Telenor's DTAC, True complete controversial Thailand tie-up

Thailand’s mobile market is now effectively a duopoly, after corporate interests prevailed over those of end users.

Norwegian incumbent Telenor announced on Wednesday that its Thai arm, DTAC, has completed its merger with True Corp, a unit of local conglomerate CP Group.

The completion comes months after a slim majority of board members at Thailand’s telco watchdog, the National Broadcasting and Telecommunications Commission (NBTC), voted not to oppose the controversial deal, which was first proposed well over a year ago.

The outcome caused consternation among consumer advocates and even some politicians. Thai Examinerreported at the time that one opposition MP pledged to report the NBTC to Thailand’s National Anti-Corruption Commission (NACC), citing a possible breach of rules regarding dereliction of duty. Sirikunya Tansakun, deputy leader of the Move Forward Party, also promised to campaign against the merger, and urged the public to lend her their support.

However, with legal backing, the corporate juggernaut – or True Corporation, to use the official designation for the merged company – will rumble on until it is ordered to do otherwise.

The new entity claims to serve on a pro forma basis 55 million mobile users. According to NBTC’s stats, there were 129 million mobile subscriptions in Thailand at the end of Q3 2022, which would give True Corporation a 42% share of those. However, some reports suggest that figure is much higher, and that actually, the new True’s market share is more likely to be approximately 55%, with rival AIS enjoying 44%.

Unsurprisingly, Telenor is not drawing attention to the fact that two mobile operators account for 99% of the mobile market.

“The completion of the transaction is a new milestone in Thailand’s impressive digital journey. The pace of innovation is expected to accelerate, creating growth opportunities for the country,” said Jørgen Rostrup, head of Telenor Asia, in a statement. “Telenor is ready to support True Corporation with access to advanced technology, a network of global partners and cutting-edge industry insights. The new company will combine the strengths of DTAC and True to deliver high quality connectivity and leverage the latest developments in 5G, AI and IoT.”

It doesn’t really matter how many layers of varnish are applied to the announcement. The fact is, Thailand once boasted four mobile operators, and now it has three, one of which – National Telecom – has an inconsequential share of the market.

As is usually the case with these sorts of tie-ups, the rationale behind the deal – as proclaimed by Rostrup – is that the merged entity has the financial clout and economies of scale to invest in better infrastructure and services. This makes it better equipped to compete against AIS – which as a result of the transaction has been relegated to second place, but is probably quite happy with having one less rival to compete against.

What gets swept under the rug is that consolidation typically leads to job cuts – or ‘synergies’, to use the sanitised term – as the merging parties ruthlessly eradicate overlap in all areas of the operation, from top to bottom. Higher prices routinely follow too, usually as soon as any legally-binding commitment to a period of price freezes has expired.

What is rarely, if ever entertained, is the notion that had the merger been blocked, both Telenor and True would have found alternative ways to compete while maintaining investments in their respective businesses, or cut and run. And end users – the ones who consume and have to pay for telecom services – would have been fine with that in the short term, long term, or any other length of term you care to mention.

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