Indications have been plenty over the years. Complaints from DTAC about high spectrum pricing and the lack of a spectrum roadmap in Thailand. Less investment in spectrum, network roll-out and quality. Declining subscribers in the millions. DTAC’s slow 5G roll-out compared to AIS and TRUE. Telenor looking to merge its operation in Malaysia and sell its operation in Myanmar – gave birth to the speculation that Telenor was also preparing to exit the Thai market by selling to TRUE.

In July 2021, the rumor of an exit reached the point where Telenor decided to comment on the matter. In a notification 29 July 2021, to the Stock Exchange of Thailand (SET), Telenor wrote:

A couple of days later, a highly placed, anonymous source at TRUE also denied. “That’s not true,” the source told the Bangkok Post without further elaboration. Interesting timing, considering the new company for the merger “Citrine Global” was officially registered 10 days prior.

Despite – or perhaps because of the denial, the rumor remained highly active. Question was if TRUE was actually in a position to buy DTAC?

TRUE has been a loss making company on its core bottom line for the last 10 years. It has not been able to show sustainable operational performance, but had additional transactions by divesting its assets to the Digital Telecommunications Infrastructure Fund (DIF) or selling its shares in DIF.

So if TRUE wasn’t able to buy DTAC, who would/could – or was there another option?

The answer came November 19, 2021 with the Norwegian newspaper “Dagens Næringsliv” article “Telenor will join forces with a competitor in Thailand”

Followed three days later by TRUE and Telenor with the official announcement of a USD 8.6 billion merger plan, approved by their respective executive boards and forwarded to the Stock Exchange of Thailand.

The two companies also signed a memorandum of understanding (MoU) for an equal partnership to form a new merged firm – or amalgamation as they like to call it themselves, perhaps to underline that the existing companies will lose their identity – and a new company is formed.

The ink wasn’t even dry yet on the MoU between TRUE and Telenor before Thailand’s National Broadcasting and Telecommunications Commission (NBTC) and the government’s competition watchdog, the Office of the Trade Competition Commission (OTCC) – was trying to avoid getting the case of a possible merger between Thailand’s largest private company and a Norwegian state-owned telecom giant, on their table.

The chair of the OTCC, Sakon Varunyuwatana, said the merger is bound to create a company with market dominance, but Section 4 of the Trade Competition Act 2560 (2017), stipulates that this Act shall not apply to acts of a business regulated by specific law in respect of trade competition.

“What we need to do is to keep a close watch on the function of the NBTC and details of the deal.” Mr. Sakon told Bangkok Post.

OTCC itself, is still under heavy criticism after having approved TRUE’s mother company, CP Group’s USD 10.6 billion acquisition of the local retail business of UK retailer Tesco in 2020.

A deal which significantly lowered retail competition in the Thai market, allowing CP Group to hold an 83.97% market share of Thailand’s wholesale and retail sector, according to the Foundation for Consumers (FFC). Tesco operated about 2,000 stores across Thailand and CP All (under CP Group), operates the wholesale grocery shops Siam Makro, as well as 7-Eleven of which there are more than 12.800 in Thailand.

Interestingly, the FFC warned back then, that this retail merger would only encourage other big players in the energy, telecom or entertainment sector to seek similar deals to dominate the market – and here we are, just one year and a few months later with the same actor engaged in a telecom merger.

The NBTC initially said it had no authority to deal with Telenor or CP Group as the two companies are not licensees of the NBTC office. The licensees are DTAC TriNet, a wholly owned subsidiary by DTAC, and TrueMove H Universal Communication (TUC), a subsidiary wholly owned by TRUE.

After a meeting between DTAC’s CEO, Sharad Mehrotra, the NBTC management and some board members discussing the prospect of a TRUE/DTAC merger deal, NBTC board member Prawit Leesathapornwongsa said the NBTC had directed its management to set up a committee responsible for monitoring the merger deal. The panel will have to report updated information to NBTC board each month.

Some NBTC board members also demanded a meeting between the NBTC, the Securities and Exchange Commission (SEC) and the Trade Competition Commission (OTCC) for proper resolutions regarding the TRUE/DTAC merger.

Let’s set the scene for the TRUE/DTAC merger by getting acquainted with the market.

Each of the Big Three has a set of subsidiaries, acting as license holders on various spectra, but branding services under their main brand:

• AIS Group: AIS, AWN, AIN, ABN, DPC,
• True Corporation: TrueMove , RealMove , TrueMove H Universal Communication (TUC).
• DTAC Group: DTAC TriNet, DTN.

AIS also has a discount sub-brand named GOMO and DTAC has a similar discount sub-brand named FinnMobile. The subscribers of these sub-brands are not disclosed separately but included in the main brand’s total subscriber numbers.

At the end of 2021, the big three, AIS, TRUE and DTAC as well as NT – had all managed to grow their subscribers both quarter-on-quarter (QoQ) and year-on-year (YoY).

Figure 1: AIS, TrueMove, DTAC and NT • Mobile Mobile Subscribers/Connections • Q4 2020 – Q4 2021

AIS, the market leader by subscribers and revenue, ended 2021 with 44.11 million subscribers, up 458.800 QoQ and 2.679.900 YoY.

TrueMove H (TRUE’s mobile service brand), achieved another quarter of subscriber growth, adding 233.000‬ QoQ and 1.622.000‬‬ YoY to end 2021 with a total of 32.25 million subscribers.

TrueMove H became the second largest mobile operator (by subscribers) when it took over the second spot from DTAC in 2016 and has continued to show the strongest customer acquisition performance among the telcos in Thailand.

Towards the end of 2021, DTAC seems to have managed to stop its four years streak of bleeding subscriber. DTAC managed to add 287.000 subscribers/connections QoQ and 705.000 YoY, ending 2021 with a total of 19.56 million subscribers/connections.

The two state owned telecom operators in Thailand: Communications Authority of Thailand (CAT) Telecom, and Telephone Organization of Thailand (TOT), was merged into a new state enterprise entity named National Telecom Plc or NT in short, on January 7, 2021.

NT was able to add 114,905‬ subscribers QoQ and 59.323 YoY compared to the combined subscriber base the two, now merged state enterprises had in Q4 2020. NT ended 2021 with 3.42 million subscribers.

Interestingly, on January 7, 2021, at the NT merger ceremony between CAT and TOT, the now former Minister of Digital Economy (DES), Buddhipongse Punnakanta said the merger’s (NT) target was to become one of the top three mobile service providers in Thailand by the end of the year (2021).

An absolutely absurd statement at the time but in hindsight with the possible TRUE/DTAC merger, he would be right, except for the timing. The TRUE/DTAC merger would create a market of only two big players: AIS and TRUE/DTAC with NT as the third, much smaller operator. Did he know something at the time?

National Telecom (NT) Revenue and Expenditures End of Year 2021

Total Profit 2021 = THB 3.142 billion

*Additional income from Universal Service Obligation (USO) fees 2011-2012. Without the USO fees, NT would have had a Total Revenue of: THB 98.254 billion, resulting in a Total Loss of THB -276 million in 2021

Figure 2: The four MNOs in Thailand: AIS, TrueMove, DTAC and National Telecom • EoY 2021

The MVNOs, Penguin SIM by Whitespace, Feels Telecom and Ikool by Loxley had a new competitor “RedONE” entering the MVNO market in May 2021.

While the Feels managed to almost triple its connections in the last quarter of 2021, the two other active MVNOs (Penguin SIM and iKool) continued their downward trend.

Figure 3: Active SIMs in the Thai market from the MVNOs: Penguin SIM, Feels, iKool and Redone • Q4 2019 – Q4 2021

The current MVNO subscriber numbers are so small that they don’t affect the market but we have included it here, to make sure we use the correct numbers when we calculate the HHI effects of the TRUE/DTAC merger later in this article.

At the end of 2021, there was a total of 99.408.059 subscribers/mobile connections in Thailand, bringing the mobile penetration to 150%

AIS had the lion share with 44.48% of the total subscribers/connections, followed by TRUE with 32.44% and DTAC with 19.68% while National Telecom (NT) had 3.45%

The MVNOs had a combined market share of just 0.05%:

• MVNO Feels: Active SIMs 26.832 / Market share 0.027%
• MVNO Penguin; Active SIMs 25.578 / Market share 0.025%
• MVNO iKool 3G: Active SIMs 2,219 / Market share 0.002%
• MVNO Redone: Active SIMs 1.888 / Market share 0.001%

Figure 4: Mobile subscribers/connections market share in Thailand • EoY 2021 / ส่วนแบ่งการตลาด ค่ายมือถือ 2564

Of the total 99.4 million mobile connections in Thailand, the oligopoly of the Big Three (AIS, TRUE, DTAC) had a combined market of 96.5%

Figure 5: Thailand’s Big Three: AIS, TrueMove and DTAC’s subscriber market share end of 2021 / ส่วนแบ่งการตลาด เอไอเอส ดีแทค ทรู 2564

When (if) the TRUE/DTAC merger is approved, the mobile service market in Thailand will go from the current oligopoly to a duopoly with the TRUE/DTAC merger taking the lion share with 52.12% of the market and the current market leader, AIS will be become the second in the market with its 44.38%

Figure 6: Thailand’s mobile market post a TRUE/DTAC merger – From Oligopoly to Duopoly.

The Herfindahl-Hirschman Index (HHI), measures market concentration to determine market competitiveness. The U.S. Department of Justice, the European Commission and the NBTC in Thailand use HHI as part of evaluating potential market, mergers and acquisitions (M&A) issues.

HHI is calculated by squaring the market share of each firm in the market and then summing the numbers. In example: In a market with four firms having market shares of 25%, 25%, 40% and 10%, the HHI is 2950

(25² + 25² + 40² + 10² = 625 + 625 + 1600 + 100 = 2950)

• HHI of less than 1500 = A competitive marketplace
• HHI of 1500 to 2500 = Moderately concentrated
• HHI of 2500 or greater = Highly concentrated

The closer a market is to a monopoly, the higher the market’s concentration (and the lower its competition).

If, for example, there were only one firm in an industry, that firm would have 100% market share, and the Herfindahl-Hirschman Index (HHI) would equal 10,000 – an example of such in Thailand is National Telecom (NT), which has monopoly on fixed-line telephony as well as wholesale to MVNOs.

The Herfindahl-Hirschman Index (HHI) in Thailand’s mobile service market was 3393 at the end of year 2020, showing a highly concentrated market lacking competition.

The merger between the two telecom state enterprise, CAT Telecom and TOT, into National Telecom (NT) in 2021, increased the HHI slightly to 3421 at the end of 2021.

Figure 7: Thailand’s mobile market HHI EoY 2020 • Post CAT/TOT merger and Post a TRUE/DTAC merger.

However a TRUE/DTAC merger would raise the HHI to 4698

• As a general rule, Mergers and Acquisitions (M&A), that take place in un-concentrated markets (HHI <1500), or that causes a change in concentration, known as delta (<100), are generally un-problematic.
• Mergers that take place in moderately concentrated markets with a delta >100, or mergers that take place in highly concentrated markets with a moderate delta (100-200), are deemed to “raise significant competitive concerns and warrants scrutiny.”
• Mergers that take place in highly concentrated markets with delta >200 are “likely to enhance market power” and will be challenged.

Figure 8: U.S. Department of Justice and the Federal Trade Commission – Horizontal Merger Guidelines HHI Delta.

The merger of TRUE and DTAC in Thailand would raise the HHI with 1277 Delta!

From 3421 (in a already highly concentrated market) to 4698. “Presumptively unlawful”, according to the Department of Justice and the Federal Trade Commission – Horizontal Merger Guidelines.

