DTAC-True merger likely to pass muster Deal planned to clear regulatory hurdles

DTAC-True merger likely to pass muster  Deal planned to clear regulatory hurdles

DTAC customers at a service centre in Bangkok.  Pornprom Satrabhaya

The merger of Total Access Communication Plc (DTAC) and True Corporation is expected to survive regulatory challenges as the two are not telecom licensees subject to the National Broadcasting and Telecommunications Commission's (NBTC) supervision.

Additionally, the two companies are seen as holding firms and do not have operating status under the Trade Competition Commission’s regulation.

A source at the NBTC who requested anonymity said the merger deal needs to be scrutinised from all legal angles by related agencies.

The NBTC should quickly amend or add some clauses to existing regulations to create proper measures to govern the deal and ward off a possible monopoly in the market, said the source.

“It has to be accepted that the deal was well designed to make it legal according to existing regulations,” the source said.

The mega-merger was announced by Norway’s Telenor, the parent of DTAC, and conglomerate Charoen Pokphand (CP) Group, the parent of True, at a joint press conference on Nov 22.

Both indicated True and DTAC will consolidate to form a new company that will move into technological fields in addition to the traditional telecom business.

True and DTAC themselves do not hold mobile licences from the NBTC.

True has its mobile business arm, True Move H Universal Communication (TUC), which obtained mobile licences through spectrum range auctions, while DTAC has a mobile arm, DTAC TriNet, which holds mobile licences granted by the NBTC.

“This means several conditions of the NBTC’s regulations governing its licensees may be challenged from a legal angle, as to whether True and DTAC should be regulated under the NBTC’s rules,” the source said.

True and DTAC appear to act as holding firms without actual operations, meaning the merger could pass regulatory hurdles from the Trade Competition Commission too, the source said.

A telecom veteran who requested anonymity said following the merger, a new entity would be listed on the Stock Exchange of Thailand via a backdoor listing, either through True or DTAC. Their mobile business units would also consolidate to form a single brand.

“It would be difficult to obstruct the consolidation of subsidiaries through either civil or public laws once their parents firms have merged,” the veteran said.

Based on Section 21 of the Telecommunications Business Act, the NBTC has the power to iron out measures to prevent telecom licensees from doing anything that would create market dominance or undermine competition.

According to Section 69 of the act, those who violate the measures are liable for imprisonment of up to three years or a fine of up to 600,000 baht, or both.

The NBTC also issued a notification on measures to prevent monopoly or unfair competition practices in the telecom business.

Section 8 of this notification stipulates the acquisition of more than 10% of total shares of telecom licensees from those in the same business type is not allowed unless the move is permitted by NBTC board members.

If the NBTC board agrees the acquisition is bound to create a monopoly or thwart competition, the board may issue an order to ban such an action or roll out special measures to govern it.

Accordingly, the NBTC has the power to prohibit mergers or acquisitions of telecom licensees as well as thrash out specific measures that can prevent acts deemed to cause monopoly or unfair competition practices, the veteran said.

Failure to comply with this section could result in violators facing up to three years in prison or a fine of up to 600,000 baht, or both.

The NBTC Act also stipulates the regulator has the power to prescribe measures to prevent any monopoly or unfair competition practices in broadcasting, TV and telecom services.

The NBTC needs to proceed in the best interest of the public and come up with measures that can prevent the exploitation of consumers or an excessive burden on them, according to the veteran.

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