Comments and Questions on the TRUE DTAC merger conditions released by the NBTC

On October 20, 2022 The Board of Thailand’s telecom regulator meet to “acknowledge” the telecom merger between TRUE and DTAC along with conditions.

On the 20th of October, the Board of Thailand’s telecom regulator (NBTC) voted to “acknowledge” the merger request between the two telecom operators, DTAC and TRUE – along with some back of a napkin conditions.

Before we go through some of the so called “conditions” that was released from the NBTC, along with the “acknowledgment” of the merger – allow us to raise five important questions.

Q1: Why hasn’t the NTBC issued a Statement of Issues (SOI) to TRUE and DTAC, asking them to address the concerns that the merger will bring?

This is a standard regulatory procedure which Telenor (DTAC) would be very familiar with from its countless merger and acquisitions – as well as attempts – while admittedly, it would probably be the first time that TRUE would get any request from the NBTC.

By way of example, MCMC in Malaysia, issued a Statement of Issues (SOI) to Digi (Telenor) and Celcom requesting them to address concerns. Likewise, the European Commission has numerous times requested potential M&A parties to come up with remedy solutions to solves concerns.

The reasoning for this procedure is simple. Having the M&A parties come up with suggestions for remedy conditions, not only makes it easier to negotiate but also hooks the M&A parties into follow the conditions.

While the NBTC hasn’t issued a SOI to TRUE and DTAC, the two was invited – but refused to take part in the public “listening” (it never was a hearing) and the subcommittees, setup by the NBTC to discuss and analyze impact of such a merger.

About a month before the TRUE-DTAC merger was “acknowledged”, 14 remedy measures – in case the merger would be approved, was leaked from a source or sources at the NBTC. These remedies were first started by The Office of the NBTC (the administrative part of the regulator) – and then extended/changed – after the input from the subcommittees setup by the NBTC.

Q2: What happened to the 14 leaked remedies? Why have they been cut by almost a third? Why invite experts and setup subcommittees if NBTC does not take their input into consideration?

The whole idea about public hearing is transparency by involving the public, related business and academics to not only give their opinions but also to be educated from the options, documents, reports of others. As it turns out, some of these opinions have been used in the leaked 14 remedies. Some of them, also from the reports from the so called “independent consulting firms”, where it now seems, some of them are not so “independent” after all.

The NBTC has summarized and released some of the early comments (May 2002) from the public hearings (Focus Groups) on the business merger case between True Corporation Pcl (TRUE) and Total Access Communication Pcl (DTAC). They have however not released all the documents or comments.

1. Summary from Focus Group No. 1: Related Business and Industry

2. Summary from Focus Group No. 2: Consumer groups and the general public

3. Summary from Focus Group No. 3: Academic Group

The NBTC has also released the Terms of Reference for Consultancy Service for the project (report and analyses). They have however, not released any of the three reports, paid for by the Thai tax payers.

Q3: Why haven’t the NBTC released the comments from the “public hearing” and subcommittees, as well as the three consulting reports and analysis ordered – to the public?

The lack of regulatory enforcement in the Thai telecom sector shows a history of hundreds, of so called “red” and “black” cases going through year long meetings, delays, arbitrage and various courts for 10-12 years – often with the result of a fine so small it was a good business not following the regulation for years.

In addition many of the new “back of a napkin” conditions released by the NBTC, are existing regulations that hasn’t been enforced by the NBTC for years (i.e. MVNO)

Q4: If the board of the NBTC in Thailand can’t even agree on – if they have the power to approve/reject M&A’s – What will the scenario be on enforcing remedy conditions?

While many are busy looking at these “conditions” as part of the TRUEDTAC merger “acknowledgement”, it is important to notice that many of those are existing regulations, notifications and license terms and conditions, hence the next question:

Q5: It must be assumed that the enforcement of some of the existing regulations used as “conditions” will of course also hold AIS and NT accountable?

Now, before these questions also turns into another 10-12 years, let’s take a look at the merger conditions – or as some would call it – the reprint of existing regulation.

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1. Mitigation measures for concerns regarding Service Rates and Service Contracts
1) Price ceiling and determination of Average Service Fee

a. Average Service Fee, to be reduced 12 percent using the new Price Average method by weighting according to the number of users in each promotion (WEIGHTED AVERAGE) within 90 days after the merger)

Questions/Comments

• It is not clear at all, on what and how the fee will be calculated and who will check? Will the Average Service Fee determination for this be calculated using the:

Average service price when including all promotions offered, sold or provided by TRUE, DTAC = Voice: THB 0.49 per minute, Data: THB 0.10 per MB, SMS: THB 0.76 per SMS, MMS: 1.95 per MMS?

Average service price when including mobile phone sales promotions offered by TRUE and DTAC = Voice: THB 0.48 per minute, Data: THB 0.08 per MB, SMS: THB 0.76 per SMS, MMS: 1.45 per MMS?

Will the Average Service Fee calculation include the service rates offered by DTAC’s sub-brand “FinnMobile”?

• As this retail price calculation will also affect the retail minus pricing to MVNOs, does it take into consideration tired pricing on day vs. night, weekdays vs. weekends, on net/off net calling, subsidies for handsets and cross subsidies to other services, etc.?

b. Provide a choice and separate prices for each service, as an alternative.

Questions/Comments

• In line with the existing regulation on pricing although never enforced due to the focus from the operators on “un-limited” packages. Question is also if users chose “unlimited” packages what will the excess voice and SMS charge be? Today those excess minutes of voice and SMS are charged way higher than the price celling regulation from NBTC.

• Will voice calling be per minute or per second?

c. Submit cost information and necessary information to an inspection agency.

