Thailand’s third largest operator True plans to issue new shares to generate funds to pay for the two 4G licences it won in auctions late last year for THB116 billion ($3.22 billion).

The recapitalisation plan, however, could be put on hold if mobile newcomer Jasmine International is unable to secure bank financing to pay for its 4G spectrum, according to a Bangkok-based brokerage.

The rights issue, which calls for the shares to be priced at 90 per cent of the average price from 3 to 30 March, could raise as much as THB85 billion ($2.37 billion) assuming the shares sell at THB5.70 ($0.16), which is 90 per cent of the current price, according to a client note from Phatra Securities.

True’s board approved a 15 billion share rights issue, equivalent to 61 per cent of existing shares, but it needs to be approved by shareholders on 8 April.

China Mobile, which formed a strategic partnership with True back in September 2014, is widely expected to take part in the rights issue to boost its stake in True. The largest operator in the world acquired an 18 per cent stake for THB28.6 billion ($880 million) through a private share placement.

True faces a 21 March deadline to pay for 50 per cent of the reserve price of the 900MHz spectrum and provide bank guarantees for the remaining amount to be paid in three installments until 2017.

In case of default
But True’s plans to make its first payment for the 900MHz spectrum have been complicated by rumours that Jasmine has failed to line up bank funding.

Jasmine faces the same 21 March deadline for paying about THB8 billion. Both operators won with a bid of about THB76 billion ($2.1 billion) for the 10MHz of spectrum. Sources say the broadband provider’s South Korean partner pulled out after the spectrum price went beyond fair value, which has put Jasmine’s mobile ambitions under financial strain.

Phatra believes that if Jasmine is unable to make the payment, True would delay its payment and try to renegotiate the spectrum price with the telecoms regulator, in which case the rights issue would be put on hold.

True’s creditors likely have called for the capital increase to secure the loans, and the brokerage said Jasmine’s banks will probably require the same.

Meanwhile, the National Broadcasting and Telecommunication Commission (NBTC) is drawing up plans for a possible new 900MHz auction in case either of the 900MHz winners is unable to pay. The NBTC can confiscate the 5 per cent of the reserve price the operators paid before the auction if they don’t pay on time.