DTAC and CAT bail on joint venture plans

DTAC and CAT bail on joint venture plans

Their planned Telecom Tower Company joint venture is off.
Their planned Telecom Tower Company joint venture is off.

The planned joint venture between Total Access Communication (DTAC) and CAT Telecom, Telecom Tower Company, under the network-sharing model was scrapped after the two parties declared they have no interest in the initiative.

DTAC chose to rent CAT's telecom tower network instead of forming a joint venture after its eight-year 2G concession with CAT ended in September 2018.

CAT Telecom owns the full rights for its 8,000 telecom towers after DTAC's concession on the 850- and 1800-megahertz ranges ended.

Col Sanphachai Huvanandana, CAT Telecom's president, said the two signed a memorandum of understanding (MoU) in late 2015 to study a possible collaboration on the network-sharing business.

The CAT board approved the details of the Telecom Tower Company joint venture in early 2016, aiming to create a network-sharing business, with DTAC and CAT holding 51% and 49%, respectively.

Telecom Tower Company was scheduled to start operations once approved by the Digital Economy and Society (DE) minister and the cabinet.

The DE minister took too long to consider the deal after CAT submitted the proposal, including the final details of the planned joint venture, to the Information and Communication Technology Ministry (the former name of the DE ministry) in June 2016, he said.

The main obstacle of the joint venture was legal issues raised by CAT Telecom's labour union.

CAT's operations are considered a national asset, and setting up the joint venture would entail selling a national asset.

In addition, there would be a risk of legal backlash involving the approval of the joint venture while the concession is still valid.

CAT president admitted DTAC entering a tower rental agreement would create some risk to CAT's benefits in the long term.

"After 2016 or expiry of the agreement, the revenue stream for tower rental fees from DTAC will end, and that means CAT must create more deals on existing assets as well as new value-added businesses," Col Sanphachai said.

DTAC previously operated mobile service on the 1800MHz spectrum under CAT Telecom's concession, which expired in September 2018.

Under the terms of establishing Telecom Tower Company, the joint venture was to be set up once approved by the cabinet.

DTAC will transfer the 8,000 telecom towers and transmission under mobile concession to CAT before the concession expires.

DTAC was to pay CAT a one-time payment of almost 10 billion baht to acquire a 51% stake of the joint venture company for the 8,000 telecom towers, while CAT paid nothing to get the remaining 49% stake.

Under the scrapped plan, DTAC will rent 8,000 towers from CAT to provide mobile service, at an initial rental rate of 20,000 baht per tower per month.

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