Questions/Comments

• Will this information be kept and used to calculate the retail minus pricing the merging parties have to provide to MVNOs?

• Does this mean that the NBTC does not have knowledge on the cost structure today from TRUE, DTAC (and AIS)?

• Is AIS and NT submitting their information to inspection?

d. The business merger must notify the user on the above for acknowledgment, in order to have an audit. Penalties in case of not doing so, include a fine based on the percentage of revenue or tiers  – or the revocation of license.

Questions/Comments

• Is there a deadline on this regarding the audit as well as when it is a fine vs revocation of license or should it be assumed that this will follow the existing process of Black/Red cases and a timeline up to 10-12 years in arbitrage and the Courts?

2) Determination of Service fees using the Average Economic Price (Average Cost Pricing)

a. Submit the information in accordance with the NBTC Notification Re: Criteria and Procedures for Preparation of the Telecommunications Ledger Report – and submit such to the Office of the NBTC every 3 months – or upon request of the NBTC, for cost structure examination of the Service Fee structure and to calculate if the average total cost of the prices (Average Cost Pricing) and the Marginal Cost (MC) are current and accurate.

b. Provide an experienced consultant expert, to verify the Cost Structure Data Service Rate or data on various rates of the telecommunication industry abroad for not less than 5 years to the NBTC. The applicant for the business merger is to be responsible for all expenses incurred from the procurement and employment of such consultants. The Consultants must not be associated with, linked to, or have conflicts of interest, directly or indirectly, with the business merger applicant. In accordance with (a) the merger applicant and consultant must verify the Cost Structure, Service Rate Structure and calculate the correct Average Cost (AC) and Marginal Cost (MC), for each service such as voice, data, SMS, etc., within 1 month from when the business integration is completed.

c. Provide experienced consultants expertise as in (b) to verify the accuracy of the information under (a) to verify the Cost Structure, Service Rate Structure and to calculate the correct and up-to-date Average Cost (AC) and Marginal Cost (MC) of each service such as voice, data, SMS etc., 4 times a year (quarterly). Consultation for a period of not less than 10 years or throughout the license period.  Expires in the event that the license is less than 10 years, which the NBTC will determine and the applicant for business merger will be responsible for the cost and all expenses incurred in the recruitment and sourcing of consultants. The consultants must not be directly or indirectly associated with, linked or having conflicting interests with the applicant of the business merger.

Questions/Comments

• What qualifies as an “experienced consultant” – and who will check these qualifications? Will it be the conditions NBTC use for its for consultants = the same conditions that let both Finansia and SCF Associates Ltd slip through, despite one having conflict of interest and the other not complying with the Terms of Reference?

d. There must be a fixed and displayed mobile phone service rate separately for each service (Unbundle), such as voice service, data service, SMS service, etc., or promotion. Selling separate service (Unbundle Package) to users, the users must be informed and confirm first. The service fee is set according to the Average Cost Per Service (Average Cost Pricing) based on the actual usage price. There must not be a minimum purchase of services. However, the Average Cost Pricing will be applied to the case of excess service charges arising from the use of a separate service promotion. (Unbundle Package) and promotion of bundles as well.

e. Must provide convenient, fast, easy access, comprehensive and easy to purchase, change (increase, decrease) the use of mobile phone service according to the needs of end users. without limitation. The details of the service must be displayed. Service rates classified according to each service. or promotional service rates as well as methods and conditions for choosing to receive services expressly and current.

3) Maintaining Consumer Choice

True Move H Universal Communication (TUC) the mobile service of TRUE and Dtac TriNet (DTN) the mobile service of DTAC must maintain separate brands of services for a period of 3 years.

Questions/Comments

• Where does DTAC’s and TRUE’s other sub-brand fit into this – in example DTAC’s “TeleAssets” and its mobile sub-brand “Finn Mobile” – as well as TRUE’s: “TRUE Digital”, “TrueMove H”, “BFKT” and “Real Move”?

• Is this only on the brands and not the business?

4) Service Contract

TUC and DTN shall maintain the terms of the contracts and agreements between the Company and the User. Including the benefits received under the contracts or agreements for the period specified in the contract. Unless there is a change in the terms of the contract that is beneficial to the user and has been agreed by the user.

Questions/Comments

• For how long? i.e. for end-users is the contract and agreement mentioned the same as the billing cycle? If so, what is new with this condition?

5) Public relations of service for the confidence of service users.

After the business merger, TUC and DTN are required to publicize and disseminate information, in order to make users aware of the parties maintaining the quality of service and fair service fees and the parties must establish guidelines for maintaining the quality of goods and services after the business integration, including conditions for public relations for TUC Company and DTN Company to continue.

Questions/Comments

• What is new in this? This only describes the method but what are the conditions?

2. Mitigation measures regarding concerns on: Barriers to market entry, Lack of competitiveness and Supporting small entrepreneurs  
1) Prerequisite (Ex Ante)

a. The applicants for the business merger must prepare a plan for the establishment of mobile virtual network operator (MVNO), which must contain the following details:

(1) Establish a business unit to provide network services to MVNO service providers by separating the management system and accounting system from the main business unit arising from this business merger.

Questions/Comments

• Does this mean that TUC and DTAC will establish a separate independent MVNO wholesale business Unit and transfer the MergeCo Wholesale Business to the MVNO Business unit, thereby ensuring separation from MergeCo’s retail mobile business. Like the Digi/Celcom merger condition we see from the regulator in Malaysia (MCMC) regarding MVNO Business Unit?

• What is the deadline on establishing this?

• What is the timeline of the separation?

• If it is a separate business unit – how does the these and other merger conditions apply to that unit?