Figure 9: Herfindahl-Hirschman Index (HHI) calculation and delta from EoY 2021 to post TRUE/DTAC merger

Looking at Total Revenue Market Share, the HHI result post merger also shows a highly concentrated market.

At the end of 2021, AIS total revenue from all its operations and subsidiaries (i.e. mobile, handset sales, roaming, internet, streaming, etc.) was THB 181.33 billion.

TRUE Group’s total revenue end of 2021 across all its operations and subsidiaries (mobile, internet, satellite and terrestrial TV, streaming, handsets sales, roaming, etc.) was THB 143.65 billion.

DTAC’s total revenue from all its operations (mainly mobile, handset sales, roaming, insurance, etc.) was THB 81.32 billion.

National Telecom (NT) total revenue, across all its operations (Internet, cloud, wholesale, mobile, etc.) was THB 101.67 billon.

As mentioned above, for NT’s revenue, it has to be taken into consideration that an outstanding USO fee payment from 2011-2012 was paid in 2021 (THB 3.418 billion), as well as payments from dispute cases (THB 3.310 billion). Total revenue results in the future will therefore be much lower.

The combined total revenue of all four, end of year 2021 was THB 507.97 billion.

Figure 10: Herfindahl-Hirschman Index (HHI) on Total Revenue Market Share End of Year 2021

Table 11: Herfindahl-Hirschman Index (HHI) Calculation on Total Revenue Market Share

If TRUE and DTAC was merged the combined total revenue of the two would be THB 143.65 billion + THB 81.32 billion = THB 224.97 billion representing a market share of 44.29% – lifting the HHI with 906 deltas to a HHI of 3636.

Figure 12: Herfindahl-Hirschman Index (HHI) on Total Revenue Market Share – Post a TRUE DTAC Merger

Table 13: Herfindahl-Hirschman Index (HHI) Calculation on Total Revenue Market Share – Post TRUE DTAC Merger

True Corporation was established 13 November 1990, as TelecomAsia, and operating as a fixed-line service provider.

In 1990, TelecomAsia (TRUE today) entered into a Build-Transfer-Operate (BTO) concession with TOT for two million fixed-lined in Bangkok Metropolitan Areas for a period of 25 years.

After the 1992 coup, the junta appointed the civilian Prime Minister Anand Panyarachun, who awarded the contracts for the fixed-line telephone expansion (3 million connections) to the CP subsidiary, TelecomAsia.

Bell Atlantic (Verizon today) paid USD 350 million for a 10% stake in TelecomAsia in 1992. It was sold again in 2003 for USD 38.49M, well below market value, putting an end to its difficult relationship with CP group. The shares were bought by CP group, raising its share to 47%.

1995-1996. The Banharn Silpa-archas government (1995-96), approved a further 600,000 connections, and the use of the PHS standard (Branded as Personal Communication Telephone or PCT in Thailand) to TelecomAsia.

In 1998, TRUE joined with the cable TV operator IBC to form, not only Thailand’s largest cable-TV provider “The United Broadcasting Corporation (UBC)” but also – and more importantly – the strongest political power Thailand have seen, as the IBC belonged to Shin Corp – owned by Thailand’s PM Thaksin Shinawatra. Thereby combining two of Thailand’s richest and most political influential families. In January, 2007, UBC was rebranded to “TrueVisions”

In 2000, Charoen Pokphand Group (CP), acquired Wireless Communication Services Co., Ltd. (WCS), who had a concession agreement with CAT – to enter the mobile service business in Thailand.

In 2001, the acquired WCS formed a partnership with the French telecom operator Orange, who takes 49% – and WCS is renamed to CP Orange. The entry of CP Orange sparked intensifying competition in the mobile service market, which until then had been dominated by AIS and DTAC.

In 2003, Orange SA sold its stake to TRUE but the Orange brand was used in Thailand as TA Orange until 2006 where it was changed to TRUEmove.

In 2004, the company renamed itself to TRUE Corporation to streamline its operations under a single brand with subsidiaries Asia Infonet (renamed True Internet) and TA Orange (renamed TRUEmove in 2006).

In 2010, True Corporation acquired Hutch from CAT Telecom.

In 2011, True subsidiaries Real Move and Real Future signed an agreement with CAT, giving them a 14-year contract under a “mobile virtual network operator (MVNO) wholesale and reseller partnership” to offer 3G on CAT’s 850MHz under the TrueMove H brand. Giving True a head start on 3G.

In 2012, after spending almost a year investigating, a fact-finding panel of the NBTC and a committee set up by the National Anti-Corruption Commission (NACC) announced that the 3G MVNO network deal between True and CAT Telecom was in violation of several telecommunication laws.

NBTC officially grants 3 licenses of 2x15MHz to each – and the only participants in the 2100 MHz spectrum auction: AIS, DTAC, TRUE – on December 7, 2012 – ending years of concession scheme.

In 2013, after certain modifications were made to the MVNO, wholesale/resell contracts between TRUE and CAT, the Council of State approved the 3G partnership after deciding that the amended public-private operating agreement complied with the law.

In 2015, the CAT-TRUE case surfaced again, when a report by the State Audit Commission under the Office of the Auditor General (OAG) into the controversial setup, identified at least THB 45,852 billion (U$1.27 billion) of damages, as well as cell sites that had not been accounted for.

In 2016, a new 4G roaming deal was announced as part of CAT Telecom’s agreement with the TRUE subsidy, True Move H Universal Communication (TUC), which will see TUC paying a total rental fee of THB 9.3 billion to CAT Telecom for the use of CAT’s 850MHz network. According to TUC’s conditions in the agreement, the 4G network is exclusively for CAT Telecom’s “MY” service and therefore none of the MVNOs will be able to use it.

In 2016, TrueMove H overtook DTAC as the second largest mobile network operators in subscribers.

• TrueMove H – mobile and wireless telecommunication business; Second largest provider with a 33.55% subscriber market share and the strongest customer acquisition performance. TrueMove H operated as a MVNO on CAT Telecom’s 850MHz for 3G.
• TrueOnline – broadband internet and fixed-line. It is the largest fixed broadband provider with a 38.43% market share.
• TrueVision – Pay TV and Digital TV business, content production and an online game and influencer network. 3.5M subscribers;
• True Digital Group – Digital media, data analytics, IoT, digital solutions and True Digital Academy.

Over the past 10 years, TRUE has not been able to show sustainable operational performance and has been a lossmaking company on its core bottom line. Although it has been able to recognize some profit, this has been from either divesting or selling its assets in the Digital Telecommunications Infrastructure Fund (DIF).

At present, the company has a registered capital of THB 133,474,621,856 divided into 33,368,655,464 ordinary shares with a par value of THB 4 per share and a paid-up capital of THB 133,472,781,204 divided into 33,368,195,301 ordinary shares with a par value of THB 4 per share.

C.P. Group (CPG) is the majority shareholder with 49.99%

Charoen Pokphand Group Co Ltd, serves as a parent company of CP Group. As a holding company, the Group operates across several industries and service sectors, which are categorized into: 8 Business Lines covering 14 Business Groups.

Top 5 Shareholders:

1. CPG, holds 17.84% of TRUE’s shares and the Top 10 shareholders in CPG are:

2. Orient Glory Group Ltd. (100% held by CPG), held 8.33% of TRUE’s shares

3. Glory Summer Enterprises Ltd. (100% held by CPG), 4.38% of TRUE’s shares

4. Unique Network Co Ltd. (41.06% Thana Holding Co Ltd & 58.94% ATCM Holding Co Ltd.), held 4.31% of TRUE’s shares

5. Jumbo Kingdom (held by Active Business Holding Ltd.), 3.36% of TRUE’s shares.

The second largest shareholder in TRUE is China Mobile International Holdings Limited (CMI) with 18%

CMI is registered under the Law of Hong Kong. It invests in the stock exchange without disclosing its investments. China Mobile International Limited (CMI) is a wholly-owned subsidiary of China Mobile, which is a state-owned enterprise directly controlled by the government of the People’s Republic of China and also a public company which is listed on the Hong Kong stock exchanges.

China Mobile International (CMI) also operates the MVNO known as CMLink. The MVNO is operating in several markets, including: Canada, Italy, Japan, Singapore, Thailand, the UK and the US.

However, CMI was ordered by the Canadian government in Aug 2021 to shut down or divest its Canadian operations citing national security concerns. In the US, CMI was told it must cease operations in the US by early January 2022.

Figure 14: TRUE Corporation Pcl., Top shareholders as of March 2021.

Total Access Communication (DTAC) was established in August 1989 by Thai tycoon Boonchai Bencharongkul. He is still a shareholder and the Chair of DTAC’s Board of Directors today.

In 1990, Total Access Communication (DTAC today), is granted a 15-year Build-Transfer-Operate (BTO) concession from Communications Authority of Thailand (CAT) under a revenue sharing basis.

In November 1995, DTAC issued 42.8M shares to TOT. In return TOT agreed to provide discounts on access charge payments.

May 2001, Telenor of Norway became a shareholder when United Communication Industry PCL (UCOM) sold 5.5M of the outstanding shares in DTAC to the Telenor subsidiary, Telenor Asia Pte. In August, DTAC issued 48.5M new shares and sold these to Telenor, as a result, Telenor held 29.94% equity interest in DTAC.

In 2002, DTAC launched a price war and unlocks the IMEI lock between handset and SIMs in the market.

From 2002-2008, the CEO of Telenor Group in Norway today, Sigve Brekke was the Co-CEO of DTAC together with Vichai Bencharongkul (the brother of Boonchai Bencharongkul). The two managed to, grow the subscribers of DTAC to 15.8 million.

2008-2011: CEO Tore Johnsen and DTAC grew the subscribers to 23.2M

2011-2014: CEO Jon Eddy Abdullah +4.8M subscribers (28M Total)

On December 7, 2013, the NBTC granted 3 licenses of 2x15MHz to each – and the only participants – in the 2100 MHz spectrum auction: AIS, DTAC, TRUE – ending years of concession scheme.

2014-2015: Sigve Brekke returned as CEO following the abrupt departure of Jon E Abdullah. During Brekke’s second period DTAC lost -2.7M subscribers down to a total of 25.3M.

In June 2014, a Telenor Asia employee told Norwegian news that DTAC had blocked access to Facebook in Thailand for an hour, due to orders of the NBTC and the military following the May 22 coup. The armed forces, which had warned critics about expressing dissent online, blamed the outage on a technical problem.

Thailand’s telecom regulator, NBTC denied instructing Telenor to restrict access to Facebook, and the regulator said DTAC would be investigated to ensure Telenor didn’t own more than the legal shareholding limit of 49% ahead of an auction due later that year.

Telenor issued a statement of apology, saying its actions had “damaged the image of the NBTC and Thailand’s junta, known as the National Council for Peace and Order (NCPO).”

2015-2018: CEO Lars Åke Norling -4.1M to a total of 21.2M subs.

2016: Financial irregularities. An external review found some DTAC partners were unable to provide sufficient documentation of ownership of the land where the base stations are located.

2018: DTAC announced it would cut its workforce by 1.000 employees this year in an effort to increase earnings.

2018-2019: CEO Alexandra Reich -800K to a total of 20.4M subs.

2019: Exit of Mrs. Alexandra Reich. According to sources close to the matter, Mrs. Reich insisted that DTAC should participate in the bidding for 5G licenses, emphasizing the importance of building network confidence for DTAC subscribers. However Telenor Group disagreed and insisted on not participating in the bidding, which resulted in Mrs. Reich handing in her resignation.

2019-Present: CEO Sharad Mehrotra -1.1M to a total of 19.2M.

From 2014 to 2020 DTAC lost a total of -9.2 million subscribers across both prepaid and postpaid.

