Thai satellite operator banks on India

Khettiya Jittapong

BANGKOK (Reuters) - Shin Satellite PCL, Asia's second-biggest satellite operator, said on Tuesday that India, its largest foreign client, would decide later this month whether to renew a transponder lease contract.

Shares of Shin Sat, Thailand's largest telecoms conglomerate, fell to a three-month low on Tuesday after some brokers downgraded the stock due to the company's poor earnings outlook on expectations that the Indian government might terminate the contract expiring on October 20.

"The final decision should be announced by October 20," a company official, who declined to be identified, told Reuters.

Shin Sat, founded by Thai Prime Minister Thaksin Shinawatra before he entered politics, told investors in an email it had always said it was likely that the Indian government would move to another satellite "one day".

India's Department of Space (DOS) contributed about 11 percent of Shin Sat's revenues from satellite transponders.

DOS had leased 10 transponders from Shin Sat since 1998, but decided not to renew a contract for three transponders that expired in May because it wanted to use it own satellite.

Last month, India launched its latest communications satellite, INSAT 3E, which raised concerns that DOS would shift to its own satellite and the launch could intensify competition in an oversupplied market.

On Tuesday, Shin Sat shares fell 5.6 percent to end at 18.50 baht ($0.47), their lowest since June. The overall Thai stock market rose 0.01 percent.

LIMITED IMPACT

Shin Sat said the potential loss of a main client and the launch of India's new satellite would have only a limited immediate impact because of the strong demand in India.

"Indian demand should still outstrip supply for a while longer," the company said in the email.

Shin Sat said the seven transponders accounted for only 5.5 percent of consolidated revenues, but analysts said this could have impact on the company's outlook.

"Although the net impact is not significant, this may create negative sentiment towards Shin Sat," DBS Vickers Securities said in a note.

Most of 10 analysts polled by Reuters Research rated Shin Sat "sell" or "hold" with a 2003 net profit consensus estimate of 1.22 billion baht ($30.79 million), down 13 percent from a year ago.

Shin Sat, 51 percent-owned by Shin Corp, the flagship of a telecoms group founded by Thaksin, operates three satellites covering Asia, Australia, Africa and Europe. It plans to launch a new high-speed broadband satellite in 2004.

Its major rivals include Asia Satellite Telecommunications Co Ltd.

The sluggish global economy and the oversupply of satellite transponders has raised doubts about the viability of the new broadband satellite, which Shin Sat plans to launch into full commercial service in the second half of 2004.