BANGKOK, June 15 (Reuters) – Shares in Thai satellite operator Thaicom PCL THCOM.BK hit an eight-month high on Tuesday, extending the previous day’s gain after the government said it wanted to buy the company or its satellites.

Thaicom, valued at $238 million on the Thai bourse, is 41 percent owned by Shin Corp SHIN.BK, itself controlled by Singapore’s Temasek Holdings [TEM.UL]. The Thai government wants control of the satellites for reasons of national security.

After surging 30 percent on Monday, Thaicom shares were up another 10 percent at 7.80 baht at 0347 GMT while the broader market .SETI was flat. Earlier, the stock hit 8.20 baht, its highest since late October.

Analysts said the market put a fair value on Thaicom of 8.80 baht a share, meaning it could go another 12 percent higher. At the end of the first quarter, Thaicom’s book value was estimated at 14 baht per share.

“Speculation over offer prices has prompted investors to jump into the stock and we expect prices to move in range of 8.04 to 9.38 baht,” said an analyst at Aira Securities.

“It’s likely that the government will buy the company for security reasons, while Temasek may want to sell because Thaicom may drag down the group’s performance,” he said.

Ayudhya Securities said in a note it expected the government to spend at least 4.9 billion baht ($151 million) to buy the satellites.

Fundamentally, Thaicom’s earnings are expected to improve this year if the company makes on progress in penetrating markets in India and China, analysts said.

Thaicom made a net loss of 157 million baht in the first quarter of 2010, but Ayudhya Securities said it could return to an operating profit of 214 million baht this year after a 471 million baht loss in 2009.

POLITICAL PROBLEMS

Thaicom was founded by former Thai Prime Minister Thaksin Shinawatra, the figurehead of the political movement that recently paralysed parts of Bangkok for over two months until their protest was ended by the military on May 19.

Thaicom was directly caught up in that unrest when the authorities forced it to take an anti-government television channel off the air in April, prompting protesters to overrun its satellite station. [ID:nSGE638019]

The government is investigating whether Thaicom violated the terms of its contract by not fully cooperating with its request to pull the plug on PTV during the crisis.

“This is a separate issue that the ministry has to look into to see if they violated the terms of the contract,” Minister of Information and Communications Technology Juti Krairerk told Reuters.

“If they did, there will be legal action, but it will have to be transparent and we cannot do this following our emotions. It has to be handled with the national interest at heart.”

Thaicom says it did not violate any rules.

In an emailed statement to Reuters, Temasek said: “Thaicom is a listed company in its own right, which is 41 percent owned by Shin Corp. Any sale of Thaicom is a matter for the boards of Thaicom and Shin Corp to consider and decide.” ($1=32.38 Baht) (Additional reporting by Ambika Ahuja; Editing by Alan Raybould)