• No divestment of retail mobile sub-brands? In example DTAC’s mobile sub-brand “Finn Mobile”?

• No retail distribution dealership remedy? In example: Before the expiry of the Integration Period i.e. three years from closing, the MergerCo’s will remove exclusive arrangements with their exclusive distributors and for a period of three years after Closing, TUC and DTN will not enter into any new exclusivity arrangements with exclusive distributors or other distributors, unless otherwise approved by NBTC.

(2) Provide a network service system that is ready to support network service access for MVNO service providers immediately after business integration.

Questions/Comments

• No condition on the minimum number of MVNA and MVNOs. So in reality no change from todays condition. No condition on minimum XX amount of MVNA/MVNOs that needs to be on contract and minimum X MVNA/MVNOs to be launched when the merger occurs?

• The rationale for using MVNOs as a condition is to bring competition in to the market. If there is no condition on the minimum of MVNOs that the merger has to have contracts with – it has no weight at all. It is not enough just to have request for access or contracts: As seen and learned from M&A’s in other market there needs to be a minimum amount of MVNA/MVNO actually launching operation when the merger occurs to keep the price level in the market.

• What does “a network service system ready to support network service access for MVNO service providers” contain?

• How is it different from what they were supposed to be ready with for MVNOs today?

• Full MVNO: In relation to “Barriers to market entry” and “Supporting Small Entrepreneurs” we cannot underline enough the need for NBTC to lift the restrictions on network elements a MVNO can have and allow the FULL MVNO model in Thailand. These restrictions represent one of the biggest barriers to entry in the Thai market, as is one of the major reasons for the failure pf MVNOs in Thailand.

• The MVNOs are not able to process data information and is therefore operating their business in total darkness not knowing which initiatives works with the customers and which don’t. The control of the MVNO’s own business is completely in the hands and eyes of the host operator. The lack of the Full MVNO model completely eliminates the chance of new innovative services in the market and the flexibility of MVNOs as without it, they depend entirely on the host operators willingness.

• With 5G, Slicing, Private networks, IoT/M2M, Cloud, eSIM, etc., as well as MVNO segmentation of end-users, the enablement of network elements for a Full MVNA/MVNO is vital for the digital economy.

• Thailand has only been using the “Thin” and “Medium” MVNO models, since the introduction of MVNOs (officially) in the Thai market 10 years ago. Therefore we once again suggest that the NBTC follows National Regulatory Authorities in other markets and allow the Full MVNO model in Thailand.

In addition, the actions under (1) and (2) must be ready for immediate operation when the business merger occurs.

Questions/Comments

• So in reality, the “separate MVNO Business unit” and this “network service system ready to support network service access for MVNO service providers” will have to be ready BEFORE the business merger occurs, as there will also be a lead time for the MVNOs?

• How long before?

b. Business merger licensees as well as companies under control must set up a separate management plan and accounting system for mobile network service and mobile phone service by submitting the said plan to the NBTC before the business merger.

Questions/Comments

• How does this apply to TRUE and DTAC’s sub-brands, in example DTAC’s “TeleAssets” and its mobile sub-brand “Finn Mobile” – as well as TRUE’s: #TRUE Digital”, “TrueMove H”, “BFKT” and “Real Move”?

2) Specific measures after business merger (Ex Post)

a. Licensees arising from the business merger and controlled subsidiaries must be done so that MVNO licensees can use and interconnect with other licensees as themselves.

Questions/Comments

• Will this be added to the MVNO notification and MVNO license as well?

• Will the MVNO license scheme be updated to also allow Full MVNOs?

b. The MVNO licensee shall be entitled to use the spectrum in all regions of the business merger with both direct and derivative rights under the same technology standards.

Questions/Comments

• What is supposed to be new in this condition? The existing regulation as well as the operators spectrum license’s terms and conditions are technology neutral.

• Does this mean that TRUE and CAT Telecom (National Telecom) will have to change its contract where MY CAT has access to TRUE’s 4G but not CAT Telecom’s (National Telecom) MVNO partners?

c. Access to network services for MVNO licensees must be guaranteed in receiving services under the quality of service (QoS) in accordance with the service standards set by the NBTC.

Questions/Comments

• What is supposed to be new in this? The existing regulation and the operators spectrum license terms and conditions, already have that condition.

By way of example: NBTC’s Notification on MVNO, B.E. 2556, Section 7: Licensee who wholesale mobile service has the following duties;

Item (4): Must guarantee quality of service that is not lower than the quality provided to own users, and in accordance with the standard prescribed by the commission.

Item (6): Not perform any action in the manner of monopolization, reduction, or limitation of mobile service provision.

Item (7): Not perform any action in the manner of discrimination towards MVNO

In addition this is, and has already been part of both DTAC’s “Wholesale offers for mobile phone services” (RISO 27-11-12) and TRUE’s “Reference Wholesale Offer” for years.

I.e. in TRUE’s “Reference Wholesale Offer” – Clause 6 Determination of the quality of wholesale service

The wholesaler shall assure the quality of the services provided to the users of the wholesale service buyer are not less than what would be provided to wholesaler’s users and in accordance with the standards set by the The National Broadcasting and Telecommunications Commission (NBTC)

As well as in DTAC’s “Wholesale offers for mobile phone services” – Section 2: Requirements and technical details for for mobile phone service. Article 1: Quality of mobile phone service.

d. Must not refuse service to the MVNO licensee due to reasons of inadequacy of the mobile network. or in accordance with the rules and conditions prescribed by the NBTC.

