GULF and INTUCH amalgamation a game changer, analyst says
Amalgamation of Gulf Energy Development and Intouch Holdings will restructure related companies within the group to maximise benefits
The amalgamation between energy producer Gulf Energy Development (GULF) and telecommunication investment firm Intouch Holdings (INTUCH) will enhance Thailand’s prosperity, according to an analyst featured in a podcast by Thai media outlet Longtunman in July.
The GULF-INTUCH amalgamation, which aims to ensure the maximisation of management and investment of their relevant companies, reduce complexity in the shareholding structure, and boost the growth of energy, infrastructure, and digital businesses, will result in a newly listed public limited company (“NewCo”) with registered and paid-up capital of 14.93 billion baht.
Moreover, as part of the transaction, GULF, INTUCH and specified tender offerors will purchase shares in Thai telecom giant Advanced Info Service (AIS) and satellite operator Thaicom, totalling 240.3 billion baht by the first quarter of next year.
Longtunman expects NewCo to be among the largest companies in Thailand with a profit of around 17 billion baht. Excluding PTT, Airports of Thailand and banks, only a few Thai companies can generate such a large profit.
Game changer for NewCo and Thailand
Beyond Securities deputy CEO Suwat Sinsadok expects the amalgamation will enable NewCo to grow further in the global market. He believes that private companies have the potential to boost their business growth and while government support plays a pivotal role in corporate development, the private sector can achieve even more substantial results. He also dismissed claims that large companies are allowed to get away with too much.
“Why would we not allow leading Thai companies to have the capabilities to compete at a global scale?” he asked, adding that the amalgamation would benefit the Thai satellite and artificial intelligence (AI) businesses. “Yes, GULF is a large company in Thai terms but we should not blame it for wanting to expand its business further to succeed at the regional or even global level.”
Suwat believes that GULF has the potential to become a game changer for Thailand with support from either the public or private sector. The top 10 listed Thai companies are dominating the domestic market, but are still unable to expand internationally, he pointed out.
“Almost all industries nowadays have achieved gorilla status, which means only a few companies will enjoy success in business expansion,” he said.
He added that the amalgamation will not impact or change the industry landscape in Thailand as NewCo will be a large conglomerate and have an opportunity to grow abroad similar to South Korea’s Samsung, Japan’s Panasonic and Taiwan Semiconductor Manufacturing Co (TSMC).
Attractive business
Suwat stressed that the GULF-INTUCH amalgamation is attractive because their expertise in electricity production and telecommunications is crucial for future industries like AI and electric vehicles (EV).
He expects GULF and NewCo to take a crucial role in the growth of AI and data centres in Thailand along with electronics exporter Delta Electronics (Thailand).
“New generation AI and data centres consume a large amount of energy,” he said, adding that nuclear power would play an important role in the adoption of new technology if it receives government support.
NewCo can also expand into microfinance, he noted, citing the application by GULF and its joint venture partners Krungthai Bank, AIS and PTT Oil and Retail Business for a virtual bank licence from the Bank of Thailand.
Long-term potential
Suwat advised investors to sell INTUCH shares for a profit as the price could drop while waiting for dividend payment but emphasised that GULF, AIS and Thaicom are still enjoying significant business growth.
Thaicom will launch new satellites in the next three to four years, so its business could expand further, he said.
He expects AIS to adopt AI in its telecommunication business to boost its competitiveness. GULF will still gain positive sentiment from electricity production and dividends from INTUCH shares, he added.
Although the telecommunication industry has taken a passive role in Thailand's development in the past, Suwat believes that it has the power to accelerate growth in a positive way.
“I believe that GULF CEO Sarath Ratanavadi has the vision to drive the company further,” he said, adding that the company would witness growth in the next 10 to 20 years.
