True Move H contract might be scrapped, hints ICT minister (but admits it could take years)

27 Mar 2012

The 3G network contracts signed by True Corp and CAT Telecom in January 2011 are ‘tainted with irregularities’ and ‘intentionally made to avoid telecom-related laws’, a Ministry of ICT (MICT) panel has concluded after a 120-day investigation. However, although the ICT Minister Anudith Nakornthap hinted that the wholesale/resale deal could be terminated, he would only confirm that a final decision would be made in two days, the Bangkok Post reports. A clutch of contracts between state-run CAT and private sector partner True allowed the latter’s takeover of CAT’s former joint venture partner Hutch Thailand, and enabled it to begin replacing Hutch’s CDMA network with W-CDMA/HSPA 850MHz infrastructure while expanding HSPA services nationwide, with commercial services launched under the True Move H banner in the third quarter of 2011. The deal, under which True Move H nominally operates as a mobile virtual network operator (MVNO), effectively allowed True to begin operating 3G services outside of its state revenue-sharing build-transfer-operate (BTO) concession, unlike rivals AIS and DTAC which offer 3G services over their BTO networks while waiting for full 3G licences later this year. CAT receives wholesale revenue from the True deal and also operates its own low-key retail ‘My’ branded service over the new HSPA network. If Minister Anudith decides the contract should be revoked, he will submit his findings to the National Anti-Corruption Commission (NACC), which must then decide whether to petition the court for further action. Anudith admitted that True can operate under the existing six contracts until the court makes a final ruling, which could take ‘years’ due to appeal processes.

The MICT’s panel identified five ‘irregularities’ in the CAT-True deal. Firstly, it pointed to a previous government’s ‘unexplained’ instruction to CAT to reduce its offer price for a proposed buyout of joint venture partner Hutch Thailand, prompting the latter to reject the deal in November 2011 and almost immediately sell out to True instead under a business model drawn up between CAT and True. Secondly, CAT bypassed the Council of State (cabinet) and the National Economic and Social Development Board (NESDB) in terminating Hutch’s CDMA mobile service in 25 central provinces to enter into the new agreement with True. Thirdly, it was found CAT had violated the MICT’s work procedures, as documents had been signed in advance and the paperwork which was processed through ICT executives carried no accompanying views of the agencies concerned before reaching the ICT minister. Fourthly, CAT failed to comply with a directive to consult the NESDB and the Council of State after it received the go-ahead for its request to enter into a business deal with True on 28 December 2010. Lastly, Anudith said that on 28 April 2011 CAT asked his ministry to scrap the state telco’s original national CDMA investment plan, and it switched to a new rental equipment agreement with True worth THB12 billion (USD390 million); the investigative panel concluded CAT had no authority to enter into the new agreement, which could also be a violation of the 1992 Public-Private Joint Venture Act, which requires scrutiny of any public-private venture worth more than THB1 billion, the ICT minister added.