecom stocks fell on worries that state agencies would take legal action to recover revenue allegedly ‘lost’ under the terms of concessions granted under the Thaksin administration.
Separately, the National Anti-Corruption Commission met to consider taking further legal action against Thaksin for what Prime Minister Abhisit Vejjajiva called “damage to the state” arising from policy decisions which the court ruled had favoured his family’s company, Shin Corp.
The Supreme Court last Friday ordered the state to seize 46 billion baht (US$1.4 billion) of Thaksin’s frozen assets. In the process, it opened a legal Pandora’s box because it concluded that Thaksin had manipulated policies to benefit Shin Corp, which was controlled by his family at the time. In January 2006, the company was sold to Singapore’s Temasek Holdings, which has 41.7 per cent ownership.
The ruling in effect called into question the terms of concessions under which Shin Corp companies operated. On Tuesday, Shin Corp shares fell 3.5 per cent to 28 baht, its steepest decline since October, amid panic selling.
Shin Corp-controlled AIS, the country’s largest mobile operator, fell 4.3 per cent to 84.25 baht, while Thaicom Pcl, a satellite monopoly, shed 11 per cent to 5.4 baht.
Shares of other telecom companies operating in Thailand, DTAC and True Move, were not spared, although the stock market had remained closed for three days after the Friday’s ruling. The stock market was closed on Monday for a public holiday.
Analysts said worries about telecom shares would persist until the government’s intentions were made clear – and also warned that the cases could take years to resolve.
Mr Abhisit has told state agencies to pursue cases exposed by last Friday’s ruling to level the playing field in the telecom sector. Thaksin’s policy decisions are said to have cost the state upwards of 138 billion baht.
Industry executives have said that voiding contracts could unravel the increasingly interlocked web of telecom providers, throwing old contracts back to renegotiation, and possibly threatening the viability of some companies.
Citigroup Global Markets said in a statement that the “government will be under public pressure” to pursue the cases.
An investment banker warned that “retroactive changes” would scare off long-term large foreign investors, and several analysts said it may not be in the government’s interest to “go after” the companies.
Shin Corp, AIS and Thaicom have said that they had operated “with good faith in compliance with laws”.
Nirmal Ghosh in Bangkok – The Straits Times (Asia News Network)