CAT and Hutch seal deal; CAT’s earnings rely on concession fees

6 Nov 2007

Thai state-run CAT Telecom and Hong Kong’s Hutchison Telecom International Limited (HTIL) have signed a memorandum of understanding (MoU) to restructure their mobile joint venture in Thailand, where they offer CDMA services under the banners Hutchison CAT Wireless Multimedia (HCWM, branded as Hutch) and CAT CDMA. A CAT source quoted by The Nation newspaper said the deal was signed last Friday. Phisal Jorphochaudom, president of CAT, said that under the MoU CAT would become the sole owner of the two companies’ networks, which together provide nationwide coverage via roaming. HTIL subsidiary BFKT will transfer the ownership of its CDMA2000 1x network covering 25 central provinces including Bangkok to CAT free of charge, so that CAT can merge it with its own 1xEV-DO-enabled CDMA network covering 51 outlying provinces. CAT will then lease the merged network to HCWM, which will also apply for an MVNO licence from the National Telecommunications Commission in order to provide services. CAT will terminate the existing contract it granted to HCWM to market CDMA services via the network in 25 provinces. The next step, according to the newspaper’s source, is for CAT to increase its stake in HCWM to an expected 49%; CAT currently owns a 26% stake in HCWM, whilst HTIL and its nominee companies hold the remaining 74%. CAT also said it aims to relaunch CDMA services across 51 provinces next month, provisionally under the CAT CDMA brand; the network currently has only around 28,000 subscribers following a limited test launch earlier this year. Hutch had 796,000 subscribers across 25 Thai provinces by end-June 2007. Marut Buranasetkul, CAT’s senior executive vice president, quoted by The Nation, suggested that CAT would use the Hutch brand nationwide once the network merger was completed.

Excluding concession fees paid to it by other telecoms operators and its revenue share of HCWM, former ILD monopoly CAT Telecom posted an operating loss of THB657 million (USD21 million) in the first nine months of 2007. The loss was attributed to rising overall expenses and the injection of THB400 million into an early retirement programme. In the period, HCWM posted revenues of THB1.31 billion. The state agency’s total revenue during the period was THB34.85 billion, earning it THB7.06 billion in net profit. Excluding concession fees, revenue was THB15.67 billion, with a net profit of THB461 million. Revenue from CAT’s flagship international telephony operations stood at THB7.16 billion in the first nine months, down from THB7.32 billion in the same period last year, while its data communications business’s turnover rose to THB6.06 billion from THB5.42 billion. CAT’s build-transfer-operate (BTO) concession revenues jumped to THB19.18 billion from THB7.21 billion.