CAT Telecom To Seek Lower Price For Its Hutch-CDMA Deal

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CAT ordered to seek lower price for its Hutchison deal

By Usanee Mongkolporn

The Nation

ICT Ministry wants CDMA network for Bt4 billion instead of Bt7.2 bn.

The Information and Communications Technology Ministry has ordered CAT Telecom to bargain with Hutchison Telecom to lower the price of the latter's CDMA 2000 1-x cellular network to about Bt4 billion. That figure is down from the Bt7.2 billion CAT was prepared to pay to the Hong Kong telecom operator to take over its code division multiple access network and telecom businesses in Thailand.

ICT Minister Chuti Krairiksh said it was not necessary for CAT to pay a high price for the network and it should save money to do something else as part of the government's plan to promote CAT and TOT as the national network providers.

CAT wants to merge the Hutchison network, which serves 25 provinces, with its own CDMA network in 51 provinces to provide seamless nationwide service.

The related state agencies are also re-evaluating the price of the CDMA network, according to the recent request by the ICT Ministry. "Hutchison Telecom has written off the CDMA network but it still has more bargaining power than CAT, so it depends on Hutchison Telecom's decision to sell or not to sell the network to CAT. And we want to buy the network," CAT |chief executive officer Jirayuth Rungsrithong said on Friday.

Jirayuth said the price of Bt7.2 billion was low. If CAT were to roll out a new network in the 25 provinces by itself, the estimated cost would be Bt7.9 billion, he claimed.

The Cabinet in April gave the nod to CAT's plan to take over the CDMA network, featuring 800 base stations in 25 provinces and the telecom businesses of Hutchison Telecom in Thailand on a budget of Bt7.5 billion, of which Bt7.2 billion is for the acquisition itself and the rest is for procedural costs of the takeover.

The Office of Attorney-General (OAG) has reportedly sent the purchase draft contract CAT will sign with Hutchison Telecom back to CAT. But it told CAT to settle differences in opinion between CAT, the National Economic and Social Development Board and the Finance Ministry on the network valuation methods first. Then CAT has to send the draft contract back for the OAG's reconsideration.

CAT submitted the draft purchase contract for examination by the OAG in February.

Hutchison Telecom's wholly owned firm BFKT owns the CDMA network in 25 provinces, which is leased by Hutchison-CAT Wireless Multimedia to provide CDMA cellular service under the Hutch brand and under a marketing contract granted by CAT. Hutchison-CAT is a joint venture of CAT and Hutchison Telecom. Hutchison Telecom has reportedly invested more than Bt30 billion in CDMA and related telecom businesses in Thailand over the years.

The CAT CDMA network has about 400,000 subscribers, while Hutchison-CAT has about 900,000 subscribers. Hutchison-CAT has made revenue of about Bt400 million per month.

-- The Nation 2010-09-27

[RKASA]

"government's plan to promote CAT and TOT as the national network providers." It which point does CAT and ToT become providers of anything that works? - It sure is not happen around here.

[Pib]

I'm shocked...the government actually trying to bargain for a lower price...spend fewer public funds. Could the govt actually be trying to do something in the public's interest, if you call increasing the size of the govt telcoms (CAT & TOT) in the public's interest?

[asiawatcher]

I'm shocked...the government actually trying to bargain for a lower price...spend fewer public funds. Could the govt actually be trying to do something in the public's interest, if you call increasing the size of the govt telcoms (CAT & TOT) in the public's interest?

No the ripoffs will happen AFER they get control. All about being seen to comply with protocols. And of course, screw the Farang company, who has far better management skills anyway.