CAT Telecom told to clear wireless venture debts or put IPO at risk

22 Jul 2005

Hutchison Whampoa’s trick of providing heavy handset subsidies to rapidly gain mobile market share has failed to ignite the Thai mobile market and now its joint venture partner, CAT Telecom, has been warned by the government that it needs to raise more cash. Hutchison CAT Wireless Multimedia – 65% owned by Hutch subsidiary HTIL and 35% by state-controlled CAT Telecom – offers CDMA2000 1x services in 25 provinces in the greater Bangkok area, and basic voice services over CAT Telecom’s CDMA IS-95A network in the rest of the country. However, whilst its market share remains well below 10% after two years of operation, the company has racked up heavy losses on expensive marketing campaigns and hefty handset subsidies, including a recent ‘buy one, get one free’ promotion. Earlier this week the cellco laid off seven executives as part of a hastily implemented cost cutting plan and now the Thai government has told CAT Telecom that it must raise new capital to clear its THB4 billion (USD100 million) share of the cellco’s losses or risk further delay in its plan to float on the Thai Stock Exchange.

Thailand, CAT Telecom, Hutch (Thailand)