True nears Hutch takeover

True Corporation is close to striking a friendly takeover of the Hutch mobile phone business in the central provinces by the end of this month after it finished its due diligence of the joint venture and its network provider BFKT.

True Corp chief executive Supachai Chearavanont said it studied Hutch’s average revenue per user (ARPU), revenues and customer base, which it estimated at 500,000 subscribers. An ARPU figure was not given but the industry average is about 400 baht per month per user.

He said the takeover would include Hutchison’s wholly owned subsidiary BFKT, which owns the Hutch network in the 25 central provinces, including Bangkok. BFKT leased the network to Hutch (Hutchison CAT Wireless Multimedia) to create a 74:26 joint venture between Hutchison and CAT Telecom to market CDMA service under the Hutch brand. A 15-year marketing contract with CAT ends in 2015.

Hutchison CAT Wireless Multimedia has 950 million baht in registered capital and BFKT Thailand 500 million.

Mr Supachai made it clear True would not pay the price Hong Kong-based Hutchison proposed to CAT Telecom of 7.5 billion baht in earlier discussions.

True Move approached Hutch last year but talks stalled when CAT expressed an intention to purchase Hutch.Hutch’s remaining five-year marketing contract is the major attraction to acquire the analogue 850-Megahertz spectrum, he said. The contract could be renewed in 2015 because it is not a concession agreement, he added.

True shares closed down 20 satang at 6.20 baht in trade worth 1.5 billion baht yesterday.

But at a press conference held by Advanced Info Services and DTAC, AIS chief executive Wichian Mektrakarn cautioned a True-Hutch deal could breach the 1992 Public Private Joint Venture Act as interpreted earlier by the Council of State. The law requires extra government scrutiny of any public-private ventures worth more than 1 billion baht.

He recalled that previous governments had set up joint venture committees to revise the amendments of mobile phone concessions if the Council of State ruled a deal did not follow the rules of joint venture law.

The Council of State has twice ruled that the law applies to Hutch: in 2004 when CAT wanted to open bids to create a nationwide CDMA network, and in 2008 when CAT proposed to buy the Hutch network in the central provinces.

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