Questions/Comments

• This is an oxymoron with the conditions under: 2) Specific measures after business merger (Ex Post):

item f: TUC and DTN shall provide telecommunication network services with capacity of at least 20 percent of its total telecommunication network mobile virtual network operators (MVNO) that has no connection with TUC and DTN upon request for such service.

as well as,

item c: Access to network services for MVNO licensees must be guaranteed in receiving services under the quality of service (QoS) in accordance with the service standards set by the NBTC.

e. Must be available to the MVNO licensee requesting access to the mobile phone network. Service can be started within 60 days from the date of request for service.

Questions/Comments

• How and where are the contact point, guidelines and terms for MVNOs requesting network access?

• What happens if there is no reply from TUC/DTN to a MVNOs request for access?

• What happens if service cannot be started within 60 days?

• Will this be added to the MVNO notification as well?

• Dispute conditions and roles of the NBTC is such? If the host operator is acting in bad faith or engaging in any form of anti-competitive conduct, or if after a reasonable period of in-good-faith negotiations, a commercial agreement cannot be reached between the parties, it would be in the interest of the NBTC to intervene and assist the parties or, if necessary, adjudicate and make a determination appropriate in each circumstance or case. The latter is important as there is a difference between the MNOs and the MVNOs (Thin, Medium, Full), and the service offered (End-users or M2M).

• The above, is in some form available on paper in the Thai market today but has never been enforced, evidently from the lack of any MVNOs on AIS, TRUE, DTAC today.

• By way of example, the NBTC could apply a number of tests, as used by the Norwegian National Telecom Regulator (NKOM) to determinate the appropriate solution between the disputing parties including:

  • Testing if the host operator could operate profitably itself, if it used the disputed wholesale price agreement;
  • A package-specific margin-squeeze test to ensure that MVNOs can operate profitably with a competing retail offer;
  • A segment-specific margin-squeeze test to ensure that MVNOs can operate profitably with a portfolio of current (flagship) retail offers.

• One of the merging parties (Telenor) is very familiar with the NKOM approach.

• In Malaysia, MCMC has introduced the Access List Determination framework to facilitate access and interconnection among MNOs and MVNOs to help access negotiations.

• In Singapore, IMDA, state that MVNOs wishing to offer services must negotiate commercially with the MNOs for access to their networks, with the regulator only intervening in case of “restrictive or anti-competitive practices”.

• IMDA has published a “Wholesale Framework” which serves as guiding principles to assist the parties in their negotiations, and provides guidance on how IMDA would likely decide if its intervention is required to resolve disputes in the negotiation for wholesale capacities with Host MNOs.

f. TUC and DTN shall provide telecommunication network services with capacity of at least 20 percent of its total telecommunication network to mobile virtual network operators (MVNO) – that has no connection with TUC and DTN upon request for such service.

Questions/Comments

• Is this 20 percent on each? As otherwise there is no new condition here.

Since Thailand’s first spectrum license in 2013, the NBTC has added the following term and condition, as part of each spectrum license:

(1) The Licensee shall comply with the Commission’s Notification Regarding Mobile Virtual Network Operator (MVNO) Service 2013.

(2) The Licensee shall provide telecommunications network service at least 10 percent of its network’s capacity to MVNO(s) that is/are not the connected person(s) with any licensee under this Notification, upon receiving such service request.

Example from the 900MHz spectrum license – terms and conditions

900MHz-Thailand-MVNO-criteria-English

For DTAC that is:

  • 10% capacity to MVNOs on its 700MHz spectrum license,
  • 10% capacity to MVNOs on its 900Mhz spectrum license,
  • 10% capacity to MVNOs on its 1800MHz spectrum license,
  • 10% capacity to MVNOs on its 2100MHz spectrum license,
  • 10% capacity to MVNOs on its 26GHz spectrum license.

It is not on the 2300MHz because that spectrum is under NT. However DTAC is using the network capacity on NT’s 2300MHz for a quasi MVNO setup for itself.

For TRUE that is:

  • 10% capacity to MVNOs on its 700MHz spectrum license,
  • 10% capacity to MVNOs on its 900Mhz spectrum license,
  • 10% capacity to MVNOs on its 1800MHz spectrum license,
  • 10% capacity to MVNOs on its 2100MHz spectrum license,
  • 10% capacity to MVNOs on its 2600MHz spectrum license
  • 10% capacity to MVNOs on its 26GHz spectrum license

It is not on the 850MHz because that spectrum is under NT. However TRUE is using the capacity on NT’s 850MHz for a quasi MVNO setup for itself.

Neither of them (AIS, DTAC and TRUE) has ever hosted any MVNOs – on any of their networks. This issue and the unused spectrum capacity to MVNOs has been pointed out again and again since 2015.

g. The rate of wholesale compensation for mobile phone service for MVNO service providers shall not exceed the Average Service Fee offered per unit of each service according to the usage rights of every promotion at a rate of not less than 30 percent of the Average Selling Price per unit of the retail price for the bundle package or the Average Unit Selling Price per unit for the actual active voice, data, SMS, etc. service (retail – 30%), that the licensee – or subsidiary controlled by the entity arising from business merger provide to end users.

Questions/Comments

• There is nothing new in this. NBTC has been floating the retail minus 30% for years, based on a study the Office of the NBTC did 3 ½ years ago on the Polish market – which in itself was an old setup and irrelevant today.

• It is also interesting to notice that the NBTC is already suggesting a retail minus 30% BEFORE the Price ceiling and determination of the Average Service Fee has been audited and calculated.

• MVNOs are actually buying the excess capacity (waste product), that the mobile network operators produce every day, which is typically minimum 40%. The payment MVNOs provide for such, are pure (and additional) profit to the mobile network operators.