At present, DTAC has a registered capital of THB 4,744,161,260 divided into 2,372,080,630 ordinary shares with a par value of THB 2 per share and a paid-up capital of THB 4,735,622,000 divided into 2,367,811,000 ordinary shares with a par value of THB 2 per share.

The largest single shareholder in DTAC is Telenor Asia Pte. Ltd. with 45.87%.

Telenor Asia Pte. Ltd., is a holding company and a subsidiary of Telenor ASA and Telenor ASA’s major shareholders are the Government of Norway with 53.37% and Folketrygdfondet (the Government Pension Fund of Norway) with 4.49%

The second largest shareholder in DTAC is Thai Telecom Holdings Co.,Ltd., with 19.18%

– and now get ready for a ride through a range of holding companies…

Boonchai Bencharongkul who founded DTAC is also the chair of DTAC’s Board of Directors.

Figure 15: Total Access Communication Pcl., (DTAC) Top shareholders as of August 2021.

Prior to the TRUE and DTAC shareholder meetings on the merger, there had not been any official statement from the National Telecom Public Company Limited (NT), who is both a competitor, partner and shareholder of DTAC – and therefore also part in the merger.

However, on March 31, 2022, National Telecom Public Company Limited (NT), announced that Mr. Prasarn Ja-ngu-laam, Chair of the state enterprise labor union along with Mr. Narapol Plainet, union advisor – had officially submitted a letter to Gen. Suchart Phongput, the Chair of NT and Captain Somsak Khaosuwan, Acting President of NT – asking NT – as one of DTAC ‘s shareholders to object to the True-DTAC merger on the TRUE-DTAC shareholders’ meeting on April 4, 2022.

Mr Prasarn said that, although NT holds a minority stake in DTAC, it’s voice will be a statement to the public to know that National Telecom, as a government agency has given importance to promoting fair competition and oppose monopoly. Therefore, we urge both the CEO and Chair of the NT Board to oppose the True-DTAC merger deal.

Air Chief Marshal Somsak Khaosuwan, Director and Acting President of NT, revealed that at NT’s Board of Directors meeting on April 5, 2022 there was an agenda item regarding the shareholding of NT in Total Access Communication Pcl. (DTAC), where NT currently holds 5.69% of the shares in DTAC.

The DTAC share issue was brought up on NT’s Board of Directors meeting because NT voted against the merger of DTAC and TRUE, at the April 4, 2022 DTAC shareholder meeting.

NT’s board resolved to keep the shares for the time being. However, the Board assigned the management to monitor the merger between TRUE and DTAC closely, including coming up with advantages/disadvantages to continue to hold shares in DTAC or not, and present it to NT’s Board of Directors for further consideration.

As part of the process of the merger, there will be an allocation of shares in a new company which will be created as a result of the merger (“NewCo”) to the shareholders of the TRUE and DTAC in accordance with the following ratios:

• 1 existing share in TRUE to 0.60018 shares in NewCo; and
• 1 existing share in DTAC to 6.13444 shares in NewCo.

The above exchange ratios was considered based on NewCo’s registered and paid-up capital of THB 138,208,403,204, divided into 34,552,100,801 ordinary shares, with a par value of THB 4.

During their first presentation on the merger, the companies said that Citrine Global Company, a joint venture of Telenor Asia, the parent firm of DTAC, and Charoen Pokphand (CP) Holding, the parent of TRUE, would make a conditional voluntary tender offer for all shares of the two firms (TRUE and DTAC) at THB 5.09 per one share in True and THB 47.76 per one share in DTAC – subject to regulatory requirements.

Once the shareholders’ meeting of both TRUE and DTAC resolves to approve the merger, TRUE and DTAC will proceed with the merger in accordance with the provisions of Public Limited Companies Act B.E. 2535, as amended (“PLCA”) and other applicable laws, including a notification to creditors of the companies shareholders’ meeting’s resolution which approves the merger and an arrangement for a purchase of shares from the shareholders who attend the shareholders’ meeting and vote against the merger.

Sirikanya Tansakun, member of the House of Representatives (Move Forward Party), raised an interesting question a few days before the shareholder meetings at DTAC and TRUE. How can the shareholders vote on the merger on April 4, 2022, when it is not known what conditions the NBTC (others) will stipulate on the deal or what specific measures will be taken? I.e. Some units cannot be included or have to be sold off? Divestment of spectrum?

Nevertheless, on April 4, 2022 – TRUE and DTAC shareholders approved the merger.

DTAC and TRUE notified the Stock Exchange of Thailand on April 4, 2022, that their respective shareholders had approved the merger and acts relating to it at today’s shareholder meetings.

TRUE announced that of its shareholders:

• 99.3713% Approved the merger
• 0.6283% Disapproved
• 0.0004% Abstained

DTAC announced there were a total of 1,272 shareholders who attended their shareholder meeting in person or by proxy, holding a total of 2,042,541,308 shares, representing approximately 86.2629% of the total issued shares by the company (which is 2,367,811,000).

Of those:

• 89.0787% Approved the merger
• 10.9210% Disapproved
• 0.0003% . Abstained

The merger is still subject to review from regulatory agencies.

Upon the completion of the relevant procedures, the companies will jointly hold a joint shareholders’ meeting to consider various matters necessary for the merger as required under the PLCA. After the joint shareholders’ meeting, the Board of Directors’ of NewCo will proceed with the registration of the merger and, upon the completion of the registration, NewCo will assume all assets, liabilities, rights, and obligations of TRUE and DTAC by operation of law.

Then, the NewCo will submit a final application for listing of its securities to the Stock Exchange Thailand (SET) in order to comply with the SET regulation re: Listing of Securities of the Company Formed by Amalgamation of Companies B.E. 2542 (1999).

TRUE and DTAC expect the merger to be completed by September 2022.

The TRUE/DTAC merger is to be structured as shown below, into a NewCo, where C.P. Group will have a share of 28.98%, Telenor Asia Pte Ltd 19.28%, Thai Telco Holdings Ltd., 8.09% followed by China Mobile with 10.43% and minor shareholders with 33.25% combined.

See more here: TRUE Corp’s notification and Information Memorandum to the Stock Exchange of Thailand on the Resolutions of the Board of Directors Meeting on the amalgamation between TRUE and DTAC 18 Feb 2022.

According to the Department of Business Development (DBD), the company: Citrine Global Company Limited with the Reg.nr.: 0105564108476 was registered on July 9, 2021.

It was registered with a capital of THB 100,000 (USD 3,002) and having its address at: CP Tower Building, No. 313, Silom Road, Silom, Bangrak, Bangkok 10500 – which is the same address as Charoen Pokphand Group.

The company is established as a branch and/or, a subsidiary joint venture representative office or regional office for conducting business both inside and outside the Kingdom.

The name of NewCo (i.e. TRUE-D) will be proposed and determined at a joint shareholders’ meeting on April 3, 2022 to be undertaken as part of the process of the merger.

NewCo will assume all of the assets, liabilities, rights, duties, and responsibilities of both companies by virtue of law.

It does however not specifically mention the telecom towers of the companies and its subsidiaries. TRUE makes use of towers which is under the Digital Telecommunications Infrastructure Fund (DIF) where TRUE is the majority shareholder. DIF had 16,059 towers from TRUE’s subsidiaries EoY 2020.

The top 10 shareholders of NewCo, after the registration of the merger with the Ministry of Commerce, will be as follows:

• CP Group 28.98%
• Telenor Asia Pte Ltd 19.28%
• China Mobile International Holdings Limited 10.43%
• Thai Telco Holdings Limited 8.06%
• Thai NVDR Company Limited 6.76%
• National Telecom Public Company Limited (NT) 2.39%
• Social Security Office 1.59%
• South East Asia UK (Type C) Nominees Limited 0.84%
• UOB Kay Hian Ay Hian (Hong Kong) Limited – Client account 0.81%
• UBS AG HONG KONG BRANCH 0.50%

Figure 16: TRUE/DTAC Merged Company: Citrine Global – Shareholders and percentage.

• The sale and distribution of mobile devices and mobile service via subsidiaries dtac TriNet and TrueMoveH – using the 700MHz, 850MHz (under agreement with NT), 900MHz, 1800MHz, 2100MHz and 2300MHz (under agreement with NT) spectrum.
• Broadband internet provider via TrueOnline
• Pay TV, digital TV and content provider via TrueVisions
• Portfolio of digital services via True Digital Group
• Venture capital investments, with the intention to raise VC funding of USD 100-200 million with partners.

Note! The above business operation does not mention anything about wholesale.

When asked at a recent press conference in Bangkok (June 30, 2022), if the management style and direction of DTAC would be affected because some observers believe TRUE has the opposite standards when it comes to “good governance”, Sigve Brekke, President and CEO of Telenor Group, swiftly defended his firm’s stance and independence.

“We are not going to compromise on our ethics and our values. We have spent a lot of time with CP Group on how the new company should be run and what standards this new company should have.”

At the same press conference, Jørgen Arentz Rostrup, EVP and Head of Telenor Asia, said the concerns raised about higher prices following the merger were missing the point.

“The regulator [NBTC] has pretty good experience in executing price ceilings and other mechanisms. The consumers are protected here,” he claimed.

When Bangkok Post asked Supinya Klangnarong Co-founder of the fact-checking website Cofact and herself a former NBTC commissioner – about NBTC’s measures in regulating fair pricing she warned that the NBTC’s unclear stance on mergers approval should serve as a clear indication of its authority to impose, regulate and enforce rules with pricing.

DTAC Information Memorandum regarding the Amalgamation between Total Access Communication Public Company Limited and True Corporation Public Company Limited | https://investor.dtac.co.th/storage/download/shareholders-meeting/egm2022-01/20220318-dtac-egm2022-01-thc01-en.pdf

DTAC: Report of Opinion of the Independent Financial Advisor from TISCO Bank Public Company Limited regarding the Amalgamation | https://investor.dtac.co.th/storage/download/shareholders-meeting/egm2022-01/20220318-dtac-egm2022-01-thc02-en-02.pdf

DTAC: Audited Consolidated Financial Statements of Total Access Communication Public Company Limited and its subsidiaries for the financial year ended 31 December 2021 | https://investor.dtac.co.th/storage/download/shareholders-meeting/egm2022-01/20220318-dtac-egm2022-01-thc04-en.pdf

DTAC: Audited Consolidated Financial Statements of True Corporation Public Company Limited and its subsidiaries for the financial year ended 31 December 2021 | https://investor.dtac.co.th/storage/download/shareholders-meeting/egm2022-01/20220318-dtac-egm2022-01-thc05-en.pdf

DTAC: Consolidated Pro Forma Financial Statements of Total Access Communication Public Company Limited and True Corporation Public Company Limited for the year ended 31 December 2021 and 2020 | https://investor.dtac.co.th/storage/download/shareholders-meeting/egm2022-01/20220318-dtac-egm2022-01-thc06-en.pdf

TRUE: Information Memorandum Regarding the Amalgamation between True Corporation Public Company Limited and Total Access Communication Public Company Limited | https://investor.truecorp.co.th/newsroom/180320221902490354E.pdf

TRUE: Independent Financial Advisor’s Opinion (Kiatnakin Phatra Securities Public Company Limited) Report on the Amalgamation between True Corporation Public Company Limited and Total Access Communication Public Company Limited (Part 1/2) | https://investor.truecorp.co.th/newsroom/180320221906330294E.pdf

TRUE: Independent Financial Advisor’s Opinion (Kiatnakin Phatra Securities Public Company Limited) Report on the Amalgamation between True Corporation Public Company Limited and Total Access Communication Public Company Limited (Part 2/2) | https://investor.truecorp.co.th/newsroom/180320221907420927E.pdf

An update on the development of AIS this year was that Gulf Energy Development Plc., – Thailand’s biggest private power producer by market value – made a tender offer to purchase shares of Intouch Holdings, the parent of AIS, resulting in Gulf replacing Singapore’s Singtel, as the number one shareholder in Intouch.

