CAT may takeover Hutchison Thai unit

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CAT may takeover Hutchison Thai unit 
The Nation: 17 Dec 2009
CAT Board approves takeover plan
By USANEE MONGKOLPORN THE NATION

The board of CAT Telecom yesterday approved in principle the state agency's plan to take over the telecom businesses and assets in Thailand of Hong Kong's Hutchsion Telecom, including its Code Division Multiple Access (CDMA) 2000 1-x cellular network in 25 provinces.

Although CAT's management declined to disclose the price, a CAT source said it would propose Bt7.5 billion for the business and assets.

Management said CAT would publicly disclose the details of the board decision today, at the same time it proposes the value to Hutchison Telecom.

CAT and Hutchison Telecom have been in talks on a possible deal for a while. They are the shareholders in Hutchison-CAT Wireless Multimedia, which markets cellular service on the CDMA network in 25 provinces under the Hutch brand.

Hutchison-CAT leases the network from BFKT, a wholly owned subsidiary of Hutchison Telecom.

CAT provides cellular service on its separate CDMA network in the country's other 51 provinces. It wants to merge both networks to provide a nationwide service.

The CAT source added that the state agency expected to be able to quickly recoup its spending on the deal, given that Hutchison-CAT has been generating impressive revenue.

Hutchison-CAT's post-paid mobile-phone service has a high monthly average revenue per user of Bt700. Its pre-paid service averages just Bt100.

The company brings in revenue of about Bt4.8 billion per year from about 1 million subscribers.

CAT will also ask Hutchison Telecom to upgrade the network in 25 provinces to the complete Evolution-Data Optimised (EVDO) cellular technology, in order to make it compatible with CAT's EVDO-CDMA network in other provinces.

If CAT and Hutchison Telecom can reach agreement on the takeover deal, the latter is expected to finish upgrading to EVDO technology within four months.

The Bt7.5 billion to be proposed by CAT includes the cost of Hutchison Telecom's network upgrade.

Hutchison Telecom has reportedly invested more than Bt30 billion on CDMA and related telecom businesses in Thailand over the years.

CAT will also submit the takeover plan to the National Economic and Social Development Board, and later to the Cabinet.

CAT chief executive officer Jirayuth Rungsrithong said the agency generated revenue of Bt39.67 billion during the first 11 months, down 2 per cent year on year. Net profit was Bt7.13 billion, down 4 per cent.

Without concession revenue, CAT would have posted income of Bt15.21 billion during the period.