Telenor’s $7.5 billion tie-up in Thailand

In a statement, Telenor have today announced that they are in discussions to merger their Thai unit, Total Access Communication (Dtac) with Charoen Pokphand Group (CP Group)’s True Corporation. 

 

Combined, the value of the two companies is estimated to be around $7.5 billion.

 

The move would be an enormous shakeup for Thailand, reducing the number of major mobile operators from three to two, creating a new market-leading entity. 

 

Currently, Thailand’s market leader is AIS with around 45% market share, while Dtac places second with at 33.5% and True third with 20.5%. 

 

Dtac itself has been struggling ever since the beginning of the pandemic, having yet to recover to pre-pandemic operating levels. In Telenor’s most recent quarterly report, it noted that Dtac’s ARPU and service revenue had fallen significantly year-on-year, with the reimplantation of coronavirus restrictions in Thailand considerably impacting the business in the last quarter. As a result, rumours have circulated recently that Dtac could be being sold to other telecoms companies in Thailand at some point next year.

 

Telenor’s Group CEO Sigve Brekke, however, last month reiterated the company’s commitment to its Thai unit, saying that “Thailand is really important to us”. 

 

“We have been in Thailand for 20 years and we are looking forward to the next 20 years. We want to do business in a responsible way. We want to be seen as a contributor to the overall society,” he said.

 

Thus, a potential merger with True could be an viable solution for Dtac, unlocking numerous synergies between the two operators and helping to share the capex of their expensive network investments.

 

Telenor Group’s experience in its Asian markets this year has been somewhat turbulent. 

 

Earlier this summer, Telenor announced another huge merger in Southeast Asia, aiming to combine their Malaysian unit with that of Axiata group for around $15 billion. Here too the merger would be creating a new dominant force in the local market, dwarfing their nearest competitor in terms of market share.

 

But In Myanmar, the overthrow of the civilian government by a military junta at the start of the year has made continuing in the country untenable. Telenor wrote off their $782 million investment in the country in May before signing a deal to sell the unit to Lebanese M1 Group in July. The junta themselves, however, are unhappy with this arrangement for a variety of reasons, saying last month that they were ‘requesting’ that Telenor Myanmar’s senior executives do not leave the country, pending face-to-face discussions with the military leaders. 

 

Nonetheless, roughly half of Telenor’s annual revenue is generated from its Asian businesses, with the company suggesting that unlocking value from this region will be at the core of their strategy for the coming years.