Gulf, holds a 42.25% share in InTouch Holdings, which holds a 40% share in AIS.

Sarath Ratanavadi, chief executive and vice-chair of the Gulf Energy Development board, said short-term benefits from acquiring InTouch Holdings will be big data infrastructure and human resources in the information technology sector. The company wants to develop a digital power trade platform to enable power companies to directly sell electricity to end users.

The deal would enable Gulf to diversify its portfolio with current business and future opportunities, such as smart grids, smart energy, smart ports, and electric vehicles.

Singtel, Gulf Energy, and Advanced Info Services Public Company Limited (AIS) executed a Joint Development Agreement (JDA) to jointly develop and operate data centers on greenfield sites in Thailand in early February 2022.

“The inclusion of AIS in the partnership will help strengthen and accelerate plans to build Thailand’s leading data center business and capture the rapid growth in demand for digital infrastructure in Thailand from both local enterprises as well as hyperscalers,” the companies said.

According to an industry source who requested anonymity, Gulf is close to the government’s key figures as well as Digital Economy and Society (DES) Minister Chaiwut Thanakamanusorn, who once served as an executive at Gulf. The DES ministry oversees NT.

Besides the obvious impact from the high HHI, a TRUE/DTAC merger will also hit other sectors due to the interests of shareholders and subsidiaries of AIS, TRUE and DTAC.

With only two players in the market, the TRUE/DTAC merger will create two gatekeepers and a bottleneck controlling access and connections on digital transformation and the digital economy.

Somkiat Tangkitvanich, president of  Thailand Development & Research Institute said at an online seminar: “It is clear the merger yields no merits. It should be suspended or the country’s transition towards a digital economy would be hampered at every step. Business sectors and tech developers relying on internet infrastructure will face rising costs caused by a limited market. Thailand would be unable to compete in the digital economy.”

Figure 17: TRUE/DTAC merger and AIS = Gatekeepers of Thailand 4.0 and Digital Transformation.

All the mobile data created and flowing in the market from end-users and various enterprises will have to pass though those two gatekeepers.

AIS and TRUE/DTAC, both have shareholders and subsidiaries in various verticals. i.e. Agriculture, Logistics, Financial services, Retail, Energy, Manufacturing, etc.

This causes a concern not only from end-users but more so from other companies, competing in the same space as the shareholders and subsidiaries of the two gatekeepers. It also causes a risk for investment into the government’s flagship project – Eastern Economic Corridor (EEC).

AIS has around 400 employees in the data field. 300 are engage in mobile and fixed broadband, the rest in new services and innovation through cooperation with partners. AIS said more data scientists and data analytics experts are needed.

Figure 18: All mobile data will pass through TRUE/DTAC and AIS = Potential Competitors.

Another problem with the TRUE/(DTAC merger and the resulting lack of competition and “choice” between only two operators, is that this quickly adds fuel to the political and social divide, in a country that is already split.

With less competition from fewer players in telecommunication, consumers will be left with more expensive services and products, higher bills and less network quality due to the lack of competition.

SMEs will find it difficult to get the attention of the two mobile operators, as they would be concentrating on the larger enterprise clients first (only).

Consumers and SMEs will be the main losers in a TRUE/DTAC merger, resulting in a slow uptake of Thailand 4.0 which means the country will have to keep an expensive dual system in place (Online and Paper version) to make sure everyone can be served, pay tax and fees.

84% disagree with the merger

Between January 5 and 13, 2022 – Super Pol Research Center (Super Poll), conducted a survey on 1,331 respondents regarding the TRUE/DTAC merger.

The result revealed that 83.9% of the respondents disagreed with the merger, fearing it would create a monopoly, resulting in expensive service fees and fewer choices.

When asked about the future impact of a TRUE/DTAC merger;

• 51.3% said consumers would have no choice.
• 49.8% said there would be no competition
• 49.2% believed service prices would rise.

As part of the merger between CAT Telecom and TOT, into National Telecom (NT), there was a range of work duplication and people drawn into the same business units. The new organizational structure will be scrutinized, and some units may be made redundant.

The present structure has 20 Senior Executive Vice Presidents (SEVPs) and 34 Executive Vice Presidents (EVPs). The merged staff consist of 17.000 (12.000 employees from TOT and 5.000 from CAT Telecom) many of whom lack actual retail experience in the Thai telecom service market.

The ministry does not have a target number of employees for NT, but the early retirement program needs to be rolled out this year said the former minister of Digital Economy and Society (DES), Buddhipongse Punnakanta back in January 2021.

DTAC has laid off staff over the last couple of years as part of Telenor’s optimization of its operations and with the TRUE/DTAC merger it is expected more will follow due to duplication.

Hence 2022 could see massive layoffs in the sector and not only that but as the layoffs are coming at the same time, it will be even more difficult for the laid of employees to find new work. It is also worth noticing that a range of employees at TRUE has been working at DTAC before and vice versa.

The differences between the two companies when it comes to procurement processes, decision-making and management culture could cause some operation issues in the TRUE/DTAC merger. In that regard it is worth noticing that TRUE’s growth in customer acquisition which eventually lead to TRUE taking over the second spot from DTAC, happened after China Mobile International got involved in TRUE.

The TRUE/DTAC merger is expected to slash 25% of the total staff (around 1.800) and it is expected most of these will be on DTAC’s side.

Figure 19: Massive layoffs expected in the Thai telecom sector from the NT merger and a TRUE/DTAC merger.

Other services that will be impacted by a TRUE/DTAC merger include but are not limited to:

• Internet Service Providers: TrueOnline + Fixed Wireless Access from both DTAC and TRUE.
• The wholesale and retail sector: The merger will add DTAC’s trade and retail shops, halls and centers nationwide to CP Group’s existing monopoly in Thailand’s wholesale and retail sector.
• Distribution channels: CP Group’s distribution (7-eleven, Lotus’s, Makro, etc.), DTAC and Benchachinda Group’s distribution.
• Payment and wallets: 7-Eleven payment counter, TRUE Money, Benchachinda Group’s “U Top Up” – a prepaid system for mobile services, internet, and online games.
• Device sales: The TRUE/DTAC merger will create a unit with large control in device sale on contracts.
• International Roaming: Both TRUE and DTAC offer international roaming services to mobile network operators outside of Thailand. DTAC is part of Telenor and this group has subsidiaries that operate as mobile operators in several other countries: Norway, Denmark, Sweden, Finland, Hungary, Bangladesh, Pakistan, Malaysia and Myanmar. Likewise, China Mobile International is part of TRUE and has operations in several countries. Hence, the international roaming will therefore also be affected by the merger.

The TRUE/DTAC merger will also cause a merge of mobile spectrum in Thailand with TRUE merging its 990 MHz bandwidth with DTAC’s 270 MHz, conflicting with the spectrum caps set by the NBTC.

A spectrum cap was already added at Thailand’s first spectrum auction in 2013 for the auction of spectrum on the 2100 MHz range. NBTC added a spectrum cap of 2×15 MHz with the aim “to prevent the bidders with excessive financial power to take advantage, to lessen the potential of strong market concentration, as well as prevent spectrum hoarding”.

At the so-called “5G auction” in 2020, the spectrum caps was as follows:

• 700 MHz range: Spectrum cap set at 2×15 MHz
• 1800 MHz range: Spectrum cap set at 2×20 MHz
• 2600 MHz range: Spectrum cap set at 100 MHz
• 26 GHz range: Spectrum cap set at 1200 MHz

Figure 20: Thailand: Mobile Network Operator Spectrum 2021 – Before a TRUE/DTAC merger.

Figure 21: Thailand: Mobile Network Operator Spectrum after a TRUE/DTAC merger.

In 2019, Thailand’s big three mobile network operators was granted a reprieve when the military junta led by Gen. Prayuth Chan-ocha, (PM in Thailand today) extended their 900 MHz licensing payments by adding another five-year instalment period and an interest rate of only 1.5% payable to the state for the extension period.

Figure 22: Original spectrum payment terms.

Figure 23: New spectrum payment terms from the Military Junta.

In exchange, those accepting the offer had to participate in the planned 700MHz license auction to speed up the introduction of 5G. All three accepted!

The controversial extension meant that around THB 19 billion – supposed to benefit the public went to the benefits of the three telecom operators.

On the same day DTAC’s CEO, Sharad Mehrotra meet with the NBTC management and some board members discussing the prospect of a TRUE/DTAC merger, someone else felt the need to give their view on the matter when Thailand’s Digital Economy and Society (DES) Minister Chaiwut Thanakamanusorn, said that he believed a merger between major mobile operators is “normal” and dismissed speculation that it would result in a monopoly.

During a press interview, the minister said the merger was normal and there were several operators in this business. Investment amounts were high and concessions for use of frequencies must be sought. In some countries, there was only one operator, he said.

Looking at the APAC region those countries with only one operator would be North Korea and the Island states: Cook Islands, Marshall Islands, Micronesia, Nauru, New Caledonia, Niue, Norfolk Island, Palau and Tuvalu. All smaller markets compared to Thailand.

It is not known if the minister’s statement was his personal opinion or a signal that the government agrees with the TRUE/DTAC merger? Either way, it raised some eyebrows and further questions.

When asked how the National Telecom (NT) – the merger between the two state telecom enterprises TOT and CAT Telecom (merged January 2021) – could compete after a TRUE/DTAC merger, the minister said NT had its own business and sources of revenue, and the TRUE/DTAC merger would have no impact on the enterprise.

The Digital Economy and Society (DES) Ministry, is the owner of National Telecom (NT) – and the very same NT, that is also the fourth largest shareholder in DTAC with 5.69% of the shares.

Not only that, NT’s survival depends on the network wholesale rental agreements they have with all three private operators; AIS, TRUE and DTAC.

Just seven days after the above statement from the minister, a source at NT said the possible network partnership deals between NT, AIS and TRUE was scrapped, following the changing competition landscape in the telecom sector by the planned TRUE/DTAC merger, as TRUE would acquire much more spectrum capacity from the merger with DTAC.

At the same time, NT’s board and management was said to discussing possible ways to return the 700 MHz slot it won during the 2020 auctions but haven’t utilized yet.

AIS in talks with National Telecom for partnership deal on NT’s 700 MHz

On January 10, 2022, The acting president of National Telecom (NT), Group Captain Somsak Khaosuwan revealed that Advanced Info Service (AIS) and NT are in talks on a new network partnership deal, where AIS would purchase 10 MHz bandwidth of NT’s 700 MHz spectrum.

NT still hasn’t found a way to utilize the 20 MHz slot they (CAT Telecom) won on the 700 MHz spectrum range during the auction in 2020.

Three options were raised earlier by NT to deal with the spectrum range:

• Launch and operate its own retail service under the NT Mobile brand
• Sell spectrum capacity to partners
• Return the spectrum and license.

Another 10 MHz of bandwidth held by NT is targeted to be jointly developed by AIS and NT “for mutual benefits of both companies”. The deal is, according to NT’s acting president, expected to be concluded by February 2022.

NT (TOT) also won 200 MHz of bandwidth on the 26 GHz spectrum range at the same auction.

Group Captain Somsak Khaosuwan added that NT had also opened the door for talks with TRUE, for mutually beneficial cooperation.

“For the benefit of the country, people and economy”

The option for such deals comes – very conveniently – on the back of amendments, added to the National Broadcasting and Telecommunications Commission Act, in late 2021.

