The clock is ticking for Jasmine International to come up with a joint-venture partner for its all important fourth-generation (4G) business by the March 21 deadline.
The National Broadcasting and Telecommunications Commission (NBTC) yesterday issued an ultimatum to Jasmine, saying it would file a civil lawsuit against Jasmine if it failed to make its bid fee payment for the 900-megahertz licence by the deadline.
More importantly, all telecommunications operating licences of Jasmine will be immediately revoked if the company defaults on the payment.
A source close to Jasmine's executives said the company was in talks with two telecom giants in Singapore and Malaysia regarding partnership.
"Singaporean state-investment firm Temasek Holdings or its subsidiary Singapore Telecommunications could potentially be a partner of Jasmine," the source told the Bangkok Post.
"Temasek may want to take over Jasmine's fixed-line broadband business, operated by subsidiary Triple T Broadband, in order to complement the mobile business of Advanced Info Service Plc (AIS), which is majority owned by Temasek."
The source said a Jasmine executive admitted the company needed a 4G licence to provide high-speed wireless broadband service to create value for the group.
The group cannot survive by merely relying on fixed broadband service, the source said.
The source said Jasmine International, through subsidiary JAS Mobile Broadband, was drafting a new borrowing plan with clearer business details, focusing primarily on a marketing strategy and business plans, which were required by Bangkok Bank (BBL) instead of technical plans previously submitted.
JAS's business plan proposal will be under the "4G ultra-broadband" concept.
The company is in talks with AIS and Total Access Communication Plc about a possible mobile service roaming agreement.
"JAS expects to complete the new business plan this week and submit it by next week," the source said.
JAS and True Move, through subsidiary True Move H Universal Communication (TUC), were given three months after the 900MHz spectrum auction ended, until March 21, to make their first payment of 8.04 billion baht.
Both companies must also post three bank guarantees for the remaining amounts to be paid later on.
JAS won the first licence for 75.7 billion baht or 487% higher than the reserve price of 12.9 billion. TUC won the second licence for 76.3 billion baht or 491% above the reserve price.
New business plan awaited
BBL, the country's largest lender by assets, admitted it had initially approved a 40-billion-baht credit line for JAS before the spectrum auction took place.
"We want JAS to turn in a new plan, as the company requested a higher loan amount after it won the licence with an exorbitant bid," a BBL source said.
"If JAS proposes a new business plan, this will show us the company's intention in doing business. We're expected to decide on the loan approval before the payment deadline, so we must determine if its plan is economically viable."
However, the source would not say how long it will take to decide on the loan application after JAS submits its new plan.
Even though BBL alone could grant the 75.7-billion-baht loan as requested by JAS, the bank wants a clearer plan to analyse business viability, the source said.
The bank must assess the risk from extending such a large loan, as JAS has never provided mobile service before.
Given that JAS needs fresh money to pay the pricey licence, borrowing from financial institutions and seeking a new strategic partner seem to be the only two options for the company to avoid defaulting on the licence payment, another banking source said.
The source said JAS would inevitably see its debt-to-equity ratio surge to about eight, far above the average industry level of two or three, if the company successfully acquired the loan.
JAS may need recapitalisation and could approach a business partner to lower the ratio in order to make its balance sheet appear healthier.
True 'ready to pay'
Noppadol Dej-Udom, group chief financial officer at True Corporation, insisted the company was ready to make the payment prior to the deadline.
"Our letter of credit facilities have already been approved, and we're ready to pay the NBTC," he said.
Four or five commercial banks have already approved a syndicated loan worth 73 billion baht to True for bank guarantee payments.
"The 8.04 billion baht has been available for payment since the 900MHz spectrum auction started," Mr Noppadol said.
He said the company believed the NBTC could clarify conditions for a possible new auction round on the 900MHz spectrum before the deadline.
"We're ready to make our bid fee payment, we're just waiting for an auspicious time," Mr Noppadol said.
Licences under threat
NBTC secretary-general Takorn Tantasith warned JAS and TUC to make their bid fee payments by March 21 or face a civil lawsuit.
The regulator also has the right to confiscate the guarantee money JAS placed before the auction -- 645 million baht or 5% of the auction reserve price.
Bid winners failing to make their payments must face stiff penalties as well, in accordance with auction rules, including being blacklisted by the NBTC.
All licences of Jasmine including for fixed broadband and digital TV will be revoked if JAS fails to make its bid fee payment, Mr Takorn added.