3G Deal Will Give True, CAT The Edge

[webfact]

ANALYSIS

3G deal will give True, CAT the edge

By Usanee Mongkolporn

The Nation

But many more hurdles need to be cleared before the project can take off

The tie-up between CAT Telecom and True Corp to offer 3G cellular service could give both a competitive edge but their race to 3G supremacy still faces hurdles.

It still remains uncertain whether the National Telecommunications Commission (NTC) will quickly grant permission to CAT to import High-Speed Packet Access (HSPA) network equipment for the CAT-True 3G project.

The regulator has been treating 3G issues carefully, following a legal challenge to CAT's licensing authority last September.

CAT CEO Jirayuth Rungsrithong said the problem of import permission would be resolved soon.

"Wait and see. We'll have a solution good for everyone," he said.

A CAT source said CAT has already asked True to deal with the NTC on the issue. The NTC reportedly is divided on whether it could allow CAT to import the HSPA equipment.

Currently True's Real Move provides the 3G service under the CAT-True 3G deals using TrueMove's HSPA equipment.

However, CAT still needs the NTC to reissue the permit for TrueMove to use this equipment after the NTC withdrew the permit in February.

The NTC had allowed TrueMove to use the HSPA equipment in 2009 but last June, CAT requested the NTC to withdraw the permit after CAT discovered that TrueMove had installed some HSPA base stations outside of its permitted areas.

CAT's board had allowed TrueMove to re-use such equipment in January but the NTC formally informed CAT about withdrawal of its permit in February.

The NTC will discuss this week about reissuing the permit. It will also debate if the CAT-True deals breach the Frequency Allocation Act, which requires licence holders to use their spectra to provide services on their own, instead of having other parties do so.

"There's still a lot of issues in these deals," NTC member Suranan Wongvithayakamjorn said.

CAT and True's subsidiaries Real Move and Real Future entered these 3G tie-up deals in January. Real Future's BFKT (Thailand) will lease HSPA equipment to CAT to wholesale and resell HSPA services nationwide. Real Move will lease HSPA capacity from CAT to retail the services.

The Office of Attorney-General is probing the deals' legitimacy, while the National Anti-Corruption Commission is probing alleged misconduct by Jirayuth and CAT's board for allowing CAT to sign the deals with True Group. Last week, the Central Administrative Court also accepted for review the complaint of Total Access Communication (DTAC) that the CAT board's decision in January to allow CAT to sign the deals with True is unlawful.

While these legal issues could make it difficult for True to secure loans for 3G service development, True CEO Supachai Chearavanont keeps insisting that these issues will not side-track True's quest for loans.

True has secured a bridge loan of Bt6.3 billion, at an interest of Bt50 million per month, from Siam Commercial Bank (SCB), for BFKT to refinance debt.

Since the bridge loan is due on July 27, True Group sought a loan of Bt49 billion from a group of six banks to repay the SCB loan and finance the 3G business. The deals could give True a competitive advantage with its cost structure to provide the 3G service.

A telecom analyst said these deals are estimated to cost Real Future and Real Move combined only 10-15 per cent of their revenue.

The relatively low cost will let Real Move aggressively market the 3G service.

However, he does not think the advantage will cause a big shift in market share in the near term as Advanced Info Service (AIS) and DTAC still have decent voice network coverage.

The likely scenario is that heavy data users will go for Real Move's 3G services but continue to use AIS and DTAC's networks for voice. But this might hurt AIS and DTAC's data revenue to a certain extent.

The analyst said the only hope for AIS and DTAC to compete with the same regulatory cost structure as True is to clinch 3G-2.1GHz spectrum licences, which are expected to be issued late next year or early 2013 by the upcoming National Broadcasting and Telecommunications Comm-ission (NBTC).

Any delay in licensing would give True a longer head start and pose a higher risk for AIS and DTAC, the analyst added.

A AIS source said AIS has considered applying a similar model as the CAT-True deals to partner with TOT to provide the 3G-2.1GHz service on TOT's planned nationwide 3G network.

AIS has provided a commercial 3G service on a trial basis on its spectrum under its concession with TOT, while TrueMove and DTAC have provided the service on 850MHz on a non-commercial trial basis with CAT's consent.

DTAC is still waiting for CAT's nod to launch a commercial 3G service.

The CAT-True deals have also raised concern from scholars and NTC member Sudharma Yoonaidharma of a possible 3G monopoly for CAT-True, which True has strongly denied.

Sudharma said the market would see actual competition when the NBTC issues 3G spectrum licences, which would enable telecoms to compete with the same licensing regime and cost basis.

-- The Nation 2011-05-23

[dominique355]

Now it's clear why CAT torpedoed the 3G auction last year.

[CTO]

So funny - I asked at a meeting in early February why not go direct to 4G The answer was they have already bought their 3G EQUIPMENT BUT BUT BUT I said, You can't import technology that doesn't have a license yet! Ahhhhh - we'll buy it and keep it overseas Somehow I see no one speaking the truth. Thing is CAT if it was NOT part of a 3G project would actually disappear in a few years.

[wpcoe]

However, CAT still needs the NTC to reissue the permit for TrueMove to use this equipment after the NTC withdrew the permit in February.

The NTC had allowed TrueMove to use the HSPA equipment in 2009 but last June, CAT requested the NTC to withdraw the permit after CAT discovered that TrueMove had installed some HSPA base stations outside of its permitted areas.

CAT's board had allowed TrueMove to re-use such equipment in January but the NTC formally informed CAT about withdrawal of its permit in February.

Maybe it's the style of writing that confused me, but doesn't this mean that CAT screwed itself last June by asking NTC to withdraw True's permits?

The article makes it sound like True lost its permit to operate 3G in February, but clearly they are still operating it. My phone is currently using a True 3G signal. So, what is it really all about?