CAT given month to amend True contracts; CAT-True working on alternative buyback solution

21 Jun 2012

Thailand’s National Broadcasting and Telecommunications Commission (NBTC) has given state-run telco CAT Telecom 30 days to amend its 3G network operating contracts with True Corp, on the basis that the 14-year partnership deal – agreed in January 2011 – violates Section 46 of the Frequency Allocation Act of 2010, which requires licensed operators including CAT to manage their own spectrum. The NBTC yesterday officially confirmed the decision of its sub-committee, which on 6 June found that CAT was illegally allowing private sector operator True to control spectrum management on its behalf, and ruled that the CAT-True wholesale/resale contracts must be amended in seven areas to comply with the law.

Additionally, the NBTC’s telecom committee has ordered an investigation into whether True’s wholly-owned subsidiary BFKT (Thailand), which leases network equipment to CAT under the CAT-True partnership, is effectively operating part of CAT’s business without a licence issued by the NBTC, in violation of Article 7 of the 2001 Telecom Business Act. Officials must report their findings to the panel within 30 days, reports Thai newspaper The Nation.

A report from the Bangkok Post adds that if CAT is unable to comply with the NBTC’s order and amend its contracts, it could ultimately face the revocation of its 800MHz-850MHz operating licence, which in turn would have serious consequences for True’s ‘True Move H’ HSPA-based 3G service, which is offered via a capacity resale deal between True’s Real Move unit and CAT. However, CAT’s CEO Kittisak Sriprasert said his company has been in talks with True over the past three weeks on a deal that would potentially eliminate the issues raised by the NBTC regarding the contracts. He said that CAT is considering a buyback of BFKT from True, which if successful would completely eliminate any need to change the current 3G contracts. A resolution is expected next month.

Regarding the contract points that CAT has been ordered to amend, the state telco must make changes so that it is free to use its 800MHz-850MHz frequencies on its own equipment and devices; under the partnership deal with True, CAT committed to use the spectrum only with the equipment leased to it by BFKT. CAT must also be seen to have full management control over its network operation centre; the 3G network operation centre is currently located on BFKT premises under the latter’s control. The contracts must also indicate clearly that CAT has the authority to manage spectrum; the existing HSPA network-leasing contract refers to a CAT-BKFT joint operation supervision committee, but does not clarify the scope of its authority, or CAT’s authority in relation to it, The Nation points out; this has to be revised to prove CAT has full control of its spectrum.