Norwegian multinational telecommunications company Telenor Group has signed an agreement with Arise Digital Technology Company Limited, a company owned by Khun Suphachai Chearavanont, to sell 24.95 percent of the shares in Thailand’s telecom technology firm True Corporation for a total value of approximately NOK 39 billion ($3.94 billion) or THB 11.70 ($0.37) per share.

In addition, Arise and Telenor have agreed a mutual put/call option for the sale of the remaining 5.35 percent two years after closing of the initial sale at the higher of THB 11.70 ($0.37) per share and the market price prior to the term of the option, the duo said in a statement on Thursday.

“We are confident that the engaged people in True will continue to grow and innovate for its around 60 million customers,” said Benedicte Schilbred Fasmer, Chief Executive Officer of Telenor.

Khun Suphachai Chearavanont, owner of Arise, said they are committed to sustaining our positive momentum, delivering profitable growth and value creation in True in the years ahead.

It is noted that over 25 years, Telenor went from investing in TAC in the year 2000 to building dtac into one of Thailand’s leading operators, making mobile connectivity affordable and widely accessible to tens of millions of Thais.

In 2023, dtac and True completed a landmark merger to form the new True Corporation listed on Stock Exchange of Thailand.

That was then Southeast Asia’s largest telecoms deal and created Thailand’s largest telecom tech company, with the scale to invest in 5G, artificial intelligence (AI) and digital services.

“Before the 2021 merger talks, our shareholding in Thailand was valued at NOK 12 billion ($1.21 billion). Today the value of our shareholding stands at some NOK 39 billion ($3.94 billion), based on the agreed sale price and the current exchange rate,

“Together with our partner True Corporation we have established market leadership in Thailand while also generating shareholder value,” Schilbred Fasmer added.

The transaction price of THB 11.70 ($0.37) per share represents a 36 percent increase to the closing price for the first trading day of True Corporation after the merger in March 2023, and a 4 percent premium to the last 3 months volume weighted average share price.

“At our Capital Markets Day in November, we said that we looked for structural value creation opportunities in Asia,

“With the completion of the sale of Telenor Pakistan in December, and the agreement to sell our shares in True we have taken big steps in delivering on that strategy,” said Schilbred Fasmer.

These divestments are part of Telenor’s strategic commitment to structural simplification, as outlined at the Capital Markets Day.

The transactions will provide focus and resources for Telenor’s four strategic priorities towards 2030: Growth through customer excellence, technology-led transformation, tapering expenses and focus on creating shareholder value.

Telenor expects the sale of True shares to contribute to its stated goal to increase the return on capital employed.

The transaction also underpins its goal to evolve into a more Nordic-centric provider of secure connectivity over time.

The proceeds from the sale of 24.95 percent of the sale in True will be THB 100.9 billion (approx. NOK 32.3 billion [$3.26 billion] at the current exchange rates), and the proceeds from exercising the option after two years will be THB 21.9 billion (approx. NOK 6.9 billion [$696.04 million] at the current exchange rates).

It is noted that top-line growth, efficiency realization and capital allocation are the three key drivers of Telenor’s shareholder-value creation strategy.

Capital discipline, shareholder remuneration, and having an effective balance sheet remain essential to deliver on this over time.

Telenor said it will recognize an accounting gain of approximately NOK 14.7 billion ($1.48 billion) (assuming current exchange rates) at the closing of the initial sale.

NOK 1.6 billion ($161.39 milion) of the gain is related to recycling of historical currency translation differences, previously recognized as other comprehensive income, with no effect on Telenor’s equity.

The transaction is subject to customary conditions and is expected to close within a few months.

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