• To determine the real wholesale pricing to MVNA/MVNOs in Thailand, it is important that the NBTC take a look at the wholesale prices AIS, TRUE, DTAC provide to National Telecom (formerly TOT and CAT Telecom), because for years, AIS, TRUE and DTAC has sold wholesale access to National Telecom (before that TOT and CAT) – and as such, the wholesale prices that National Telecom has paid those three, should serve in the decision on the actual wholesale pricing in the market.

• First of all, it has been the wholesale price used in the market for years. It has been the base price that National Telecom used for its wholesale price to MVNOs – and more importantly, is has a much higher percentage margin than the low retail minus 30 suggested by NBTC –  Anything else would be discriminatory.

• Retail minus and Units of Usage (per Minute/Megabyte/SMS) has historically been the most common when calculating MVNO wholesale pricing. However, this approach has lost its relevance with the change from voice as the dominating service to a data-driven environment.

• Much has changed from the days of voice calling being the dominating service, in example:

  • The arrival of 3G/4G made data the dominating service in most markets and as a consequence prices on data have dropped.
  • The introduction of messaging apps resulted in SMS (and MMS) declining significantly, similarly Wi-Fi calling and Voice over LTE (VoLTE), has also changed the interest and pricing on Voice services.
  • IoT and M2M continues to change wholesale pricing models, as most of these are data-only. Furthermore, some of these service, might be huge in quantity but not in data usage – and/or no need for 24 hour access but can be processed during low capacity hours on the network.
  • Cloud and Open RAN have provided lower costs for both the MNO and MVNA/MVNE/MVNO.
  • Different MVNOs, bringing different elements themselves to the setup with the MNO (i.e. Full MVNO), as well as different service proposition (No two MVNOs are alike)
  • 5G slicing demand another price structure, as this will be a defined slice, versus the whole network.
  • The introduction and growth of eSIM has and continues to change the cost structure (i.e. distribution)

• MVNO wholesale pricing models and commercial agreements have evolved since their inception more than 20 year ago. Although there is a wide range of approaches today – each with its advantages and disadvantages – the models continues to evolve in line with new innovations and opportunities.

Illustration: Examples of Commercial Agreement Models between Host Operators and MVNOs

Example of commercial agreements and models between MVNO and host operator

• As a consequence of this evolution, most of the MNO/MVNO or MNO/MVNA wholesale agreements today, have – and are taken shape and form based on individual negotiations between the parties, rather than just following Cost Plus, Retail Minus models blindly.

• The purpose of introducing MVNO competition into a market is to foster retail level competition and innovation, as described in NBTC’s old and updated notification on MVNOs. We assume the purpose of the conditions regarding MVNO in relation to the merger, is to substitute for the lack of effective competition. However, by its very nature, if the MVNO is locked into a wholesale price which reflects the host operators’ retail prices minus 30 percent, it creates a defacto limit for the MVNOs potential to discount retail prices, innovate new pricing and bundles etc, in the market and thereby killing the affect MVNOs should have on competition and the price level in the market, as it merely becomes a reseller of the host operator.

• The MVNOs margin is derived from the savings the MVNO can make in its setup versus the costs the mobile operators’ can avoid. This is clearly unequal from the beginning and with a retail minus of only 30 percent, it is very unlikely (as seen several times already in the market) that even an efficient MVNO would have a viable business in Thailand under these circumstances.

• In addition, with this particular merger, as it include an operator whose associated companies are sitting on 95+ percent of the retail market, the cost savings the MVNOs can make in sale and distribution are further reduced in the supply chain.

• Mobile network operators can move the costs between different parts of their retail prices. When the retail minus approach is adopted on voice calls to MVNOs, there is a considerable opportunity for the host operator to increase its retained margin on call types provided to MVNOs and thus discriminate against them.

• Further options to look into on wholesale prices are that they are data only = they are not based on voice call, SMS or data. The wholesale buyer purchase data only from the host network and sell it themselves as data, voice call or SMS (data used for a voice call, data use for a SMS based on ERLANG). This is how National Telecom is purchasing wholesale from AIS, TRUE and DTAC and also how they “resell” it to MVNA/MVNOs.

• The retail-minus 30 percent approach to wholesale pricing is only appropriate where an MVNO is a reseller only of the host operators own price plans (MVNO reseller).

• However, where an MVNO or MVNA/MVNE has invested in and provide it own infrastructure and network elements, and has its own pricing freedom and plans, the host operator should be required to supply access services on a cost orientated basis and on non-price terms which are non-discriminatory, compared to the supply of similar services to the host operators competing retail operation. Cost-based access pricing, rather than retail minus, is the appropriate approach for enhanced MVNOs with infrastructure components.

• One again, we cannot underline enough the need for NBTC to lift the restrictions and allow the FULL MVNO model in Thailand.

• The NBTC itself, is monitoring the average retail pricing on both the MNOs and MVNOs each quarter and interestingly, the average retail pricing collected by the NBTC on the MVNOs, clearly shows they can’t compete in the market, as the pricing on some of the mobile services from the MVNOs are way higher than the MNOs.

In fact they are so high they conflict with NBTC’s maximum retail pricing cap in the market but the NBTC hasn’t done anything about it.

Table: NBTC’s maximum retail pricing cap on 3G and 4G mobile services

Spectrum/GenerationVOICE (THB/minute)
DATA (THB/MB)
SMS (THB/SMS)
MMS (THB/MMS)
3G Must not exceed0.820.281.333.32
4G Must be lower than0.690.261.153.11

 

Table: The MVNOs average service retail pricing Q1 2022 – Collected by the NBTC

MVNO/Service priceVOICE (THB/minute)
DATA (THB/MB)
SMS (THB/SMS)
MMS (THB/MMS)
Penguin SIM0.900.202.00No service 
I-Kool 3G0.990.211.75No service
Feels0.760.211.80No service
Redone (Postpaid*)0.780.050.99No service
MVNOs blended0.860.171.70No service
AIS, DTAC, TRUE, NT blended**0.600.160.892.33

 

*Note that the MVNO Redone is postpaid only while the other MVNOs are prepaid only. In addition the wholesale agreement Redone has with its host operator (NT) is based on revenue sharing.

