CAT to propose 2G tower JV with Dtac
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Thai state-owned operator CAT Telecom is seeking to enter a telecommunications infrastructure joint venture with private operator Dtac to allow it to continue generating revenue after its concession revenue dries up.
CAT’s concession agreement with Dtac expires in September 2018, marking the end to the prior build-operate-transfer regulatory regime, whereby private operators paid a portion of their revenues to the state-owned operators. The market is instead transitioning to the more conventional spectrum licensing model.
After this period CAT will be left without a sustainable revenue stream. Dtac will meanwhile need to transfer its roughly 13,000 2G mobile towers and base stations to CAT. As the deadline approaches, the CAT board is exploring establishing a JV with Dtac for the operation of CAT’s 2G mobile tower assets.
Under the proposal, Dtac would need to invest nearly 10 billion baht () in exchange for a 51% stake in the venture, which would be named Telecom Tower Co. CAT would take the remaining 49% in exchange for transferring the tower assets to the venture.
According to the report, the CAT board believes that such an agreement would be mutually beneficial, as it would allow CAT to earn new revenue from the venture, while Dtac would be able to guarantee service continuity after the concession expires.
The proposal still requires approval from the Thai Cabinet, the report adds. CAT hopes that the venture will help it realize annual revenue of around 10 billion baht per year.
Questions & Answers
Q.What is CAT Telecom hoping to achieve by forming a joint venture with Dtac?
What is CAT Telecom hoping to achieve by forming a joint venture with Dtac?
CAT Telecom aims to secure a new, sustainable revenue stream after its concession agreement with Dtac expires in September 2018. It also hopes the venture will generate around 10 billion baht in annual revenue.
Q.What is the primary reason Dtac would agree to this joint venture with CAT Telecom?
What is the primary reason Dtac would agree to this joint venture with CAT Telecom?
Dtac would enter the joint venture to ensure service continuity for its operations after the existing concession expires. This allows them to continue utilising the 2G mobile tower assets.
Q.What financial contribution would Dtac need to make to secure its stake in the new venture?
What financial contribution would Dtac need to make to secure its stake in the new venture?
Under the proposal, Dtac would need to invest nearly 10 billion baht into the new company, Telecom Tower Co. In return, Dtac would receive a 51% controlling stake in the venture.
Q.What happens to Dtac's 2G mobile towers once the concession agreement ends?
What happens to Dtac's 2G mobile towers once the concession agreement ends?
Upon the expiry of the concession agreement, Dtac will be required to transfer its approximately 13,000 2G mobile towers and base stations to CAT Telecom.
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