A royal decree that ”supports convergence of technologies for the benefit of the country,” was formulated based on Section 30 of the amended National Broadcasting and Telecommunications Commission (NBTC) Act.

NBTC received recommendations from the House of Representatives and the Senate to add the definition of “technology convergence” stipulated in the legislation as the infusion of technologies for the benefit of the country, people and economy.

Along with it, the NBTC also drafted four new regulations:

• Criteria for spectrum license transfer,
• Criteria for allocating spectrum ranges other than from auctions,
• Criteria for applying for business licenses,
• An amendment to the Spectrum Management Master Plan.

Although it was said that the amendments was meant to benefit the tech and innovation ecosystem, it is also very helpful, as a life support for a state enterprise in coma and it will probably also become convenient for the merger of TRUE and DTAC, with spectrum and licenses.

A network access deal between CAT/TrueMove, sees TRUE pay a rental fee of THB 4.1 billion to CAT for the use of CAT’s 850MHz capacity and a barter deal (valued at THB 5.2 billion) giving CAT access to some of TRUE’s 4G network on 1800/2100MHz. The deal runs until 2026. TRUE anticipate it will be able to negotiate a reduction on the THB 4.1 billion rental fee to CAT (now NT) by a third.

Figure 24: TRUE and National Telecom (CAT Telecom) 850 MHz “MVNO” setup.

TOT selected DTAC, as its partner to deploy 4G LTE using the 64MHz TOT was given by NBTC on the 2300MHz band.

The setup is a copy of the TRUE/CAT 850MHz setup, and involves DTAC’s subsidiary purchasing 60% of TOT’s capacity for a fixed annual payment of THB 4.5 billion. The deal runs until year 2025.

Figure 25: DTAC and National Telecom (TOT) 2300 MHz “MVNO” setup.

In September 2016, TOT and AWN, a subsidiary of AIS, signed a 6 month trial contract where AWN would roam on TOT’s 2100MHz.

A permanent deal was later agreed where AWN added 11,000 base stations to TOT’s existing 5,320 bringing the total to 16.320.

AWN can purchase up to 80% of TOT’s 2100MHz capacity on a wholesale basis, to serve its own subscribers, and pay TOT an annual fee of THB 3.9 billion.

Figure 26: AWN (AIS) and National Telecom (TOT) 2100 MHz “MVNO” setup.

NT is the only operator hosting MVNOs in Thailand. Neither AIS, TRUE or DTAC has hosted any MVNOs on their networks since the introduction of MVNOs in Thailand (2009), despite the NBTC notification, as well as the terms and conditions in the operators licenses since 2013, stating that minimum 10% of their spectrum capacity has to go to MVNOs.

Figure 27: The MVNO wall in Thailand.

With the merger of TOT and CAT Telecom in January 2021, the option for MVNOs to gain network access and negotiate wholesale pricing, went from two to one. The merger of CAT Telecom and TOT in 2021 created a monopoly on wholesale to MVNOs

Figure 28: With the TOT/CAT merger in to NT, the MVNO host operator options in Thailand shrank to one.

The wholesale network rental/barter agreements NT has today with AIS, TRUE and DTAC, places the three, not only in control of NT’s network but also the wholesale pricing NT can offer to MVNOs, bordering anti-competitive behavior by controlling, preventing, restricting or distorting anything that could become competition from the MVNO side.

When NT wants to wholesale to a MVNO on 2100MHz, their wholesale price depend on how much NT has to pay AIS in wholesale. Same on the 2300MHz, where NT are dependent on the wholesale price DTAC demands NT to pay before NT can wholesale/resell it to MVNOs.

Doing so, AIS, TRUE and DTAC are able to control, who can enter the market and not via NT – by setting the price to NT so high, that there isn’t a margin left for the MVNO to run a sustainable business. Furthermore, as anyone who can calculate can see, is that the end-price the MVNA or MVNOs can provide to their end-users or enterprise clients can’t be competitive in the market. MVNOs buy in wholesale and sell in retail, their business depends on the margin they can make between the two, by strongly maintaining a low operation cost.

NT’s price and access to MVNOs depend on AIS, TRUE and DTAC. In order for those Big 3 to give NT a price for MVNOs, they need information on the MVNO and what they are trying to achieve – thereby gaining information on any possible competition that could enter the market.

With a merger, MVNOs will find it even more difficult to enter the market, given the reduction in the number of potential hosts operator partners and the decreased bargaining power of MVNOs in the negotiating process, as another consequence. This applies both to prospective MVNO entrants and to the existing MVNOs, once they need to renegotiate their wholesale agreement – or to switch host operator.

For MVNOs, the lack of network access at the mobile operator and the lack of a suitable wholesale pricing regulation, are two of the key obstacles for the successful launch and operations of MVNOs in Thailand.

As the Full MVNO type isn’t allowed in Thailand and there are no Mobile Virtual Network Aggregator (MVNA) and Mobile Virtual Network Enabler (MVNE) partners attached to any of the mobile network operators today, the MVNOs aren’t able to run their own business. MVNOs in Thailand today are not even able to monitor and analyze their own generated data to see what part of their business and service is working or not.

The availability of a MVNA/MVNE at the mobile operators in Thailand would not only lower the upfront capital cost for MVNOs by taking advantage of economies of scale but also provide them with the necessary platform to launch, operate and optimize their business – which any other businesses in Thailand are able to do.

It would encourage the 67+ businesses, who have already applied, approved and paid for a MVNO license in Thailand (but haven’t launched) – as well as the potential local and international MVNO candidates, who so far have steered clear of investing in Thailand due to the issues mentioned. Where else in the world – or in which industry can you find so many companies having applied and adhered to a license without being able to actually launch it’s business afterwards?

It is highly questionable when TRUE and DTAC use the argument that they need to merge to be able to share costs due to rising investment and longer period of return of investment – when neither of them (AIS, TRUE or DTAC) have opened for MVNOs, who are ready to pay for 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, as it is the MVNOs who has the capital expenditures (CapEx) and operational expense (OpEx) on such.

Mobile network operators are lobbying for over-the-top (OTT) players to start paying the mobile network operators a fee for using their networks to support all the data that the end-users are using on these services. Ironically, MVNOs who are paying for such, who are licensed, who pay local tax as well as fees to the regulator and who are bound to – and adhere to local laws, regulation and culture – are not even welcomed at AIS, TRUE, DTAC – or correctly supported by the NBTC for that matter.

The rise of devices that needs connection and a tailored service and package with it. are in the millions if not billions. The mobile network operators cannot handle this by themselves. As seen in all other markets (1600 MVNOs in 86 countries), MVNOs are the perfect partner for such, as they are more agile and not stuck to “one size fits all” as the traditional operators.

The current MVNO setup (or lack off), in Thailand has limited innovation and competition in the market. The operators have built barriers to entry by not having any active MVNA/MVNE/MVNO on their networks, opposite our neighboring countries where MVNOs have accelerated in IoT/M2M, Ai ML, Blockchain, Fintech and new pricing and promotion packages to both end-users, enterprises and government projects.

When CAT Telecom (now part of the NT merger) and TrueMove renewed their network/barter agreement, it was added in the agreement that MVNOs would not be given access to TrueMove’s 4G, only CAT Telecom’s own retail service (MyCAT), thereby actively prohibiting MVNOs to use 4G on the network NT has access to on TrueMove then and today.

MVNOs in Thailand are not able to get access to – and offer 5G services in Thailand today/tomorrow. Thailand’s investment, support and effort to get 5G up and running successfully, is hampered by the lack of MVNOs being able to utilize it for the requested innovative services and support in getting various verticals and projects transformed into the digital economy. All the eggs have been placed in only three baskets of the gatekeepers (AIS, TRUE, DTAC).

National Telecom (NT) hasn’t been able to decide yet on a business plan and roll out its 5G network, almost two years after it won the spectrum at the auctions in 2020. Yet again, the only “solution” on the table thus far has been for NT to be dependent on AIS or TRUE controlling NT again.

Additionally, NT has to give back its existing 850MHz, 2100MHz and 2300MHz spectrum to NBTC, in about 2½ – 3 years from now. This, in addition with NT, not even having decided if it will keep and how to utilize the spectrum they won in 2020, or give it back – raises a serious question!

What will happen to MVNOs (IoT/M2M) in Thailand? Because why would any company consider investing into a MVNO/IoT/M2M/Private network with only a 2-3 years horizon on their business plan/break-even/return of investment?

These serious issues and anti-competitive behaviors towards MVNOs in Thailand are present – and will only become more severe with a merger. We know from other Mergers and Acquisitions (M&A), that the MVNA/MVNE/MVNO situation, in the given market play a major role in the market analytics for the approval/disapproval process, as well as possible remedies for an approval.

Approval of the TRUE DTAC merger or not – the above issues needs to be addressed and even more so when looking at MVNA/MVNE/MVNO remedies as part of a possible approval – because otherwise, such remedy, as it is today and the near future would not have any weight at all.

Generally the primary regulator in respect to merger control in Thailand is the Office of the Trade Competition Commission (OTCC). It has the authority to oversee and regulate M&A activities in generic industries that are not governed by specific regulations in Thailand.

M&A’s in certain sectors are regulated by specific regulators. In example, banking and financing businesses are regulated by the Bank of Thailand. Insurance is regulated by the Office of the Insurance Commission, while broadcasting and telecommunications is regulated by the National Broadcasting and Telecommunications Commission (NBTC), which applies to the TRUE/DTAC merger.

NBTC also has the legal duty to consider the merger deal under Section 60 of the 2017 Constitution:

Section 60. The State shall maintain the frequencies and the right to access a satellite orbit, which are national treasures, in order to utilise them for the benefit of the country and the people.

The arrangement for utilisation of the frequencies under paragraph one, regardless of whether it is for radio broadcasting, television broadcasting and telecommunications or for any other purposes, shall be for the greatest benefit of the people, security of the State, and public interest as well as the participation of the people in the utilisation of frequency, as provided by law.

The State shall establish a State organisation which is independent in performing duties to be responsible and supervise the undertakings in relation to frequencies to ensure compliance with paragraph two.

In this regard, such organisation shall ensure that there are measures to prevent against unfair consumer exploitation or imposition of unnecessary burden on consumers, to prevent the interference of frequencies, as well as to prevent an act which results in obstructing the liberty of the people to know or preventing the people from knowing true and accurate data or information, and to prevent any person or any group of person from utilising the frequencies without considering the 19 rights of general public. This shall include the prescription of a minimum proportion to be undertaken, for public interest, by a person utilising the frequencies as provided by law. 

Section 75 in the Constitution regarding State Policies, states that:  The State should organise an economic system which provides opportunities for the people to collectively benefit from the economic growth in a comprehensive, fair and sustainable manner and to be self-reliant in accordance with the philosophy of sufficiency economy, should eliminate unfair economic monopoly, and should develop economic competitiveness of the people and the country.

In addition, Section 274 stipulates that the NBTC has the direct responsibility for the operation of spectrum

Section 274. The National Broadcasting and Telecommunications Commission under the Act on the Organisation for Frequency Allocations and Regulation of Radio Broadcasting, Television Broadcasting and Telecommunications Businesses, B.E. 2553 (2010) shall be the organisation under section 60 paragraph three.

The NBTC implements two types of competition regulation – the ex-ante and ex-post regulation.

• Ex-post regulation is governed by the NTC “Competition Code”
• Ex-ante regulation, in 2014 the NBTC issued two key notifications.

The first is the NBTC Notification on Market Definition and Relevant Markets in Telecommunication B.E. 2557 (2014)

The second is the NBTC Notification on Criteria and Procedures for Identifying Operators with Significant Market Power in Telecommunications Business B.E. 2557 (2014).

