Telecoms labour union calls for NBTC to stop DTAC-True merger

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The National Telecoms state enterprise labor union network, composed of the NT company union, the Defenders of TOT, the TOT staff alumni association, CAT staff alumni association have joined together with analysts to oppose a merger between True and DTAC.

The group called for the National Broadcasting and Telecommunications Commission (NBTC) to stop the incipient merger. 

Prasarn Ja-ngu-leuam, President of the NT labor union and representative of the network of NT state enterprise labor union, said that the merger between True and DTAC would have a direct impact on the operations of National Telecommunications Plc (NT), and there would also be effects on free market competition in the domestic telecom business.

The merger of the two companies would result in semi-monopolistic conditions in the telecom market and there would no longer be incentives to compete in business.

Regarding this, the government and NT would be impacted by the merger as follows:

  1. Lost dividend income for NT, which has a stake in DTAC, of approximately 200 million THB per year, as the management styles of True and DTAC were very different. When comparing operating results for the past five years, DTAC had average profits of 5 billion THB annually, while True’s management did not earn profit, and had a continuously negative balance sheet. It was expected that after the merger, True’s management would impact shareholders by shares not yielding dividends previously received from holding DTAC shares. Going back over the past five years, DTAC had paid dividends to NT of over 1.2 billion THB.
  2. Lost income from DTAC leasing cell towers of approximately 1.9 billion THB per year, as True had its Infra Fund, which had a large number of cell phone towers, so they had no further need to lease NT’s towers.
  3. Lost income from reduced amounts of roaming of DTAC on the 2300 MHz network, of approximately 4.5 billion THB annually: If the merger was completed, the spectra available to provide service belonging to both True and DTAC are adequate to provide service to their own customers, so they would have no need for cross-network domestic services from NT. It was expected that DTAC would reduce amounts of roaming, or maybe even stop roaming on NT’s 2300 MHz network altogether. NT would thus lose income from providing contractual services to DTAC of 4.5 billion THB annually.
  4. Loss of income from reduced purchases of capacity on the 850 MHz network by Real Move (a unit of True) of approximately 2.2 billion THB per year. This was because True and DTAC had sufficient spectra to provide services to their own customers and therefore had no further need to lease capacity on NT’s 850 MHz network.

The merger would also impact the public sector and cause damage to the nation as follows:

1. If the market lacked competition because they were only a few players, it is not possible that market mechanisms can manage players in the market. Service charges may become more expensive and the quality of service may deteriorate. There would be no competition on price or continual improvements in service quality, to maintain customer base and prevent churn.

2. In violation of the 2017 Constitution’s Section 40, concerning unfair monopolies, and Section 75, concerning consumer protection.

3. The merger was in conflict with the intentions of the Announcement of the Telecommunications Committee concerning mergers and cross-holdings in telecom businesses of BE 2553 (2010), and the critical point of forbidding any licensee to carry out a merger with the impact of dominating its market. There are clear qualitative criteria to measure “levels of market domination” considered from the HHI index of market concentration.

4. The merger between True and DTAC did not benefit consumers. Initial studies by NBTC itself found that service charges would increase and that the country’s GDP would be reduced. On the contrary, the merger between True and DTAC would be only of benefit to the company. True would become the player with the greatest market share, and would have powers of market dominance from the advantage of support from business units in its network, such as retailers and wholesalers.

5. In the past, the government changed the Telephone Organization of Thailand to be National Telecommunications Plc (NT) to reduce dominance of service provision by just the government. This was to create a free and fair competitive market for the benefit of consumers. Consumers receive improved services and pay cheaper service charges, as market mechanisms under free competition benefit consumers. However, this merger would result in a semi-monopoly, which would lead to attempts to revive monopolistic power.

The NT state enterprise labor union network representative added, “I would like the Office of the NBTC to consider this merger transparently, for the core benefit of consumers and the nation. This is because, if this deal is allowed to happen, it must be called the end of National Telecommunications Plc (NT), and the certain end of free competition in the Thai telecom market. The critical issue is that if NT must go bankrupt and disappear from the telecom industry, Thailand’s entire provision of telecom services will be conducted by only the private sector. This will impact the security of the country’s telecom systems on the part of the state sector, and operations according to various policies relying on the telecom system as a motor.”

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