** Note that the blended average pricing from NBTC on the MNOs does not included the sub-brand priding from AIS’ sub-brand “GOMO” and DTAC’s sub-brand “Finnmobile” which it should, as it part of the pricing and lowers the blended average pricing significantly for the MNOs

h. The mobile network operator must not impose a minimum limit on the purchase of services such as voice, data, SMS, etc., services on the MVNO licensee. The service charge shall be based on the actual usage.

Questions/Comments

• Just to be clear on this condition – does this still allow the merger and MVNA/MVNOs to agree on a bulk purchase anyway themselves (commercial agreement) – as this is the whole concept about wholesale vs. retail = buying in bulk for a better discount?

• Will this also apply to AIS and NT?

3. Mitigation measures regarding Service quality concerns
1) TUC Company and DTN Company must maintain the quality of service as follows:

1.1) The quality of the network in the service

TUC and DTN shall not reduce the number of cell sites of both companies, in order to maintain the quality and standard of services that the users receive. QoS must not be lower than before and must strictly maintain the quality and standards of the service according to the NBTC’s Notification Re: Standards of Telecommunication Service Quality.

Questions/Comments

• From what date does this apply? i.e. is it according to cell sites and planned cell sites from the date of these conditions – or from the date of the merger?

• Is it only cell sites or cells/radio in general?

• Will a coverage map/signal quality be available to MVNOs so they can see the coverage/signal quality and lack of for their business/segment?

1.2) Quality of Customer Service

TUC and DTN must prepare to support the number of customers that will increase from the business merger in order to provide service quality to users not lower than before, such as the number of staff that are sufficient to support the service both in regards of service center and call center staff, as well as the size of the customer service center that can support the incoming and outgoing calls of service users.

Questions/Comments

• On What and Whose standards will this be based and measured?

2) Network Coverage TUC and DTN must provide a telecommunications network for business operation with 5G technology covering not less than 85 percent of the total population of the country within 3 years and 90% of the total population of the country within 5 years from the date of business incorporation.

Questions/Comments

• Better than the 80 percent within 5 years first suggested as condition

4. Mitigation measures for Spectrum ownership/Infrastructure sharing concerns
1. Spectrum holdings

TUC and DTN must comply strictly with the laws relating to spectrum usage in telecommunication business.  (The use of frequency spectrum under Section 41, paragraph four, Section 44/1 and Section 44/3 of the Spectrum Assignment Organization Act B.E. 2553 and its amendments)

Questions/Comments

• Does this overrule the terms and conditions in their respective spectrum licenses? If so, it puts them in a better position than AIS.

• How about the spectrum cap in the spectrum licenses terms and conditions?

• No return of spectrum to NBTC – So an extremely limited chance of competition and innovation into the market from new entrants, MVNOs who might consider becoming MNOs, Private networks use and National Telecom, who has to return its 850, 2100 and 2300 MHz spectrum 3 years from now – and therefore no longer interesting for MVNA/MVNOs?

• When will the NBTC release its spectrum timeline?

2. Infrastructure Sharing

TUC and DTN are required to allow other licensees to lease their own telecommunication networks to operate their telecommunication businesses. and must strictly comply with the rules relating to the use of telecommunication networks of the NBTC.

Questions/Comments

• How does this apply to the sub-brands of TRUE and DTAC i.e. DTAC’s “TeleAssets” and “Finn Mobile” – as well as TRUE’s: “TrueMove H”, “BFKT” and “Real Move”?

5. Mitigation measures: Thailand’s Digital Economy Innovation and Digital Divide concerns

1. Network Coverage TUC and DTN must provide a telecommunications network for business operation with 5G technology covering not less than 85 percent of the total population of the country within 3 years and 90% of the total population of the country within 5 years from the date of business incorporation.

2. Provide promotional programs at special low prices for low-income earners and underprivileged people in society and provide thoroughly public relations for the target group.

Questions/Comments

• When and what defines special low prices?

• Could this also be accepted if provided through one of the MVNO partners on its network?

3. (Digital Divide) Propose a concrete innovation development plan within 60 days after being notified of specific conditions or measures and start implementing the plan within 1 year. 

In addition the meeting agreed to:

1. Reporting on business results under the implementation of the period and conditions received from the NBTC every 6 months for a period of at least 5 years

Questions/Comments

• Why not follow standard business reporting (quarterly)?

2. After the business merger, if the NBTC considers or receives complaints that there are acts, behaviors or causes that monopolize or reduce or limit competition in the service, or there is a material change in the telecommunications business causing the specific conditions or measures to be inappropriate or ineffective, the NBTC may suspend, cancel, add or revise specific conditions or measures as appropriate and necessary.

3. The meeting also assigned the Office of the NBTC to discuss 3 issues with the NBTC’s legal advisory sub-committee, namely; The approval of a mechanism for selling shares and power to control the business.. Policy (Divestiture) on the business merger of TUC and DTN in the future and Complaints about the qualifications of the independent consultants. (Finansa Securities)

Questions/Comments

• Is the “mechanism for selling shares and power to control the business” as well as the “Policy (Divestiture)” related to the condition mentioned in the former “14 remedies” from the Office of the NBTC regarding Equal Board seat for MergerCo for three years and restrictions on appointment of executives and directors in the subsidiaries?

