Thailand’s CAT hands TRUE 3G windfall

Construction News

The 3G licensing saga took a new twist yesterday with True Corp becoming the sole operator to be awarded the rights to a 3G service rollout.

Meanwhile, the future of other private operators hinges on TOT’s eauction for the 3G2.1GHz network today after the Central Administrative Court last night rejected the petition by the disqualified Ericsson-led consortium and Forth-Corp ZTE consortium for a stay on the auction.

If the TOT auction cannot go ahead as planned, True will have a headstart in 3G rollout and gain an advantage over other operators.

CAT Telecom yesterday awarded deals to two of True Corp’s wholly owned subsidiaries for joint development of the 3G wireless broadband services nationwide.

The partnership paves the way for CATTrue to take the lead in providing 3G service and will come as a relief to True.

True’s concession with CAT will end in 2013, forcing it to urgently seek deals to sustain its mobilephone business.

Operating profit

The CAT deals will also enable True’s wireless business led by TrueMove to report an operating profit for the first time in the next few years, True CEO Supachai Chearavanont told a press conference.

The only obstacles to that are lingering legal doubts concerning the cancellation of CAT’s purchase of Hutchison Telecom’s Thai operations, the emergence of True as the potential buyer, and the joint development deal between CAT and True. Given that all of this took place after the National Telecommunications Commission’s 3G auction was abruptly suspended last September, questions have been raised over whether the process is entirely legal.

CAT and True executives yesterday expressed their shared view that the deal did not contradict any laws.

CAT senior executives have already submitted a request to the ICT Ministry to consider if the joint development needs to be regulated by the 1992 Public Private Joint Venture Act.

CAT chief executive officer Jirayuth Rungsrithong believes this will not be necessary, saying the project is not a joint venture.

Both Supachai and Jirayuth had reasons for wanting the deal to be concluded quickly.

‘No change in deals’

The former said that the deals with CAT must be clinched this month, as the exclusive rights for True subsidiaries Real Move and Real Future to buy four Hutchison subsidiaries in Thailand, including BFKT, will end.

He said he did not expect any change to the deals, even after the election.

Jirayuth said that the rush is necessary, to stop CAT Code Division Multiple Access (CDMA) business from further bleeding. The business has suffered loss of Bt1 billion every year, due to the complication in the business structure.

The chief said that instead of loss, CDMA would generate Bt2 billion in annual revenue. CAT staff, however, raised doubts about the chief’s projection.

The deals would be submitted to the board of directors for acknowledgement today, Jirayuth said. Though the board had just approved the agency’s 3G business plan last week, Jirayuth claimed that the board allowed the management to sign the deals once the document is ready.

12 contracts

Both CAT and True signed 12 contracts yesterday, starting at 7.45am.

After the signing, Real Move will oversee 800,000 customers of CAT on its CDMA network in 25 provinces for two years, during which CAT will convert the network to 3GHigh Speed Packet Access (HSPA) technology. The CDMA netฌwork has generated around Bt4.3 billion revenue per year with expenses of Bt3.8 billion.

Supachai said Real Future would spend between Bt5 billion to Bt6 billion on installing the 3GHSPA radioactive equipment on CAT’s two separate CDMA networks nationwide. Then CAT will lease such HSPA equipment from Real Future to provide wholesale service.

True chief finance officer Noppadol Dejudom said that True would break even from this investment within 67 years.

The planned HSPA network is expected to draw 2 million customers within two years, of which the first group will be existing customers on the CDMA network in 25 provinces.

CAT also granted the deal to Real Move to resell the planned HSPA service for 14 years. While CAT and True executives declined to specify the details of the deal, Supachai said Real Move could offer the service to customers at a reasonable price based on the effective cost.

Meanwhile, Supachai assured about 1,000 employees of Hutchison yesterday that they would not be laid off after the takeover.


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