CAT, TOT in frenzy of network partnership negotiations, frequency lobbying

16 Jan 2015

It was reported this week that Thai state-run telco CAT is resuming mobile venture partnership talks with South Korea’s SK Telekom, whilst also seeking a new network partnership deal with existing infrastructure-sharing local partner True Corp. CAT is also lobbying to be allocated a portion of 1800MHz spectrum by the country’s nascent Digital Economy Committee ‘for providing public services’ as well as accessing another currently-unused tranche of the frequency band for commercial services. Meanwhile, CAT’s sister telco TOT has reportedly shortlisted three private telecoms firms as prospective partners to help it turn around its ailing fortunes, with joint venture agreements expected to be settled ‘by March’ by both state-owned companies.

CAT is looking to seal a new agreement with True – its existing partner in the True Move H 850MHz 3G network operation, and also its former 2G concessionaire under an expired build-transfer-operate (BTO) contract – by March to ‘achieve a greater level of collaboration and partnership in network sharing,’ according to Sanpachai Huvanandana, CAT’s acting president, quoted by the Bangkok Post. Last month CAT signed a memorandum of understanding with its BTO concessionaire DTAC, whose BTO contract runs until 2018, looking to establish a joint venture 3G/4G company or an infrastructure fund, and the details of this planned new CAT-DTAC cooperation are still being hammered out – involving the problematic question of infrastructure asset valuation. Sanpachai also stated that CAT planned ‘unconditionally’ to end its decade-long disputes over BTO network asset transfers with True and DTAC this year, with arbitration damages claims to the tune of over THB10 billion (USD305 million) still unresolved. The Post adds that there are 15 disputes between CAT and DTAC and seven involving CAT and True.

CAT also plans to ask the yet-to-be launched Digital Economy Committee to allocate it bandwidth for providing public services, according to a quote from Mr Sanpachai in a report by The Nation, adding that CAT wanted to join the upcoming 1800MHz licence auction ‘as it may need some of that spectrum for its hoped-for public-service duties’ which might include operating ‘the telecommunications centre for government disaster and emergency systems. The state telco will seek partners to join it in the bid, possibly SK Telecom with which it has held previous partnership negotiations, ‘or a Japanese telecom service provider’. ‘We will resume the talks with SK Telecom and other possible strategic partners for this auction,’ the acting CAT president stated. CAT also intends to lobby the Digital Economy Committee to use a 25MHz block of currently-idle 1800MHz spectrum for mobile phone services, which was previously issued by CAT to DTAC under the latter’s BTO concession. It is understood that CAT would aim to utilise this 1800MHz block via network partnerships with True and/or DTAC.

TeleGeography’s GlobalComms Database notes that in mid-2014 CAT issued a proposal to Thailand’s ruling military administration, the National Council for Peace and Order (NCPO), to approve its plan to bid for an 1800MHz 4G technology neutral licence in the upcoming auction, now tentatively expected around Q3 2015, having been delayed under NCPO orders. Earlier, CAT and SK Telecom had studied a possible collaboration on the Thai 4G spectrum auction (as reported in April 2014), aiming to build on a preliminary agreement signed by CAT and the Korean telco in October 2013 to explore the idea of forming a mobile partnership.

TOT, meanwhile has shortlisted three private sector firms as prospective network partners – cellular market leader AIS, existing MVNO/infrastructure partner Loxley, and start-up company Mobile LTE – with joint venture terms expected to be settled by March, said a source familiar with the matter quoted by the Bangkok Post today. TOT’s financial advisers are reportedly on the verge of completing their evaluations of proposals submitted by the candidates. Under potential collaboration plans, TOT could rent out its existing unused 10MHz (out of 15MHz) on its 2100MHz 3G spectrum band to selected partners who would provide 4G wireless broadband services under a network rental agreement. The Post’s source added said AIS had proposed to jointly manage TOT’s telecom towers through a joint venture agreement. The lesser known of TOT’s potential partners, Mobile LTE, is a Thai telecoms start-up founded in October 2014 and headed by former AIS executive Yanyong Akrajindanon, which has proposed to offer 2100MHz 3G services as an MVNO, while investing in 4G LTE network rollout with the state-owned firm, while It is understood that Mobile LTE is seeking a 25% stake in TOT under the terms of its investment.