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Deal details revealed after AIS informed stock market of 32,420 MB spend to take over 3BB’s broadband Internet business, now submitted to NBTC for inspection; after successful approval, the different transactions are set to complete at the start of 2023.
Advanced Info Service plc. (AIS) informed the Stock Market of Thailand (SET) that the company’s Board of Directors had passed a resolution for its subsidiary unit Advanced Wireless Networks Co., Ltd. (AWN) to purchase 7,529,242,385 shares in Triple T Broadband plc. (TTTBB) or 99.87% of its stock from Acumen Co, Ltd, a subsidiary unit of Jasmine International plc. (JAS). This included the acquisition of two TTTBB subsidiaries, Triple T Internet Co., Ltd. and In Cloud Co., Ltd. with a total value of 19,500 MB.
Over and above these, is the purchase of 1,520,000,000investment units in Jasmine Internet Broadband Infrastructure Fund (JASIF), which is 19% of the stock at a unit price of 8.5 THB, the total value of 12,920 MB. The total invested in the entire acquisition is 32,420 MB. The next step is for AWN to submit the matter for approval from the National Broadcasting and Telecommunications Commission (NBTC). Following the deal’s approval, there will be a contract signing ceremony for the purchase of shares and investment units. The company expects that the purchase transactions of shares and investment units will complete in Q1/2023, subject to NBTC approval.
With the excitement generated by the AIS-3BB deal, there have been inevitable comparisons with the merger between True Corporation PLC (True) and Total Access Communications PLC (Dtac) announced at the end of 2021. The target for the merger’s completion is by the end of this year, following approval from parents Charoen Phokpand (CP) and Telenor, which also needs to clear legal hurdles and approval from the NBTC. However, looking deeply into both deals’ objectives and probable results, the AIS-3BB deal is totally different from the famous mega-merger in a number of significant ways.
Three key differences to the deals
1. The AIS-3BB deal isn’t creating a monopoly like the True- Dtac deal. This is because there are four operators in the broadband market: True, with 4.73 million customers and a market share of 43.1%; 3BB, with 2.42 million customers and a share of 22.1%; and National Telecommunications PLC (NT), which has 1.95 million customers and a share of 17.8%. AIS has 1.865 million customers and a share of 17%. Therefore, if the AIS-3BB deal is approved, this will give AIS 4.29 million customers or a share of 39.1%, which does not give it the number one spot, as True still has more share.
Looking at the size of the market and the number of households using the service from these four providers, now reduced to three, this is still considered normal market conditions in which every player can compete by following their target customer segments, which is a clear difference to the True-Dtac merger.
This is because the mobile phone market has three big players, which is not considered full competition. It comes under the attributes of an oligopoly market. If the True-Dtac deal is successful, the telecom market will become a complete oligopoly.
Therefore, this market consolidation by mobile phone companies has a chain effect to consumers. Between them, True and Dtac have more than 50% of the total market, while in fiber broadband, the AIS-3BB merger has a market share of 39.1%
2. The True-Dtac merger is a monopolistic entity with vast assets in the form of auctioned Spectra and cell phone towers. The merger will give the merged entity huge strength in network and frequencies. A telecom market with only a few players being further merged is a significant barrier to the entry of new players, as there are no Spectra remaining. On top of requiring huge investments, investments in new networks are not even counted.
The broadband market is still easy to enter for new players with lesser capital and investments to stimulate demand, as broadband isn’t considered a necessarily nationwide roll out. Service providers are judged more on network efficiency. Broadband marketing enables limited service areas, and being able to lease the networks belonging to the DIF and JASIF funds. The fibre broadband market is still growing strongly with a penetration rate of less than 60%, while saturation of the mobile phone market is currently at 145%.
3. The AIS acquisition of 3BB is different from the True-Dtac merger because in the latter, the existing companies are disappearing. In the former, a share acquisition gives stability to both companies and will enhance professional market competition. The AIS-3BB deal will bring more alternative products to consumers on a wider basis and with better quality. 3BB will concentrate on marketing to the segment of basic infrastructure demand, while AIS Fibre is focused on providing service increasingly more as a Fix Mobile Convergence content provider.
On top of all these differences, AIS has complied with regulations by executing a straightforward process of informing NBTC about the share purchase. This is in contrast to True-Dtac, who registered their company first, and only then went to seek permission, which has its own legal issues to contend with.
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