According to these Notifications, the Office of the NBTC must prepare a report on analysis of the level of competition in the relevant markets and propose a list of operators with SMP in each relevant market for the NBTC’s consideration.

This will be used as a basis for outlining measures for the supervision of anti-competitive behaviors in telecommunications market in alignment with the above-mentioned Notification, and also for formulating a guideline to prevent the operators with SMP from abusing their market power to restrict or hinder free competition in the market.

The NBTC also issued the Notification Regarding Criteria and Procedure for Accounting Separation in Telecommunication Business, as a tool to support the implementation of measures for the prevention of monopoly of unfair competition in telecommunications business. Under the Notification, the operators with SMP are required to undertake accounting separation for the NBTC’s analysis.

In the Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010) Section 27 it states: The NBTC shall have the powers and duties as follows:

(11). To prescribe measure for the prevention of anti-competitive conduct or unfair competition in sound broadcasting, television broadcasting and telecommunications services.

Likewise, in the Telecommunications Business Act (“TBA”) B.E. 2544 (2001) – Section 21 it states:

In the telecommunications business operation, other than being subject to the law on trade competition, the Commission shall prescribe specific measure according to the characteristics of the telecommunications business operation to prevent the licensee from carrying out any act that is monopolistic, or that reduces or limits the competition in the provision of telecommunications service in the following matters:

(1) subsidization of services;

(2) holding in businesses of the same category of service;

(3) abuse of market power;

(4) anti-competition behavior;

(5) protection of small entrepreneurs.

In addition, at the 900MHz and 1800MHz spectrum auctions in 2015 and 2018, the licensing condition included the following:

Clause 11 “Competition Measures” states: The licensee shall not commit any act that leads to monopoly, or reduction, or restriction of competition in supplying the telecommunications service, either in the matters of cross-subsidization, cross-holding in the same category of service, abuse of dominant power, anticompetitive behavior, or protection of small-sized operators.

The licensee shall comply with the notification of the National Telecommunications Commission regarding measures preventing any act that leads to monopoly or unfairness in the competition of telecommunications business, and the related rules, regulations, notifications, orders, requirements or any other criteria prescribed by the Commission.

Although the NTC was replaced by the National Broadcasting and Telecommunications Commission (NBTC) and its board in late 2010, the regulations are now under the supervision of the NBTC. The NTC notifications below was also used by the NBTC on the applications for the 900MHZ and 1800MHz spectrum auctions 2015 and 2018.

There are three main sector-specific NTC notifications regarding merger control:

• The “Competition Code” – The NTC Notification on Measures to Prevent Monopolistic and Unfair Competition Practices in Telecommunications BE 2549 (2006)
• The “Market Definition Code” – The NTC Notification on Market Definition and Relevant Markets in Telecommunications BE 2551 (2008)
• The “Merger Code” – The NTC Notification on Merger and Crossholding Rules and Procedure BE 2553 (2010).

According to Clause 8 of the “Merger Code” – other than being subject to the law on trade competition, the licensee or the licensee’s controller shall be prohibited from undertaking a merger that would lead to relevant market domination.

Clause 9:  …In the case where the Commission considers that the merger will not cause relevant market domination, the Commission shall permit the merger. However, in the case where the Commission considers that the merger may result in relevant market domination, the Commission shall prohibit such merger unless for economic benefit or national security or investment promotion and innovation development in the telecommunications industry or for public interests, the Commission may permit the merger.

NBTC will use the Herfindahl–Hirschman Index (HHI) to identify the level of concentration in the market to indicate if a merger causes market dominance and hence will not be allowed pursuant to the Merger Code = If the pre-merger HHI is >1800 and the post-merger HHI will increased by more than 100 delta.

Other economic tools such as:

• Hypothetical Monopolist Test: Small Significant Non-transitory Increase in Price test (SSNIP test),
• Own-Price and Cross-Price Elasticity of Demand

Can also be used by the NBTC in defining the relevant market to determine whether a merger would prevent or restrict competition. All well-known measures and tools to determine and handle competition issues in a market.

After several delays during 2021, on picking seven new board members for the NBTC, the Senate finally approved five new members on December 21, 2021, but two are missing. One for the Media Fund and one for…Telecom.

The five new chosen board members had 15 days to step down from their existing positions (January 5, 2021). The six existing NBTC board members are not expected to make any policy decisions during this period, but stepping down, as soon as the new members have been royally endorsed.

On January 14, 2022, the Secretariat of the Senate invited the five, who have been approved by the Senate to become members of the National Broadcasting and Television Commission (NBTC) board, namely:

• Air Chief Marshal Thanapant Raicharoen, Broadcasting.
• Dr. Pirongrong Ramasoota, Television.
• Torpong Selanon, People’s liberty and rights.
• Dr. Suphat Suphachalasai, Economic field.
• Dr. Sarana Boonbaichaiyapruck, Consumer protection.

At their first meeting the group elected Dr. Sarana Boonbaichaiyapruck to be the new Chair of the NBTC.

Dr Sarana is a medical doctor who has close ties to Thailand’s Deputy Prime Minister, General Prawit Wongsuwan, as he takes care of Gen Prawit’s health and cardiac system. He is also a former member of the defunct military-installed National Legislative Assembly (NLA).

With five (out of seven) people approved, the new board was expected to receive royal endorsement in February 2022 and start working – ending months of delays and a decision-making vacuum at the watchdog. But February and March came and went with no endorsement.

Then, on April 14, 2022: The new NBTC board was (finally) officially appointed, effective from April 13, 2022.

At its first official meeting (April 27, 2022) of the new NBTC board with Dr. Sarana Boonbaichaiyapruck as Chair, the meeting approved appointments of sub-committees and guidelines regarding the merger between TRUE and DTAC.

1. Appoint sub-committees

It was agreed to appoint four sub-committees to study and analyze impact and matters in various fields regarding the merger, namely:

• A Legal sub-committee,
• A Economics sub-committee.
• A Consumer Protection & Civil Rights sub-committee,
• A Technology sub-committee.

2. Organize a Focus Group meeting/Public Hearing

In addition to appointing four sub-committees. The board also agreed to convene a Focus Group meeting/Public Hearing to exchange views from the business sector and related industries, academics and consumer groups and the general public.

3. Assign a Working Group

It was also agreed to setup a working group, at the office of the NBTC together with both local and international independent consultants to study the economical and social impacts.

The Public Hearing

NBTC has announced that the public hearing will take place on May 9, 2022, from 9:00 a.m. – 12:00 p.m. at the Office of the NBTC, where relevant business and industry groups, academics and members of the public can attend the hearing regarding the proposed TRUE DTAC merger.

Businesses and related industries can register and attend the event, as well as express their opinions at the Office of the NBTC.

The general public can watch and chat via NBTC’s Facebook Live and the NBTC’s website. After the hearing session, the NBTC office will remain open for comments from everyone via the email: merger@nbtc.go.th – The comments has to be submitted before 12 May 2022.

NBTC Sub-committees regarding the proposed TRUE DTAC merger

Members appointed to each of the four Sub-committees

Mandate of the Legal sub-committee:

1. to consider the law, powers and duties of the NBTC, in accordance with the laws, rules, regulations and notifications related to the proposed merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC) and other relevant laws;
2. to give recommendations on legal issues for the conclusion of the public hearing and the study report on related business;
3. to provide legal recommendations related to the supervision of the proposed merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC) by collecting data from the subcommittee to study and analyze the case of the proposed merger in various fields;

The Legal sub-committee has a term of 90 days from the date of the appointment order (Ordered on April 5, 2022)

Mandate of the Economic sub-committee:

1. to consider the economic impacts related to the proposed merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC);

The Economic sub-committee has a term of 90 days from the date of the appointment order (Ordered on April 29, 2022)

Mandate of the Consumer Protection & Civil Rights sub-committee:

1. to consider the impact on consumers and civil rights in the case of the proposed merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC);
2. to consider the results of the public hearing and study reports about the various businesses involved;
3. to propose opinions and guidelines for the supervision of the NBTC to protect consumers and appropriate civil rights arising from a merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC);

The Consumer Protection & Civil Rights sub-committee has a term of 90 days from the date of the appointment order (Ordered on April 29, 2022)

Mandate of the Technology sub-committee:

1. to consider the impact on technology related to the proposed merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC);
2. to consider the results of a public hearing and study reports concerning the merger of related businesses;
3. to propose opinions and guidelines for the supervision of the NBTC on technology issues in the case of a merger between True Corporation Public Company Limited (TRUE) and Total Access Communication Public Company Limited (DTAC);

The Technology sub-committee has a term of 90 days from the date of the appointment order (Ordered on April 24, 2022)

In addition all four sub-committees will have the mandate:

• to summon officials or employees of the NBTC, as well as related persons to provide information or clarification, as it deems appropriate;
• to report on the performance of duties to the NBTC, in accordance with NBTC’s Regulation on Appointment Duties of Sub-Committees;
• to perform any other duties as prescribed by the NBTC.

The merger between TRUE and DTAC will be a test for both the telecom regulator (NBTC), as well as the competition watchdog (TCC), to see if the truly have the duties and power as regulators – or if they are merely facades.

Expectations are not high. CP and a few other big conglomerates in Thailand have long enjoyed market power, in a regime that many perceive to be friendly towards the big family companies.

The NBTC which is supposed to have stepped in already, claims that the merger is not at a stage yet, where it can get involved, making it unable to do anything, other than wait for information from the merger companies. Even if the NBTC considers that the merger will affect competition or create a monopoly, it says it has no power to intervene.

It is however clearly stated – as described in the section “Merger Regulation” above – that the NBTC has the duty and the power to prescribe measures to prevent any monopoly or unfair competition in the broadcasting and telecommunications business sector.

Meanwhile, the Office of the Trade Competition Commission (OTCC), is hiding behind the skirt of NBTC, saying it does not apply to the actions of businesses that have specific laws governing competition.

The NBTC has the duty and power to issue measures immediately – without having to wait for the merger companies’ report to arrive 30 days before the merger, and this is important to prevent certain coordination between TRUE and DTAC before the merger, also known as “Gun Jumping”.

The term “Gun Jumping” refers to when merging parties fail to notify a merger to the competition authority, implement all or parts of the merger during mandatory waiting periods or co-ordinate their competitive behavior before closing.

A variety of actions that merging parties might enter into, prior to the closing of merger, includes coordination on prices or terms to be offered to customers, products and service, distribution or employees. Merging parties must remain competitors until the merger has been completed, and may not lessen competition between them to facilitate a merger that has not been completed.

At a press conference in Bangkok (June 30, 2022) Telenor CEO, Sigve Brekke revealed that it had spent a considerable amount of time with the leaders of CP Group before announcing the planned merger publicly in November 2021.

The TRUE DTAC merger is both under the NBTC and the OTCC

Although the OTCC says, it does not apply to industries where merger control is already regulated by specific legislation (i.e. the NBTC), Asst. Prof. Dr. Kamonwan Jirawisit, lecturer at the Center for Commercial and Business Law at Thammasat University, said during an online seminar on the merger, that in considering the approval of the TRUE DTAC merger, it will be the under both the NBTC and the OTCC to consider whether such would be allowed.

Although the Trade Competition Act (“TCA”) BE 2560 (2017), states that this law does not apply to businesses that have specific legislation (i.e.: Banks, Insurance and Telecom), the Telecommunications Business Act (“TBA”) B.E. 2544 (2001) – Section 21 states: “In the telecommunications business operation, other than being subject to the law on trade competition…”.

“If you look at it (merger of TRUE with DTAC), it will be under both acts, because the specific legislation (The Telecommunications Business Act) points back to the law on trade competition,” Asst. Prof. Dr. Kamolwan said.