4. Assign the Office of the NBTC to study the 2018 business merger announcement and the 2006 announcement.

5. Agree on the principle of appointing a sub-committee to monitor and evaluate all business merger and acquisitions according to the 2018 announcements.

6. The Office of the NBTC and the business merger notifier, shall announce to the service users of the specific conditions and measures as approved by the resolution. In order to have an audit and have penalties in case of not doing so, such as a fine in the form of a percentage of revenue or tiers or the revocation of license.

Questions/Comments

• When can the public expect such information from the NBTC?

• When can the public expect to see the comments, reports and analysis from the public hearings and subcommittees.

• Has the NBTC itself prepared a public relation and communication plan to inform the public in line with its own policy and measures for disseminating information to the public – given the many issues with leaked information, fake news, lack of transparency, facts released and withdrawn from the NBTC?

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NBTC's 14 remedy measures BEFORE the acknowledgement of the merger

For comparison follows the 14 remedy measures from the Office of the NBTC which was leaked before about a month before the NBTC’s Board “acknowledgement” and remedies of the merger. The measures was initial proposed by the Office of the NBTC and changed/updated after processing the opinions received from the sub-committees.

1. Spectrum holding

Office of the NBTC 1st proposal:

  • It should be stipulated that TRUE and DTAC cannot use their spectrum together to provide services and the parties must strictly comply with the NBTC rules related to the use of frequencies.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • The Office of the NBTC is of the opinion that it is only advisable for applicants to merge businesses to comply with the rules that are already in force.
  • Without the sharing of frequencies together the NBTC may, however, consider in the future the allocation of spectrum to new operators, through auctions and mechanisms such as set-aside spectrum or a spectrum holding ceiling.
2. Maintaining consumer choice

Office of the NBTC 1st proposal:

  • Assigning no business merger to TRUE and DTAC and maintain separate service brands for a period of time, such as 3 years.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • No comments received
3. Support for MVNO

Office of the NBTC 1st proposal:

  • Prescribing TRUE and DTAC to sell capacity for mobile phone service to MVNO, which may be set at 20% of the capacity of their own network (more than the normal condition at 10%).

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • From the various opinions received — in addition to promoting MVNOs to enter the market by stipulating measures to sell capacity of mobile phone services to MVNOs as proposed — additional measures may be considered, including:
  • Increasing or maintaining the number of MVNOs in the market, for example requiring that before or after a business merger, a contract must be made with at least 1-2 non-affiliated MVNO operators, which could create more market players.
  • However, the pressure of such measures may cause an MVNO, that is not really ready to provide services, to enter the market anyway due to the measure ending up being unable to compete and leave the market.
  • Determining that the wholesale of mobile phone services to MVNOs must be paid according to the actual amount (Pay as you go) to reduce the burden and risk of providing services.
  • According to the opinion of the subcommittee of Consumer Protection and Civil Rights, if an MVNO can purchase a quantity of services that is in line with its ability to provide its own services, this will reduce costs and be one of the factors that help MVNOs being competitive and stay in the market.
4. Determination of Service Rates

Office of the NBTC 1st proposal:

  • It should be determined that TRUE and DTAC must strictly comply with the rules relating to the supervision of the NBTC’s service fee rates – increased from the one that is currently in use, to make the governance more suitable for the changing market structure with conditions that are suitable and flexible to the current situation.
  • It should be similar to the approach proposed by Chulalongkorn University consultants regarding pricing in the form of Price Cap, which takes into account the current market condition and the efficiency of the telecommunication industry, etc.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • The Office of the NBTC has reviewed that the most appropriate approach is that TRUE and DTAC must strictly comply with the rules relating to the supervision of the NBTC’s service fee rates. At present, the supervision of service fees is in accordance with the NBTC’s Notification on Determination and Supervision of the Domestic Mobile Phone Service Rate Structure and the NBTC’s Announcement on Determination and Supervision of Rates of Mobile Phone Service Charges.
  • Domestic mobile phone service in excess of the usage of the main promotion – and to consider additional measures related to the service rate – must increase from the one that is currently in use to make the governance more appropriate for the changing market structure from mergers and acquisitions.
5. Quality of Service (QoS)

Office of the NBTC 1st proposal:

  • Signal (QoS): TRUE and DTAC must not reduce the number of cell sites from the original, in order to maintain the quality and standard of services that the people receive, not lower than before.
  • TRUE and DTAC must strictly maintain QoS in accordance with the NBTC’s announcement regarding the standard of telecommunication service quality.
  • QoS in customer service: Determine that the two companies are ready to support the number of customers that will increase from the business combination in order to ensure the quality of service to the service users is not lower than before, such as the number of staff that are sufficient to support the service in both the service center and call center staff, as well as the size of the customer service center area that can support the calls of service users.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • The proposed measure by the Office of the NBTC is in the same direction as the specific measures proposed by other agencies.
6. Service Contract

Office of the NBTC 1st proposal:

  • It is appropriate to specify that TRUE and DTAC terms of the contract and the agreement between the Company and the user shall be maintained, including the benefits received under the contract or agreement for the period specified in the contract. Unless it is a change in the terms of the contract that is beneficial to the user and with the consent of the user.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • It is of the view that the Office of the NBTC has set a contract to protect consumers. But there may be additional consideration as to the appropriate length of time the business merger should maintain the contract and how to notify the user of the termination of the contract and the change of the contract in order for users to get the most benefit. Both Finansa Securities and the Subcommittee on Consumer Protection and Civil Rights have proposed a period of approximately 3 years, which is a period that may be considered applicable.
7. Network Coverage

Office of the NBTC 1st proposal:

