Samart seeking partner for Cambodia air-traffic venture
Burma and Laos expansion targets
24/05/2010 Srisamorn Phoosuphanusorn Bangkok Post
Samart Corporation, the country's leading communications equipment firm, is in negotiations with a few prospective foreign partners for a joint venture in its air traffic management services in Cambodia.
The strategic move is in preparation for listing its Cambodia Air Traffic Services (CATS) Co on the local stock market to raise capital by the end of this year.
The wholly owned subsidiary of Samart is also moving aggressively to expand its air traffic control services into Burma and Laos this year to increase overseas revenue.
Watchai Vilailuck, the president of Samart Corp, said three to four potential air traffic management companies in Europe have expressed interests to purchase shares in CATS for a partnership. He declined to specify names but said the firms are the world's leading business scale.
"A conclusion is expected to be settled soon. We would limit the maximum foreign shareholding at 40% in CATS," he said in an interview.
Mr Watchai said seeking a strategic partner was primarily intended to further expand business into other countries and develop business portfolio.
Listing CATS on the fledgling Cambodian stock exchange, meanwhile, is aimed at increasing liquidity, broadening service availability in the market and enhancing its financial standing. It also gives investors in Cambodia an opportunity to acquire shares in the company.
The proceeds from the listing would be used for business expansion and development, he added.
Mr Watchai said air traffic control service was a cash cow for Samart, thanks to its sustainable long-term growth in revenue and profit.
The company had already reached the break-even point after a one-time investment of $30 million during the startup, he added.
CATS was granted an exclusive 32-year licence by the Cambodia government under a build-operate-transfer agreement to develop and operate the entire civil air traffic control and navigation system in Cambodia.
CATS posted $3 million in net profit in 2009. The company earned US$23.07 million in revenue last year, compared with $12.6 million in the first year of its licence in 2002. Its first-quarter revenue this year was $6.27 million.
The company managed 47,476 flights last year, compared with 31,425 flights in 2002. The flight number in the first quarter of this year totalled 12,724.
Mr Watchai said CATS expected revenue to grow by 10% this year, thanks to a recovering global economy and a surge in tourist numbers in Cambodia.
The company is spending $7 million to expand its radar system and navigation platform in Sihanu city to broaden its service network.
CATS now operates air traffic control services at domestic and international airports in eight cities in Cambodia.
"We are looking to expand our air traffic control service in other countries in Indochina to increase revenue from overseas businesses," Mr Watchai said.