4 Real: CAT awards four contracts to True units; Hutch takeover complete

28 Jan 2011

True Move yesterday completed its acquisition of Hong Kong’s Hutchison Telecommunications International (HTI’s) Thai assets, including its ‘Hutch’ CDMA2000-based mobile business covering 25 central provinces including Bangkok. As reported last month in CommsUpdate, True’s subsidiary Real Move agreed to buy 92.5% of Hutchison Wireless Multimedia Holdings, through which HTI held its 74% stake in Hutchison CAT Wireless Multimedia (HCWM, 26% owned by CAT Telecom), for THB4.35 billion (USD144 million), whilst Real Move and another True unit, Real Future, will acquire other related companies for nominal prices, including BFKT, the company that owns Hutch’s network infrastructure. Furthermore, True agreed to provide a THB6.3 billion loan to BFKT to clear outstanding debts. Yesterday True said it will consolidate the new assets’ performance into its financial statements this year, adding around THB4.3 billion to revenue.

Meanwhile, Real Move and Real Future have signed four marketing contracts with state-owned CAT Telecom covering wholesale and retail operations over CDMA and HSPA networks, to replace the existing Hutch-CAT marketing agreement which was due to run until 2015. As reported by the Bangkok Post, CAT president Jirayuth Rungsrithong said the first two contracts, each with a two-year life, cover CDMA2000 operations, whilst the other two agreements, each 14 years in duration, cover services based on W-CDMA/HSPA technology. Under the CDMA contracts, True Move will serve the existing approximately 800,000 Hutch customers whilst carrying out its plan to migrate them to a HSPA network within two years. True Move is required to share 20% of the CDMA service revenue with CAT, similar to the old Hutch-CAT contract. For the HSPA contracts, CAT will lease network infrastructure in 25 provinces from True Move for 14 years, while True Move will lease networks in Thailand’s other 51 provinces from CAT (currently operated as ‘CAT CDMA’ but earmarked for replacement with a HSPA network). True will also be contracted to resell 3G HSPA services for 14 years. CAT will become a network provider for transmission as well as a wholesaler and reseller, said Mr Jirayuth. True Move, meanwhile, will operate via ‘co-branded marketing’ and focus on persuading Hutch customers to shift to its 3G HSPA service.

‘This new co-business model will help CAT to escape annual losses of THB1 billion under the previous agreement with Hutch,’ said Jirayuth, who added: ‘In turn, the model will help us earn up to THB2 billion within one year of operation.’ He said the CAT board had already approved the agreements, although the issue would be the subject of another board meeting today. He stressed that the contracts do not require submission for cabinet approval, as there is no relationship to the existing 2G build-transfer-operate (BTO) concession contract between CAT and True nor private-public joint venture legal requirements (under which the previous Hutch-CAT partnership came under scrutiny). True pledged that none of the existing 600 Hutch employees would be laid off, nor would the 400 staff at network owner BFKT. The cellco also confirmed that it would continue leasing its existing 2G network from CAT for at least five years after its BTO concession officially ends in 2013 to support its 2G customers (in line with a five-year extension agreement reached in January 2009, according to TeleGeography’s GlobalComms Database).

True plans to spend between THB5 billion and THB6 billion to deploy 3,000 HSPA base stations (including converting 1,400 Hutch cell sites and 1,600 CAT CDMA stations) within two years, parent group True Corp’s CEO Supachai Chearavanont told a press conference.

Thailand, CAT Telecom, CK Hutchison, Hutch (Thailand), True Move