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The merger now awaits regulatory approval, with rival Advanced Info Service (AIS) already having launched complaints
In November last year, Total Access Communication (DTAC) and True announced they would seek to merge their businesses, a move that would shrink the number of mobile players in Thailand from three to two.
The deal would be worth an estimated $7.5 billion, creating a new market leading entity with roughly 50 million subscribers and a 53.4% market share.
AIS, with 44 million subscribers, would control the rest of the market.
The shareholders of both True and DTAC approved the merger yesterday, meaning the fate of the merger now rests solely in the hands of Thailand’s various regulatory authorities. If cleared, the merger will likely be completed later this year.
Naturally, any move that would turn a telecoms market into a duopoly is a cause for major regulatory concern and this merger is no different.
In announcing their intentions, True and DTAC have consistently argued that the merger would not harm competition in the Thai market and would instead benefit customers, allowing for increased investment in 4G and 5G rollouts, as well as transforming the resulting entity into an IT company.
“[The new entity] “will have scale to both invest in network quality and make technology advancements that meet the changing needs of Thai consumers and support Thailand’s digital growth,” said Jorgen Arentz Rostrup, EVP and head of Telenor Asia, which owns DTAC.
However, detractors suggest that a duopoly will damage industry competition, leaving consumers with less choice and driving up prices.
Late last month, AWN, a subsidiary of AIS, submitted a letter to the National Broadcasting and Telecommunications Commission (NBTC), reiterating these concerns and asking the regulator to block the deal.
Alongside competition concerns, AWN also noted the enormous advantage in spectrum availability that the new entity will enjoy, as well as arguing that it will prevent new players from entering the market in future.
AWN is not alone in its complaints, with various research institutions and consumer groups also being critical of the deal, many of whom directly petitioned the various regulators seeking intervention.
The regulators’ powers themselves, however, are also in question here. The NBTC’s ability to veto mergers in the telecoms sector were largely abrogated in 2018 as part of wider government policy to facilitate business consolidation and encourage liberalisation, leaving them far more likely to apply conditions to the deal rather than stop it entirely.
On the other hand, some analysts suggest that the NBTC could still intervene to directly stop the deal if the move is deemed to create a monopoly or limit competition, based on Section 27 of the NBTC Act. As a result, the regulator’s power to step in remains unclear and will likely be subject to considerable legal interpretation.
Finally, the political situation in Thailand only serves to further muddy the waters surrounding the deal’s approval. The current government is currently facing enormous political pressure, with many commentators suggesting that a general election could soon be called. Meanwhile, the NBTC is also currently in the process of having a new board elected, with candidates already having been chosen by the Senate and awaiting royal approval before they can replace existing members.
When this switch in board members will ultimately be finalised is unclear, but they could seek to reinvestigate the merger, or even amend the Telecommunications Business Act to ensure they once again have legal powers to prohibit such mergers.
Thus, with both the government and primary regulator facing potential upheaval in the near future, as well as the regulator seemingly lacking the power to block the deal, it seems likely that the merger will proceed largely uninhibited later this year.
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