Telecom Investors Approve Merger

Telecom Investors Approve Merger

Shareholders give the green light to the union

DTAC customers at a service center in Bangkok. DTAC customers at a service center in Bangkok. (Photo: Pornprom Satrabhaya)

Shareholders of True Corporation and Total Access Communication (DTAC) have overwhelmingly approved the proposed merger of the two telecom operators, a major step towards their planned merger in the second half of this year.

Meanwhile, a True executive, who requested anonymity, told the Bangkok Post that the merger would be a boon for both companies in terms of long-term investment financing, which could ensure business continuity and strengthen their position in the fight against the market leader Advanced Info Service (AIS).

The two telecom operators held their general meetings yesterday, with key items on the agenda regarding the approval of their merger plan.

Some 99.37% of True shareholders approved the proposed merger, while 89% of DTAC shareholders gave it the green light.

According to True and DTAC, the registered and paid-up capital of the new company will be 138.2 billion baht. It will have 34.5 billion ordinary shares with a nominal value of 4 baht each.

Sharad Mehrotra, managing director of DTAC, said the consolidation will help optimize infrastructure investments and the use of frequencies owned by the two companies.

“The strength of True and DTAC will be drawn into the new company with the support of major shareholders of both companies,” he said at the DTAC shareholder meeting.

He then told the media that the new telecommunications technology company plans to meet higher customer expectations, manage the rapid changes in the global market landscape and accelerate Thailand’s transition to a leader in the digital world by taking advantage of progressive technologies.

The merger is expected to be completed in the second half of this year, Mehrotra said.

The True source said the merger would allow both companies’ services to compete with AIS as they currently face several business limitations.

The telecommunications industry, especially mobile phone services, is capital-intensive, the source said.

True has a higher debt ratio than AIS and significantly less cash flow flexibility, the source said.

The company has come under pressure in terms of loan limits as its parent company – Charoen Pokphand (CP) Group – has invested in a series of government mega-projects, the source noted.

Operating services in the 5G era requires more capital to invest in network expansion, equipment and marketing, the source said, adding that all operators have already taken on the financial burden of licensing. of 4G and 5G spectrum.

According to the source, 5G is more suitable for industrial use than for individual use. An operator that has better network coverage, better signal quality and a better financial situation will have a competitive advantage over its competitors, including in terms of consumer perception.

The merger is seen as a new venture for True, as it could be more flexible in terms of financial flows, help upgrade 5G services and raise funds in the future through additional debentures or loans from creditors.

“If nothing is done and both companies are allowed to continue their course naturally, they will likely be in trouble and AIS will retain its leading position in the market for the long term,” the source said.

It is still unclear whether the merged company will have an advantage over AIS, the source said, adding, “However, it is certain that the merged company will have a larger subscriber base than AIS in the early stages.”

After all procedures are completed, True and DTAC will hold a joint shareholders’ meeting to consider various issues related to the newly merged company, including organizational structure and a business roadmap, the source said.

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