  • Set additional measures to telecommunication network coverage requirements with 5G technology, for example to achieve 5G network coverage of more than 80% of the population within 5 years.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • It is the opinion, that measures should be imposed on the requirements for expanding the coverage of telecommunication networks with 5G technology, not less than the proposal of the business merger which is consistent with the opinion of the subcommittee on Consumer Protection and Civil Rights and the Independent Consultant (85% within 3 years)
8. Infrastructure sharing

Office of the NBTC 1st proposal:

  • Should stipulate that TRUE and DTAC must allow other licensees to lease their own telecommunication networks. and must strictly comply with the rules relating to the use of telecommunication networks of the NBTC

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • The measures proposed by the Office of the NBTC are in the same direction as the opinions received.
9. Public relations of service for the confidence of users after business combination

Office of the NBTC 1st proposal:

  • Public relations and publicity to maintain quality service and fair prices for service users

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • The NBTC’s proposals for measures are consistent with the opinions received. However, in the details, the Office of the NBTC has not yet determined the details of procedures, time frames, and public relations methods. While the subcommittee on Consumer Protection and Civil Rights are clearly defined and concrete.
  • Therefore, it may be considered further in the implementation to make public relations to be more clear, according to the measures of the Office of the NBTC
10. Follow-up on operations and changes that may occur after a merger

Office of the NBTC 1st proposal:

  • Reporting on business results subject to the implementation of the periods and conditions received from the NBTC on a quarterly basis – or in accordance with the period prescribed by the NBTC, in accordance with the form prescribed by the NBTC, for at least a period of time: 3 years

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • The Office of the NBTC’s measure proposal has not specified the details of what information the applicant must report to the NBTC, while Chulalongkorn University has proposed details of what should be done and reported, It also proposed to have measures to monitor the results of the operation by having other agencies to join in the inspection. Therefore, it may be considered for further adaptation in conjunction with the licensee to report the results of the existing operations.
11. Promotion of competition – increase MNO service providers

Office of the NBTC 1st proposal:

  • Specify the return of spectrum from the same operators who requested a business merger and arrange spectrum auctions to be allocated specifically to new MNO operators
  • Require distribution of property holdings such as spectrum, telecommunication towers or necessary infrastructure and details of the distribution of property holdings, should be completed prior to the business combination, to prepare spectrum allocation plans for new service providers and conducting spectrum auctions at the latest within 6 months after the business merger
  • Require new MNO operators to enter into roaming contracts with existing applicants or service providers until they have sufficient infrastructure of their own.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • Both Chulalongkorn University and the Sub-Committee on Consumer Protection and Civil Rights propose a way to create a new service provider that has a network using the spectrum that has been returned from the business merger, as well as selling some networks to new service providers and the introduction of the network, in the form of roaming.
  • These methods emphasize on new venture operators having access to the infrastructure needed to provide services – both from the allocation of resources and the use of the necessary infrastructure of the same operators in the market until they can provide services on their own – may need to be considered in conjunction with the measures of spectrum holding and determined accordingly.
12. Prevention of business takeover to reduce the likelihood that either TRUE Corp or DTAC can control the NewCo solely

Office of the NBTC 1st proposal:

  • Conditions relating to the Board of NewCo may prescribe a condition for shareholders of TRUE Corp and DTAC to either be unable to nominate – no more than half of the names of directors in NewCo during the first 3 years after the merger.
  • Conditions relating to the appointment of executives and the Board of Directors of NewCo’s subsidiaries
  • The appointment of NewCo’s directors must be approved by NewCo’s Nomination and Remuneration Committee. NewCo’s sub-committees must be appointed in accordance with NewCo’s board designation characteristics.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • Finansa Securities offered measures related to the prevention of new company domination by any one company, by offering measures to the NBTC to determine the shareholding and appointment of executives and sub-committees of the new company in a way, such an approach could be a defense against a company domination by a particular company.
  • But there are concerns whether it will interfere with the business management of the business merger or not. Therefore, the proposed measures and objectives for their appropriate implementation should be considered.
13. Investment to develop new services and develop new technology

Office of the NBTC 1st proposal:

  • NBTC should determine the investment ratio of entrepreneurs in technology development and innovation according to revenues.
  • Require the development of technology and infrastructure to benefit consumers and increase pressure on other operators to develop tech and infrastructure. It is more difficult to enter the market as new entrees must find comparable technology
  • NBTC should play a key role with relevant sectors in overseeing and formulating policies on digital technology development to support the expansion of the digital economy. Due to advances in technology this group is largely associated with telecommunication technology.
  • The NBTC should determine its own investment plan in technology development and innovation by considering the worthiness of investment and sharing of resources with the private sector to support government operations

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • These measures should be those that promote the overall growth and development of technology for the further development of the industry, rather than the specifics of individual entrepreneurs
14. Receiving issues and problem solving mechanisms for service users

Office of the NBTC 1st proposal:

  • Require the applicant for the business merger to establish a mechanism for accepting matters and solving problems for service users after the business merger;
  • Requiring all service providers to provide channels for receiving complaints and disseminating statistics and complaints problems in accordance with the rules prescribed by the NBTC.

Office of the NBTC proposal after processing the opinions received from the sub-committees:

  • At present, the NBTC has announced the process for receiving and considering complaints related to the telecommunication business act B.E. 2559, which specifies processes such as the complaint submission process.
  • The process of considering and reviewing the resolution of complaints and the duty of the licensee to manage complaints including receiving and solving complaints, applies to all licensees. Therefore, if there are any additional details In terms of such matters it would be more appropriate to apply as a whole.
Author: Allan Rasmussen
Managing director at Yozzo. Allan’s expertise includes the development and execution of growth strategies, market insights, trends and opportunities, new business models and strategies
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