The chair of the OTCC, Sakon Varunyuwatana, has told local media earlier “What we need to do is to keep a close watch on the function of the NBTC and details of the deal.”

When the OTCC gave the controversial approval of CP Group’s (owner of TRUE Corp) acquisition of the Thai retail business of UK retailer Tesco in Thailand in 2020 – it came with conditions.

One of those conditions was a ban on CP Group entering any other trade retail mergers (excl. e-commerce) for three years. (Until November 2023)

However, the TRUE (CP Group) / DTAC merger will include DTAC’s trade and retail shops, halls and centers nationwide. Both TRUE and DTAC even mention this in their Information Memorandum regarding the merger:

4.3 (C) – The Amalgamation will allow the Company and True to utilize consolidated infrastructure resources such as physical outlets and service centers around the country…

The main legislation currently governing merger control in Thailand is the Trade Competition Act (TCA) BE 2560 (2017). Any merger that meets the requirements under the TCA and the relevant subordinate regulations issued thereunder is subject to the merger clearance process as stipulated under the TCA.

The TCA divides regulated mergers into two categories:

• Pre-merger filing: those that require approval from the Trade Competition Commission; and
• Post-merger notification: those that only require notification to the TCC.

Pre-merger filing will be required if the merger may result in the creation of a monopoly or a business operator with a dominant market position. If the merger may substantially lessen competition, the merging entity must notify the TCC within seven days after the completion of the merger.

A monopoly situation is where there is only one business operator with absolute power over the determination of the price and supply of its products or services and the business operator has a sales turnover of at least THB 1 billion per year.

A business operator having “dominant market power”, is defined as:

One business operator having a market share of 50% or more and a sales turnover of at least THB 1 billion per year; or any top three business operators together having an aggregate market share of 75% and a sales turnover of at least THB 1 billion a year each.

For a pre-merger filing, a merger transaction cannot be completed until approval from the TCC has been obtained, and the TCC has 90 days (+ a possible extension of 15 days) from the date of submission to issuing its decision.

Failure to seek approval from the TCC for the merger is an offence for which an administrative fine not exceeding 0.5% of the total value of the merger transaction can be imposed, in addition to potential liability to a civil penalty claim from any person who suffers damage from the violation. The TCC also possesses the power to suspend, stop, correct or change completed mergers that did not seek its pre-approval.

Post-merger notification is required for any merger transaction where the sales turnover of any one business operator, or of all business operators conducting a merger, amounts to THB 1 billion or more per year and that does not cause a monopoly or result in a operator having dominant market power.

The merging parties must notify the TCC within seven days after the transaction has been completed. Failure to notify the TCC of the merger is an offence for which an administrative fine of up to THB 200.000 and a daily fine throughout the period of violation of up to THB 10.000 per day can be imposed.

Thailand Consumers Council (TCC) has already expressed its opposition to the planned TRUE/DTAC merger, saying the move would reduce service choices for consumers, lower competition and foster market dominance.

The Secretary-General of TCC, Saree Ongsomwang said “The deal would leave people with little choice or even no choice to select services in the future.“

On Monday 15 February 2022, Thailand’s Consumers Council (TCC), delivered a letter to the NBTC, calling for a delay in the decision on the merger, pending the appointment of the new NBTC board.

In an open letter to the National Broadcasting and Telecommunications Commission (NBTC), TCC expressed its opposition to the merger.

Signed by TCC telecom subcommittee chair, Supinya Klangnarong (herself a former NBTC Commissioner), the letter called reminded the NBTC, that it had once pledged to prevent monopoly or any action that would lead to unfair market practices.

Speaking to reporters, Supinya said the NBTC has the authority to prevent monopoly or unfair market practices, so it should carry out its duties as the regulator, not just a registrar of the merger.

“The Thai telecom market is an oligopoly and hasn’t reached a free-market state yet. The TRUE/DTAC merger would create a duopoly and there could be collusion to create a monopoly, compromising the interests of consumers,” said Supinya Klangnarong.

TCC hosted an online seminar on the 18 February 2022, where the panel shared their views on the TRUE/DTAC merger and the role of the board of the National Broadcasting and Telecommunications Commission (NBTC).

The panel participants were:

• Saree Ongsomwang, Secretary-General of TCC,
• Dr. Somkiat Tangkitvanich, President of TDRI,
• Dr. Prawit Leesathaphonwongsa, NBTC Commissioner.
• Sarinee Achavanuntakul, independent economics scholar,
• Asst. Prof. Dr. Kamonwan Jirawisit, Lecturer at the Center for Commercial and Business Law.

The online seminar was moderated by TCC’s Telecom subcommittee chair and former NBTC Commissioner, Supinya Klangnarong. The recording of the online seminar is available here on TCC’s Facebook page.

Responsibilities of the SEC, is to approve the issuance of securities for sale to the public, oversee listed companies’ conduct and disclosure of information to ensure the complete and timely compliance with governing regulations for the purpose of protecting the interest of investors and supervise transactions that have a material impact on shareholders.

Thailand Consumers Council (TCC) will submit a petition to the NBTC, the Trade Competition Commission and the Securities and Exchange Commission, urging them to obstruct the deal process and set out a clear resolution to handle possible market dominance and consumer protection. “State agencies involved should play a role in promoting a competitive ecosystem with an increase in the number of players to boost free and fair competition.” said the TCC.

“If the agencies can do nothing to govern the TRUE/DTAC merger deal or issue a resolution with proper measures, Thailand Consumers Council (TCC) will petition the cabinet to intervene in the process,” TCC secretary-general told Bangkok Post.

Thailand’s entrepreneur-turned-MP, Pakornwut Udompipatskul, said during a session in the House of Representatives, on the 26 November: “If left unchanged, this can be interpreted, as – no government agency in Thailand has the power to suspend mergers and acquisitions that could potentially dominate a market – thereby creating a legal vacuum which can be exploited by other mergers.”

However, neither the government nor the administration can deny responsibility, because under Section 5, of the Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010), the Prime Minister shall have charge and control of the execution of this Act.

And under Section 6, of the Trade Competition Act B.E. 2560 (2017), the Minister of Commerce shall have charge and control of the execution of this Act and shall have the power to issue Ministerial Regulations.

The question is, if the ministers will contact the agencies to let them know of their duty and responsibilities in examining and approve/disapprove, the merger and/or measures? Or just kick the can down the road, let the merger happen without any review or impact assessment and see what happens?

On December 23, 2021, MPs from seven political parties requested the House of Representatives to set up an Extraordinary Committee to study and consider the impact of the TRUE DTAC merger deal on retail and wholesale – and on December 27, 2021, the establishment of the Extraordinary Committee was agreed in the House of Representatives.

The committee will have 90 days to conclude its study. (March/April 2022).

The list of committee members includes:

• Group Captain, Anudith Nakornthap, (Pheu Thai Party), former Minister of Information and Communication Technology (ICT Minister), in the Yingluck Shinawatra cabinet.
• Colonel Dr. Setaphong Malisuwan, (Pride Thai Party), the former vice chair of the NBTC and former chair of the Telecommunications Commission (TC). Col. Setaphong used to act as the secretary-general of General Montri Sangkhasub, when the latter was the chair of CAT Telecom.
• Mr. Pichai Naripthaphan (Pheu Thai Party), former Minister of Energy in Yingluck Shinawatra’s cabinet, former Deputy Minister of Finance in Samak Sundaravej’s cabinet.
• Mr. Kiat Sitthimamon (Democrat Party), former President of Thailand’s Trade Representative. Former Director of International Chamber of Commerce (ICC). Former Director of the Thai Chamber of Commerce and former Deputy Secretary General of the Board of Trade.
• Pol. Col. Suchart Wongananchai former member and chair of TOT’s Board of Directors.
• Prof.Dr.Kanok Wongtrangan (Democrat Party), former advisor to ex-PM Abhisit Vejjajiva.
• Dr. Kittisak Kanasawad (Pheu Thai Party)
• Mr. Pichet Satirachawan, (Prachatham Thai Party)
• Ms. Padah Worakanon (Palang Pracharath)
• Mr. Manoon Sivapiromrat (New Economics Party)
• Mr. Yuthaphong Jaratsathien (Pheu Thai Party)
• Dr. Rawee Maschamadol (New Palang Dharma)
• Mr. Sathit Wongnongtoey (Democrat Party
• Mr. Sutin Klangsaeng (Pheu Thai Party)

In a statement to Voice TV on February 2nd 2022, Pichai Naripthaphan, Vice President and Economic Strategist of the Pheu Thai party said that during the third meeting, between the Secretary-General of the NBTC and the House of Representatives Extraordinary Committee – that according to the NBTC, the issue was not whether the merger could be allowed or not, which Pichai saw as surprising, because the only agency that controls this aspect is the NBTC itself, he said.

He views that the NBTC’s attitude appears to be intended to lead to a merger. But whichever perspective he is looking at, he sees it as a problem. and strongly oppose this merger because it will cause damage to the people.

In addition, Pichai also speculated – based on the inside information he said he had – that the Prime Minister, Gen. Prayut Chan-o-cha is trying to hold back the appointment of the new NBTC board, because he fears that the new NBTC board members will not agree with the merger.

“This should be left to the NBTC, in order to create transparency. The old NBTC board is like it’s under the influence of Gen. Prayut,” Mr. Pichai said. He will invite the people to keep an eye on this matter and ask the Prime Minister to accelerate the endorsement of the new NBTC board, to consider this case ASAP.

You can see Mr. Pichai Naripthaphan video statement on the merger from Voice TV, February 2, 2022, on YouTube (Thai language)

At an online seminar about the merger, hosted by Thailand Consumers’ Council on the 18 February 2022,  NBTC board member, Dr Prawit Leesathapornwongsa, told the panel that the House committee and the NBTC regularly holds talks, and the committee agreed state authorities have the power to govern the merger deal.

On March 1st, 2022 – in an online interview with the English language newspaper The Nation – the deputy leader of the Move Forward party and member of the ad hoc committee studying the impact of the TRUE-DTAC merger deal, Sirikanya Tansakul, said:

Now the option is boiled down into one, that we can try to revoke this deal by filing a lawsuit to the Administrative Court, in order to ask them, to put it into a stall for a little while, to get the consumers protected.

We have this consumer protection council [Consumers Council] which is a brand new organization that should be there to protect the consumers benefits – and I think we can do some work with them in order to work around this deal – in order not happen.

I think the best case, should be the Notification from the NBTC should be amended and getting back the [merger] approval system. But if it is not there – or if it is to late now, then we only have the Administrative Court to end this deal. So this it what we plan to do, if the deal is true, we will go to the Administrative Court.

The extraordinary House committee said is expected to issue the final draft of its study by the end of April 2022. The study considers the positive and negative implications of the merger, the prospect of service quality and pricing after the merger, regulatory elements, best practices from overseas and suggestions.

The conclusion is then scheduled to be forwarded to the Parliament and the Cabinet for further consideration.

Chair of the committee, Group Captain Anudith Nakornthap said the committee is aware of regulatory loopholes in governing the merger. The committee has yet to determine whether it would suggest amendments to some regulations to facilitate governing the merger deal.

As the NBTC can prescribe measures to govern the merger, decisions about the measures by the regulator’s office and board will be vital to protect the public interest, said Anudith Nakornthap.

Group Captain Anudith’s fellow party member in the Pheu Thai party, Mr. Saran Timsuwan was more direct it his statement in local news.

He called on the Prime Minister, General Prayut Chan-o-cha to study the matter thoroughly and not let personal relationships affect the interests of the nation and its people. He added that all kinds of monopoly must be prevented and eliminated in order not to take advantage of the people, and to allow small businesses to develop and grow in the future.

