ASEAN KEY DESTINATIONS
True Move telecom wins Hutch contract
True Move, Thailand's third-largest mobile operator, says it is now in a "more comfortable" position after its concession holder CAT Telecom granted it what others see as a complicated new marketing contract to operate the Hutch business.
The contract could extend True Move's life by 14 years past the 2013 expiry of its present mobile concession. It also appears to give the company an edge over its bigger rivals in 3G wireless broadband services pending the formation of a new industry regulator.
Top-ranked rival AIS's concession will end in 2015 and DTAC's in 2018.
The sudden move by CAT caught the industry by surprise, as True Move's takeover of Hutch was complicated by the 1992 Public-Private Joint Investment Act, which requires extra government scrutiny of any ventures worth more than one billion baht.
The heads of both companies said they could wait no longer, and the deal was a win-win solution for both parties after four months of negotiations.
CAT president Jirayuth Rungsrithong said the agreement comprised four contracts. The first two, each with a two-year life, cover businesses on the Code Division Multiple Access (CDMA) 2000 1-X network. The other two contracts, for 14 years each, cover services on the third-generation (3G) high-speed packet access (HSPA) network.
Under the CDMA contracts, True Move will handle the existing 800,000 Hutch customers in 25 provinces, with a plan to migrate them to True Move's 3G HSPA network within two years. True Move is required to share 20% of the service revenue with CAT, similar to the old Hutch old contract.
For the HSPA contracts, CAT will lease the CDMA network in 25 provinces from True Move for 14 years, while True Move will lease the CDMA network in 51 provinces from CAT. CAT will award a contract to True to resell the 3G HSPA service for 14 years.
"This new co-business model will help CAT to escape annual losses of one billion baht under the previous agreement with Hutch," said Mr Jirayuth. "In turn, the model will help us earn up to two billion baht within one year of operation."
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