Jasmine share buyback plan may create confusion over licence fee

 

The move may confirm that Jasmine is having trouble coming up with the Bt8.04 billion it needs for the first instalment of the upfront fee for the telecom licence it won at an auction last year, stock analysts said. It is required to pay the National Broadcasting and Telecommunications Commission and supply bank guarantees for the remaining instalments by March 21.

A source at Bangkok Bank said it was surprised that Jasmine had announced the share buyback. However, Jasmine might be doing this in preparation for acquiring partners. If Jasmine can get partners for its foray into the fourth-generation telecom business, it will have no need to borrow.

The source said the bank’s board of directors would meet at the end of this month to consider the Jasmine case. 

At 12.31pm yesterday, Jasmine reported to the Stock Exchange of Thailand its plan to buy back shares under a treasury stock programme for Bt5 each. The report caused its stock price to climb by 26.45 per cent to Bt3.92. The ceiling price is Bt4.02.

At 2.44pm, the SET suspended trading on Jasmine’s securities until the company was able to provide more information about its intentions, as such information could affect the investment decisions of its shareholders. 

The SET lifted the suspension after Jasmine clarified that it would buy back up to 20 per cent of the total stocks, but the Bt5 purchase price would be subject to its board’s decision at its next meeting. 

Amnart Ngosawang, an analyst at KTB Securities, said Jasmine was in a difficult position because it needed cash to strengthen its business but was spending a lot of money for the treasury stock programme.

“Jasmine has cash in hand of around Bt7 billion, but this amount is for the treasure stock programme and the dividend payment. We don’t know what will happen to Jas and we cannot say they [Jasmine] is leaving the 4G license,” the analyst said.It is not easy for Jasmine to raise capital through a private placement because if investors have tracked its trading history, the stock price is not attractive for PP, he said.

Jasmine doesn’t have enough assets to borrow from the banks or get the needed letter of guarantee, so the only solution for Jasmine right now is to acquire partners.

Tisco Securities said in a research note that Jasmine might discard its telecom licence and the treasury stock programme was a tool for the company to restore the stock price to the normal level before the 4G auction.

Before the auction, Jasmine’s stock price peaked at Bt4.90 before declining to below Bt4 per share and then dropping to a low of Bt2.74 on February 25.

If Jasmine cannot get the letter of guarantee in time, Advanced Info Service (AIS) and Total Access Communication (DTAC) will gain the most advantage. 

True Corp, the other winner of a 4G licence at the same auction, might not see much of an advantage at first because it too has to pay a large licence fee.

Jasmine, traded under the "Jas" symbol, closed at Bt3.7 per share yesterday, up 19.35 per cent from Friday.