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Thai mobile merger close to completion

The merger of Thailand’s second and third largest mobile operators looks set to happen sooner rather than later, with the shareholders of both companies having now approved the move.

DTAC and True Corp both held shareholder meetings on Monday and both subsequently announced that the proposed deal had been given the green light by an overwhelming majority. 99% of True shareholders voted in favour, as did 89% of DTAC holders.

The vote marks a crucial step forward in the companies’ quest to merge, with some predicting that the deal could close as soon as June, although Q3 is probably a more conservative estimate.

Telenor and CP Group – parent companies of DTAC and True respectively – brokered a deal to merge their Thai subsidiaries in November. The firms have hammered out a deal that will leave them each with a 50% stake in the merged entity, presuming the transaction goes ahead. And now it looks like it will.

When the deal was first announced, the idea of Thailand’s second and third operators being allowed to come together to create a new market leader – in customer terms, at least – seemed laughable. While Thailand is technically a four-player market, its fourth player is state-owned National Telecom (NT), which was established in its current form as recently as January last year through the long-awaited merger of state incumbents CAT and TOT and has a tiny market share.

According to analyst firm Yozzo, the big three served almost 97% of Thai mobile customers as of mid-2021, leaving NT with 3.4%. While that doesn’t seem to bad for a newcomer, it’s worth noting that with a customer base of 3.33 million, the new firm has slightly fewer SIMs on its network than CAT and TOT together claimed at end-2020. There is always potential for a newcomer to make its mark on a mobile market, but the state-owned telcos have been trying to do that for years and as yet there are few signs that NT will be much different.

Therefore, Thailand is effectively heading for duopoly, for now at least. But it seems the authorities are OK with that.

According to the Bangkok Post, the deal will sail through the regulatory process, since the relevant authorities have the power only to impose measures to aid competition, not to stop the deal altogether.

A subcommittee set up by the National Broadcasting and Telecommunications Commission (NBTC) is currently working through the likely impact of the merger. A source at the NBTC told the paper that the merger process is progressing faster than expected and will likely be wrapped up by June. The paper also hinted at the likely impact of CP Group’s government connections on the smooth progress of the deal.

In a separate report published after the shareholder vote, the newspaper quoted an unnamed source at True Corp as essentially defending the deal from a competition angle.

Without the merger, both True and DTAC would likely find their businesses in trouble, while AIS would retain its leading position in the market over the long term, the source said. The exec also noted that while the merged entity will initially have a bigger subscriber base than AIS, it is difficult to determine whether it will actually have a real advantage over the market leader.

The veracity of that statement is debatable; the source is hardly neutral, after all. You could certainly argue that two strong players are better for consumers than just one, but surely three big players, even with some challenges, are better still.

Nonetheless, the deal looks set to go ahead, and therefore the impact of a two-player market should be evident soon enough.


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