UPDATE (July 6, 2022) The delay by the NBTC in considering the merger deal between TRUE and DTAC would be a dereliction of duty, the House of Representatives’ consumer protection commission said at a meeting today (July 6, 2022)

Commission adviser Kanapol Tuisuwan also pointed out that the merger deal would lead to market domination, adding that the government will lose benefits i.e. during the new round of auctioning concession spectrum.

However, an NBTC representative stated that the watchdog has the authority to prevent market domination by an entity.

The NBTC representative also asked for more time to consider the merger deal, but the consumer protection commission noted that a delay by the NBTC would be a dereliction of duty, as there has been no answer to the public so far.

Meanwhile, a representative from National Telecom (NT) said the merger deal would force small telecom operators and mobile virtual network operators (MVNO) to close their business. Adding that service fee would increase and there would be no need to launch promotional campaigns.

The TRUE/DTAC merger will take a toll on a broad range of parties; consumers, shops, taxpayers, startups and the government. “If the agencies and government still fails to act, consumers might have to come out as a political force against the market dominance,” said the president of Thailand Development Research Institute (TDRI), Somkiat Tangkitvanich. “Consumers may risk an uptick in service charges or be forced to take bundled packages they do not want.”

Unfortunately, consumers and consumer interests still lack power in Thailand, especially compared to the Big 3 and their economic resources, as well as being major donors to political parties.

On January 28, 2021, an online signature petition “Antitrust Campaign on the Merger between TRUE and DTAC,” was setup on Change.org by a member of the public.

The campaign, launched by a ”KHUN KUNA”, urged Thailand’s national telecom regulator (NBTC), The National Anti-Corruption Commission (NACC) and the Office of the Trade Competition Commission (OTCC) to; “do their duty and investigate the merger deal between TRUE and DTAC, as it constitutes a monopoly in the market, is against the law and creates unfair competition,” it said.

Thailand’s biggest complaints-maker, activist Srisuwan Janya – who is notoriously known for lodging over 1,000 official complaints ranging from high profile political cases, consumer protection, corruption and environmental cases – visited the NBTC on the 28 March, 2022 to file a petition, where he urged the NBTC to use it powers and duties to suspend, deter and prevent the TRUE-DTAC merger as well as prevent monopolies in telecommunication businesses.

He views that the merger of TRUE and DTAC will create a monopoly and affect the competition in the mobile service business. In addition to having an impact on finance and investment, It will also have a huge impact on consumers and businesses using telecommunication services. including the business of suppliers retailer-wholesale of mobile phones and devices as well as services that rely on the network of telecommunication infrastructure.

He said the Telecommunications Business Act 2544 (2001) Section 21 – required the NBTC to determine specific measures in accordance with the nature of the telecommunications business. Accordingly, the licensee is prohibited from doing any act that monopolizes or reduces or restricts competition in the provision of telecommunications services, use of unfair marketing power or anti-competitive behavior.

In addition the “Competition Code”  – NTC Notification on Measures to Prevent Monopolistic and Unfair Competition Practices in Telecommunications BE 2549 (2006) – Clause 8, states that in the event that the NBTC considers that a business may monopolize or reduce or limit competition in telecommunications services, the NBTC may order a ban on or impose specific measures under Chapter 4 to prevent or suspend acts or behaviors that monopolize or reduce or limit competition in the provision of telecommunications services.

Mr. Srisuwan also revealed that if the NBTC does not expedite the case within 30 days, he will immediately bring the matter to the Administrative Court.

It is not the first merger between network operators and it wont be the last we have seen.

Mergers have increased in the sector and we have seen a fair share recently in the US and especially in the European markets.

In the following we take a quick look into some of the mergers in Europe and what regulations and remedies that was used to approve these. All four cases are mergers where the markets would go from four mobile operators to three.

Divest Spectrum

H3G commits to divest radio spectrum and additional rights to an interested new entrant in the Austrian mobile market.

Provide 30% capacity to MVNOs

H3G commits to provide, on agreed terms, wholesale access to its network for up to 30% of its capacity to up to 16 mobile virtual network operators (MVNOs) in the coming 10 years.

This will enable MVNOs to offer services to customers at competitive terms and conditions.

Up-front commitment with MVNO

An up-front commitment ensures that H3G will not complete the acquisition of Orange before it has entered into such a wholesale access agreement with one MVNO.

More information here and here

The Hutchison H3G and Orange Austria merger took place at the beginning of 2013. But the merger commitments (MVNO entries/access) became effective much later.

As it turned out, the remedies failed to attract new entrants in a “timely” and “effective” way. Cable TV provider UPC who had signed the upfront MVNO agreement entered the market almost two years later, in December 2014.

The Austrian Telecom Regulator RTR and the Austrian Competition Authority, examined the development of the market following the merger. Both studies reached the same conclusion that prices in the market was falling prior to the merger but increased soon after, in the order of 20% during the two years following the merger. The prices decreased again in 2015 when a number of MVNOs entered the market.

The Body of European Regulators for Electronic Communications (BEREC), who also examined the case – although over a longer period – confirmed the price increase during the first two years of the merger and that the negative effect of the merger became insignificant when MVNOs entered the market.

The fastest growing entrant, was Ventocom, a MVNO enabler (MVNE) and MVNO itself on the T-Mobile Austria network, rather than the on the H3G network.

As per 28 Jan 2020: Austria’s mobile market was dominated by the three operators

• 3 Austria
• Magenta Telekom (T-Mobile Austria)
• Telekom Austria’s unit A1

However, the market benefited from a growing number of new entrants in the MVNO sector, which collectively had about 7% of the subscriber market. The growth in the MVNO sector was partly due to regulatory remedies by which 3 Austria, as a condition of the merger with Orange Austria, was obliged to provide 30% of its network capacity to support up to 16 MVNOs.

The competitive environment has led to some of the region’s lowest tariffs for consumers.

As of 2021, with a combined share of almost 12%, MVNOs play a decisive role for stable competition in the mobile service market in Austria today.

Divest Spectrum

H3G committed to divest 5 blocks of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands. The spectrum will be available for ten years.

Provide 30% dedicated capacity to MVNOs

H3G commits to sell up to 30% of the merged network capacity to two MVNOs at fixed payments with an option for one of them to become a mobile network operator by acquiring spectrum at a later stage. The MVNO entrants will obtain a dedicated “pipe” from the merged entity’s network for voice and data traffic.

Improved network sharing with 3^rd MNO

H3G committed to offer Eircom (3rd and smallest operator in the market) to continue the network sharing agreement on improved terms. More information at EU here and here

Before the merger there were four MVNOs present in Ireland:

• Tesco Mobile – a Full MVNO, operating with O2 since 2007
• Postfone – a Thin MVNO, operating via Vodafone since 2010
• Lycamobile – a Full MVNO, operating via O2 since 2012
• Blueface – a Thin MVNO, operating via Three since 2012

Tesco Mobile was (is) a 50/50 joint venture between the retailer Tesco Ireland and O2, and as such, it would come under the control of the merger and thus not regarded as an independent MVNO.

Based on ComReg’s data, Tesco Mobile had a market share of 4% in terms of subscribers and 2% in revenue share. Lycamobile had a subscribers market share of 2.1%, while the other MVNOs jointly had a subscriber market share of 0.3%

As of Q3 2020, there were eight MVNOs in Ireland with a combined market share of 12.3%

Divest Spectrum

Telefónica committed to divest radio spectrum and certain assets either to a new MNO entrant or subsequently to the MVNO(s).

Provide 30% dedicated capacity to MVNOs

Telefónica commits to sell, before the acquisition is completed, up to 30% of the merged network capacity to one or several (up to three) MVNOs in Germany at fixed payments. The MVNO entrants will obtain a dedicated “pipe” from the merged entity’s network for voice and data traffic.

Extend existing MVNO agreements + 4G

Extend existing wholesale agreements with Telefónica’s and E-Plus MVNOs and Service Providers and offer 4G wholesale in the future.

Mere information at EU here

The European Commission had concerns that the merged entity would face insufficient competitive constraint from the only two remaining players. This could lead to higher prices, less innovation and lower quality. The merger would also lead to a reduction in the number of MNOs able to offer wholesale to MVNOs. Telenor and TeliaSonera announced the withdrawal of the proposed merger.

As can be seen in the cases above, most of them have a couple of remedies in common which are divestment of spectrum and the commitment to provide access to MVNOs. It is also worth noticing that in most of the cases, it was the merged network operators themselves proposing the dedicated capacity to MVNOs as remedy.ment/tariffs/margin.

According to the minutes of meeting from the NBTC’s committee meeting 1/2565, on January 12, 2022, NBTC board member Dr. Prawit Leesathapornwongsa, made the following remark regarding Agenda Item 4.20 : “Report on Business Integration and Telecommunication Market Conditions Q2 2021”

“NBTC Prawit made an observation on the report and market conditions regarding the issue of MVNOs having a very low market share. Therefore, I would like to ask the Office of the NBTC to analyze and synthesize the measures in order to keep the MVNOs alive and viable in the market, especially – if in the future, there will be a merger between the big players – it may be necessary to increase the base of smaller players or MVNOs to more.” wholesale agreement/tariffs/margin.

MVNOs are partners of the host mobile network operator – and as such they help the host, which is either the merged entity – or one of the other operators in the market – to gain more market share from the competition and/or pick up churners who would otherwise have gone to the competitors.

An example of an MVNO coalition in the Thai market – See also Figure 25: MVNO Coalition – The battle for market shares below and see also MVNO Benefits for MNO

In saturated markets, like the Thai market, organic growth is limited and competition becomes a quest for market share. This challenge leads MNOs to seek for MVNO partnerships to sustain the overall market growth.

In the two examples below we have used a conservative 5% market share, which 3-5 MVNOs in Thailand should be able to achieve over a relative short period, if the setup for MVNO is correct = a strong partnership with the host operator determining the targeted segments, supported by a MVNA/MVNE with knowledge of the local market and a workable wholesale agreement/tariffs/margin.

Figure 29: MVNO Coalition – The battle for market shares.

The Malaysian telecoms firm Axiata Group Bhd and Norway’s Telenor ASA, announced that proposed merger of Celcom Axiata and Digi Telecommunications on April 8, 2021 – for the second time after the first attempt in September 2019 had failed due to disagreement.

On November 24, 2021, The Malaysian Communications and Multimedia Commission (MCMC) received the merger application. The transaction, subject to regulatory and other approvals, is expected to be completed by Q2 2022.

The mobile service market in Malaysia is opposite the Thai market, already vibrant and competitive with 9 operators having spectrum to run mobile network services. Beside the big 4 (Maxis, Digi, Celcom, and U Mobile), this includes Asiaspace, Altel, Redtone, YTL Communications, and TM, as well as, a dozens of MVNOs – with a combined market share of over 16%.

MVNOs have been able to grow a larger share of the mobile retail market in Malaysia compared to its regional peers, evidencing a mobile wholesale environment that facilitates competition.

In addition, a national wholesale 5G network, Digital Nasional Berhad (DNB) was launched in December 2021.

Figure 30: Malaysia’s mobile market has more players and is more competitive than the Thai mobile market.

Figure 31: Malaysia’s mobile market pre and post Digi/Celcom merger.

Figure 32: Thailand’s mobile market pre and post TRUE/DTAC merger.

Figure 33: Schedule MVNO Business Unit Separation Structure.

Figure 34: Fixed broadband internet subscribers market share Thailand – Pre and post AIS acquisition of Triple T and 3BB.

Figure 35: Fixed broadband internet revenue market share Thailand – Pre and post AIS acquisition of Triple T and 3BB.