22 มกราคม 2542
Jasmine falls back on engineering
Usanee Mongkolporn
The Nation
JASMINE International PCL is anticipating its "back to fundamentals" strategy will put it on an even keel and help it forge ahead when the telecom market is liberalised in the next few years.
As the country's largest private contractor, which has won most of the turnkey projects from state agencies, Jasmine is realising that its competitive edge lies in engineering expertise and not in operating telecom services like other Thai telecom firms.
The economic crisis has put an end to an era when telecom firms tirelessly fought for concessions. Jasmine was one of them, hoping to build an empire with a variety of telecom licences.
Songrit Kusomrosanan, its president, pointed out that the company is preparing for market liberalisation by focusing on telecom networking services.
"When the market is open, many foreign companies will come in. Though they have lots of money and experience, they will never know the local environment better than the local companies," he said. "This is a great opportunity for Thai companies."
During the transition to a liberal market place, Jasmine will continue to reap benefits from a number of current networking projects worth about Baht 4-5 billion.
Songrit said the projects will be Jasmine's prime income source for the next two years.
Among them are the installation and provision of rural telephone facilities, which could bring in Baht 2 billion, and its investment in expanding telecom transmissions using submarine optical fibre cables, which could yield Baht 1.5 billion. The two projects are Telephone Organisation of Thailand contracts and the revenue is shared annually.
Last year, the company won a transmission expansion project to increase the 800,000 telephone-line network of TOT. This will bring in Baht 2 billion.
Despite the firm revenue stream, the company could not avoid financial troubles as the project's import content is high. Standard Chartered is working out a debt restructuring plan for it and is scheduled to finish it next month. Negotiations with creditors will follow.
Songrit declined to elaborate on the debt structure of the company.
However, at the end of the third quarter of last year, the company was exposed to total liabilities of Baht 21.1 billion, according to a report by the Stock Exchange of Thailand.
Jasmine shut down a year ago its loss-making operations including Radio Phone-a trunked mobile joint-venture with TelecomAsia Corp., Ericsson Thai Network Products, which produces telecom network equipment, Jasmine Cable and Materials, and all energy-related subsidiaries.
The restructuring resulted in three business lines being still active: telecom and service provision, service and distribution and offshore/regional business ventures. About 800 employees were also laid off and the number of staff is now 1,000. Salaries were also cut. Jasmine is also working on several deals to sell most of its overseas operations.
In India, it is operating cellular phone licences in two main states: Karnataka and Andhra Pradesh. In the Philippines, it runs a paging network via Island Country Telecommunication Inc. Another stake in a Philippine venture, Digitel, was earlier sold.
Songrit said ABN Amro is working with Jasmine to sell the Indian joint venture, JT Mobiles, hopefully this year.
"JT Mobiles (also owned by Telia of Sweden) performs quite well with about 50,000 customers now. But Jasmine is to sell it to generate more cash," he said.
Earlier this month, Jasmine decided to reduce its ownership in a significant satellite mobile phone project, dubbed ACeS, from 23 per cent to 9.9 per cent. The buyers are PSN of Indonesia and Philippines Long Distance Telephone. Jasmine made about US$40-50 million from the sale.
"We sold the stake at a friendship price," Songrit said.
ACeS, in which Jasmine has already invested about US$70 million, is supposed to launch its satellite in June and start operations later this year. Songrit said Jasmine retains its right to provide the service and also expects to profit from the remaining stake.
Songrit said Jasmine is not considering having a partner like other telecom firms because the sale of overseas operations should generate large amounts of cash for the company.
"Having a partner by selling a stake is both negative and positive. The price is important. But Jasmine believes it can survive by simply selling the stakes in overseas companies," Songrit said.
Songrit, 41, said business conducted under current economic pressures requires executives to be more cautious and flexible when it comes to long-term investments while management decision-making must be conservative.
He added that though Jasmine has been run by professionals for a long time, because of the economic situation the owner is closely monitoring the company's performance.
Jasmine is about 70 per cent owned by the Bodharamik family. Dr Adisai Bodharamik is chairman of the board.
He said he would rather spend more time as a senator, "When the market is open, many foreign companies will come in. Though they have lots of money and experience, they will never know the local environment better than the local companies."
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